Guest column

‘No one ever gets fired for hiring a Top 10 CRO.’ Why?

By Matthew Barrows, senior business consultant

- Last updated on GMT

(Image: Getty/dangrytsku)
(Image: Getty/dangrytsku)
It’s a phrase we’ve all heard a thousand times – often from clients explaining why they didn’t go with your business as they’ve opted for the assumed ‘safe bet’ of a global leader.

But I think it’s time to reset the status quo. Maybe it’s time to start asking why? Why would a client partner with a top 10 contract research organization (CRO) instead of picking a smaller business that could be better suited to their needs? Why aren’t smaller CROs being considered more often as a serious alternative?

The question was initially inspired by a statistic I saw in an article from Boris Reznik. He’s the chairman of mid-sized CRO Biorasi and claimed that up to a third​ of all clinically active trials are seriously behind schedule.

That’s a crazily high figure.

Sure, some​ of those delays will be caused by uncontrollable factors and would have been present regardless of CRO partner, but I believe that by going down a different route than the traditional ‘safe option’ when it comes to large-scale CROs, some of these problems could be avoided and everyone could benefit.

I think it’s easy to think of all the pharmaceutical trials in the world in the shape of a pyramid, or a triangle divided into, for the sake of argument, three sections.

1

The top section, the smallest in terms of surface area, would be the smallest trials. That means that need the least resources, manpower, and investment to complete. Then, as you move down the pyramid, the size of the trial increases, as does the amount of resources needed to execute it. Eventually, you’re left with the bottom section, which accounts for huge global trials that only a small number of companies have the infrastructure to carry out.

That’s not to say that the trials at the bottom are more-or-less important than those at the top: all three sections are of equal importance to the market and the pyramid. You could argue that the top section, the point, is the most important … But that’s going to lead us into a much more triangle-centric conversation than I was hoping to have here, so we’ll leave that there.

Using that analogy only groups trials into three categories, but it works to illustrate the point. Now, imagine another triangle, this time representing CROs. At the top are the smaller companies and as you move down they grow until you’re left with the likes of IQVIA in the third section.

2

Again, this is crude; it means categorizing all the CRO companies in the world into 3. In reality, there’s much more overlap but again – it illustrates the point I’m making, so we’ll stick with it for now.

When you’re choosing a partner for anything, it makes sense to choose someone who is similar to you in order to find a match. If it’s a boy or girlfriend, you should have similar interests to a degree. If it’s a doubles partner in tennis, you’d want someone on the same level ability-wise as you, or it’s not really going to work.

You might think that you’d like to partner with Serena Williams or Roger Federer, but when it comes to playing together it’s not going to work if you’ve just picked up a racquet. There’s too much of a gulf between you. 

Selecting a CRO partner should be no different. If you imagine the two pyramids side by side, then when it comes to volume or surface area, the top sections are dwarfed by huge sections at the bottom.

3

So, why would a company with a smaller trial, sitting at the top of the pyramid, choose to forego the corresponding sections in CROs and voluntarily​ be swallowed up by a top 10 giant? Anyone can see that it’s a mismatch. Wouldn’t it make sense to be partnered with someone at the same level, who understands your problems and can spend the time, effort and resources with you that your trial deserves?

In business, any company prioritizes their biggest accounts. They get special treatment. If a client is responsible for 20% of your annual turnover, then you’re going to pay them an awful lot more attention than the much smaller client who accounts for .2% of turnover.

That’s not a bad thing – it makes perfect sense – but when a smaller pharma company or trial is being handed to a giant like Syneos or Parexel, they’re choosing​ to be a lower priority. 

It might feel like partnering with a smaller CRO is a risk because your trial is so important, but in actual fact if you’re choosing to be 10% of a companies’ revenue for this month, quarter or year instead of 1% then you’ve just multiplied the importance of your trial in their ​view by 10. Surely that’s something that everyone would choose? 

In conclusion, I don’t want to sound as though I’m bashing global giants here. I’m not. They’re that size for a reason – from being outstanding. As a consultant who works across the whole market, I’m exposed to their excellence every day. 

It’s just that I’m also exposed to frustrations from those working in smaller CRO businesses who are asking the question I’ve posed in the title. Ultimately, I’d love this to be a conversation, and to hear your thoughts on this topic.

Should smaller companies get more of a look in, or am I totally barking up the wrong tree? 

Matthew Barrows is a senior business consultant specializing in the CRO industry for Charlton Morris, which specializes in the placement of mid- to senior-level professionals across the life science industry.

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