Ratan Ratnesh, director of clinical outsourcing at Otsuka Pharmaceutical Development and Commercialization, Inc., recently presented at the SCOPE Summit, discussing the considerations and implications of outsourcing, the whole process of which has evolved.
“Ninety percent of CROs are living their Kodak moment,” Ratnesh said, alluding to the film company’s decline after it failed to make the move to digital.
“For context, Kodak developed the digital camera but chose not to market/promote it as they were concerned it would mean losing their film business, which was bringing in significant revenue. Another company then developed and promoted the digital camera and Kodak lost not only their film business but also potential leadership in the digital camera business,” he told us after the conference.
Similarly, Ratnesh said large, global CROs need to be proactive in implementing newer technologies such as risk-based monitoring (RBM), eSource, and eConsent – “rather than waiting for the sponsor to push them towards implementation.”
“These new technologies increase the efficiency of clinical trials and allow them to be more cost-effective; this may also reduce revenue for global CROs as they require less labor, so adoption of them is slower,” he said, noting that the majority of revenue for CROs is generated by professional services, which remains their focus area.
Alternatively, smaller companies with clinical and technological expertise are better positioned for innovation and can market technology without the risk of losing revenue, Ratnesh said. “If you look at recent technological innovations like eConsent, eSource, eScan, etc., they came from smaller companies with that focus,” he added.
Following recent mergers, however, Ratnesh said he believes CROs “now focus on the value of data and technology along with their clinical expertise, but we need to allow some time before we will see any major output from this development.”
“As an industry, we need to be open to new ideas,” he added. “We often don’t try to take operational risks as we are afraid of failure and clinical trials are high-profile and require a large investment.”
The cost of doing business
In 2016, the pharmaceutical industry spent approximately $160bn on research and development. Nearly $70bn of this was spent by the top 10 pharma companies, with outsourced development spend reaching $26 to $30bn, Ratnesh said.
Yet drug development costs approximately $2bn, takes 10 years, and 9 out of 10 drugs fail before making it to market, he explained.
“We can do the best possible job and still expect 90% failure … That’s the cost of doing business for us.”
The combination of inexact science, risk adversity, and large profit margins result in inefficient clinical development programs, Ratnesh explained. “It is an inexact science – no one is an expert in clinical trials,” he added.
“We need to change, we need to adapt … If we don’t change in 10 years some kid in Silicon Valley will change it for us.”