Dispatches from PCT

Readers' Survey: Are strategic alliances good for the CRO industry?

By Dan Stanton

- Last updated on GMT

Related tags Clinical trial

Survey: Are strategic alliances good for the CRO industry?
Survey: Are strategic alliances good for the CRO industry?
Are strategic alliances a positive or a negative thing for the CRO industry as a whole? In light of PCT Europe this week, we invite you to comment. 

The CRO world will be heading to the classical music capital of the world this week, Vienna, Austria, to participate in the 12th​ Annual Partnerships in Clinical trials (PCT) Congress, and Outsourcing-Pharma.com will be accompanying them on the banks of the Danube to listen, discuss and stir the debates affecting the clinical outsourcing world.

Amongst the talk of cutting edge clinical delivery and trial innovations, one topic bound to be rearing its clinical head is strategic partnerships with pharma companies and their effect on the CRO industry. According to a recent GlobalData report​:

“Collaborations have evolved from simple transactional relationships into multi-year, highly integrated strategic engagements focused on shared objectives, mutual investment, and involvement in clinical trial design and drug plan development.”

Some of the largest alliances of the last few years not surprisingly includes some of the largest companies, both pharma and CRO. These include Pfizer’s partnerships with Parexel and Icon​, Sanofi and Covance​, GSK, PPD and Parexel​, and Bristol-Myers Squibb selection of Quintiles​ as a central labs supplier earlier this year.

Though clearly benefiting the bigger boys, whether the trend towards strategic partnerships is furthering small and mid-sized CROs is a much bigger question. Furthermore, consolidation through mergers and acquisitions is reducing the number of players (see PRA and RPS​, for example) and perhaps pushing the industry towards an oligopoly.

To answer such questions we need your help. Please answer the question below, and don’t forget to leave us your comments and for what sort of CRO (big, medium or small) you work for.


Are strategic alliances a positive impact on the CRO industry as a whole?

  • Yes

  • No

  • Too early to say still


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The pendulum swings

Posted by K. Williams,

Having worked for a sponsor, a mega CRO and a midsized CRO over the past 15 years I have seen it all. The trend now with outsourcing seems to be strictly driven by solely money which is never a good policy. It wipes thousands of jobs from big pharma, is demoralizing to those being treated as disposable, and results in a major loss in senior talent. There is always a disruption in quality and represents exposed risk across the board. I know there is a tendency to shift risk to other companies but ultimately sponsor companies are responsible for over all trial operations and quality. I have seen numerous warning letters which reflect a dual responsibility regardless of the development and audit outsourcing. Did I mention turnover? Rarely are either sides happy with this mass outsourcing. I have met QA auditors and monitors/ site managers from almost all CROs. No one is content right now.

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Industry Consultant

Posted by Haris Kup,

Large pharma wants to reduce their costs on indirect spend in product development by turning them into variable costs. As the whole R&D spend is depended on this crucial stage, pharma companies have to rely on strategic alliances with the CROs.

Strategic alliances with large CROs will make the life easier for a pharma company with reduced risk, project management and operating cost for the clinical research space. Although, cost savings are very minimal in this engagement, large pharma is focused on the success rates and project completion.

large pharma alliance with local CROs is completely focused on cost saving metrics where former accepts to manage and track the project status regularly with assumed risks.

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Industry Consultant

Posted by Michael Harte,

Strategic alliances have assisted industry on two fronts: one is it allowed pharma to displace salaried staff (Overhead) and move it to a variable cost item. In addition, pharma gets the benefits of having CROs deal with turnover, replacement, training, and provide access to trained staff for projects. The downside, and fundamental problem, which continues to plague the industry, is the lack of management of these resources, the continued use of newer technologies and services, the leveraging of experienced and skilled labor. CROs provide this staff based upon hourly rates or unit costs, both of which have to be managed effectively to meet budgets. Sponsors were able to leverage salaried employees in the past and not worry about employees working beyond 40 hours - in this model, they will because every minute and every effort is charged. This dynamic is the reason that some suggest the cost of drug development is approaching $1.5 billion/compound. The CROs will manage to your specifications and expectations; it is up to sponsors to ensure that the work gets done as contracted, and they locate newer approaches to drive greater costs and efficiencies. Does anyone have any metrics or successes to share indicating that this model reduces costs or compresses timelines?

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