Expected Changes to the Vendor Landscape in 2018

Over the last several decades, contract research organizations (CROs) have become heavily involved in the conduct of clinical trials. Sponsor companies often saw the involvement of CROs as an opportunity to alleviate burdens on their internal teams and staffing, to reduce risk by not investing in full-time employees, and to gain targeted knowledge related to disease areas, trial designs, geographies, and clinical sites. In situations where CROs have acted as true operational and strategic partners with the sponsor, these benefits have usually been realized.

However, the reality is more commonly that relationships between sponsors and CROs are not seamless, and outsourcing to a CRO ends up causing a different slew of complications for the sponsor. These can include duplication of effort, increased decision-making time, failure to identify important issues of trial design or execution, frustrations associated with the management of the high rates of turnover of study staff, and other administrative stressors like contracts and payments associated with any vendor.

Because of this, some of the most “innovative” companies are rethinking their outsourcing models. They are bringing certain functions back in-house and reducing the amount of work out-sourced throughout all phases of clinical trials, from conception to completion.  

Recently at an executive retreat we held a workshop and except for a couple of very large pharmaceutical companies who already conduct their clinical development programs completely in-house, attendees from every other size company were in agreement that if they could, they would shift away from outsourcing their work. The two biggest areas of focus during the discussion that followed pinpointing specific areas of dismay are monitoring and project management of the trials.

In companies of all sizes, managing and overseeing outsourced projects involves dozens of both parallel and sequential activities with significant redundancy between the sponsor and the vendor. There are a million ways things can go wrong, and most sponsor PMs feel a sense of ownership that can never be matched by a vendor who has multiple projects of their own to manage.

One client of ours is moving project management and monitoring in-house because they are spending millions of dollars each year to redo the work of their vendors. Their position in a niche market requires physicians with specific knowledge-something that project managers and monitors from CROs don’t have. Making this shift is a multi-year process, but cloud-based technologies will enable them to do this. They have estimated that, by taking the work in-house, they will save 10% in their development costs the first year, rising to 15% in year two onward.

A second client with a large portfolio has made similar assessments regarding the value of a single, preferred provider. They are embarking on a four-month process to evaluate methods and improve results. Their development leaders have been sharing best practices with companies who wish to shift work in-house, and their consistent advice is to build in-house capabilities with technology and personnel to launch trials and focus any outsourced activities to extract the most value.

While the industry is certainly experiencing a shift towards insourcing, it is unrealistic to think that every company can and will shift to in-house resources to run trials. The constraints on many companies will simply not allow for this. Whether it is due to their smaller size, stage of development or future business goals, many companies will continue to take on the challenges of working with the CRO over investing in a complete change of business model.

There is much to be learned from the companies that have chosen to change their business model towards greater insourcing. Companies that choose not to expand insourcing should still critically examine their relationships with CROs and other vendors and invest in creating long-term strategic relationships built on trust, focusing on strong project management, open communication, and CRO employee retention. At least for the foreseeable future, CROs are here to stay. Their services are attractive, ideally providing near turn-key solutions to major clinical trials challenges, and their presence is strongly engrained in the industry. It will take more than a few innovative companies to change this.

Laurie Halloran, President and CEO of Halloran Consulting Group