Managing CRO Selection
In the March 2001 issue of this magazine, Anthony DeStefano from Procter & Gamble raised some
important issues around outsourcing early stage discovery and development activities (Contract Pharma, March 2001, “Early Phase Outsourcing,” pp. 20-26; www.contractpharma.com/ mar011.htm). The selection of partners that outsourcing necessitates is a demanding activity and, as Mr. DeStefano related, a successful development team will most probably include not just a single partner but rather a group of specialist companies, individuals and even institutes.
Despite the difficulties and new challenges this approach to R&D presents, data suggests that more and more companies—large and small—are implementing outsourcing programs as part of a strategy to accelerate the discovery process, control development costs, exploit profitable niche markets and minimize time to market.
This article discusses the move towards outsourcing at this early stage, presents an outline of some recently introduced resources to aid partner selection, and discusses the emergence of a new class of ?intermediary? company that works between the client and sponsor organisations.
The Trend Towards Outsourcing
“Contracting out” or “outsourcing” of chemical scaleup and, more particularly, bulk manufacturing has always been an integral part of pharmaceutical industry activities, but outsourcing of biology is a more recent phenomenon. This is because the more mature industrial chemical industry was already using contract providers, a service that then became available for the younger pharmaceutical industry. The expense of investing in and maintaining chemical plant means that it must be fully utilized in order to maintain profitability; its use by a number of clients has obvious cost-saving elements. In the past, there existed neither the requirement nor the services necessary to consider outsourcing biological studies.
This changed in 1955, when the tragedy of thalidomide revealed the importance of adverse toxicology and transformed the public policy surrounding drug safety, and was furthered by the introduction in 1975 of Good Laboratory Practice (GLP). Since these two events, the pharmaceutical industry has accepted outsourcing preclinical safety studies as an integral and essential part of their overall strategy. This can be similarly applied to the clinical work that is performed to supply proof of safety and efficacy of new medicines.
Outsourcing is now an essential element in the strategy of pharmaceutical companies. Far from being solely the province of large company strategy, outsourcing is used intensively by small companies aiming to adopt modern techniques in a flexible and competitive environment. Outsourcing can be taken to mean more than just contractual R&D, and can involve university and industrial collaborations. In the widest sense, outsourcing can range from contract R&D to acquisition, with a spectrum of joint ventures and research collaborations in between. Arrangements between parties can stretch from preferred provider contractual relationships, through to equity investments alongside research collaborations. For the purposes of this article, we?ll narrow our definition of outsourcing to the
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contractual relationship between technology provider and client. This may involve a research or a development contract, however, the intellectual property in this definition remains with the sponsor, with payment based on completion of the sponsored work and not related to the ultimate success of the project.
The ache typical technology provider in this regard is the contract research organisation (CRO), with some reporters differentiating the services provided by such organisations—predominantly in the toxicological and clinical areas of pharmaceutical R&D—from the services of the contract
pharmaceutical manufacturers (CPMs) or contract manufacturing organizations (CMOs). Within the scope of this article, the definition of CRO shall be taken to include the role of the CPM or CMO.
Rapid Growth
In a recent report, outsourcing in the pharmaceutical industry was estimated as running at about 30% of overall R&D spend, and rising (figures from Deutsche Banc Alex. Brown, Equity Research, Pharmaceutical Outsourcing 1999). Given that pharmaceutical R&D is estimated to run at more than $50 billion for the year 2000-1, this amounts to some $15 billion of expenditure annually. The overall outsourcing market is expected to grow significantly over time to perhaps 50% of pharmaceutical R&D (Source: Deutsche Banc). In some areas such as outsourcing of chemistry-related functions the figure has recently been rising at a compound annual rate of 40-50%. Given the huge amounts of money spent on outsourcing it is perhaps surprising that more attention is not given to the procedures of selection.
The market outsourcing of toxicology and clinical functions is divided between a relatively small group of major players, as shown in Figure 1. 迅速的发展
在最近的报道中，制药工业的外包被认为维持在全部R&D成本的30％，并上升（数据来源于Deutsche Banc Alex. Brown, Equity Research, Pharmaceutical Outsourcing 1999).制药工业的R&D在2000～2001年持续在超过500亿美元这等于每年150亿的开销，外包市场被期望随时间增长到制药D&D的50％（资料来源：Deutsche Banc)。在某些领域如化学相关功能的外包数字预计将以每年40－50％的比例增长，花费在外包上的开销如此巨大，可让人惊讶的是很少有人关注到选择的方法。
毒理和临床的外包市场被分开在相关小集团，如图1所示
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Figure 1: Service providers and market share for toxicology and clinical R&D (data from Deutsche Banc Alex. Brown, Equity Research, Pharmaceutical Outsourcing 1999)
This rather oligopolistic market representation should not disguise the fact that there is huge diversity amongst the smaller organisations not shown on the chart, and indeed, in the somewhat older manufacturing function, the split is much wider among a larger number of companies (Figure 2).
相当的市场垄断并没有遮盖实事，在小组织中有很大的差异没有体现在表中。实施上在老的制造业
角色中，大多数公司存在很大的不同（图2）
Figure 2: Service providers and market share for pharmaceutical manufacture (data from Deutsche Banc Alex. Brown, Equity Research, Pharmaceutical Outsourcing 1999)
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In clinical and toxicological evaluation, many (though not all) of the tasks have similar skill
requirements, and the generic nature of the processes involved tends to favor the agglomeration into larger business units. In chemical manufacture, there is a greater degree of specialization and a greater importance of specialized machinery and plant required to operate in different synthetic routes or in the manufacture of different formulations. Where chemical synthesis is less intensive in
machinery and plant, in earlier stages of the development process (and even in research), the market is again split amongst a smaller number of players (Figure 3). However, it is also true that this segment of the outsourcing market is less mature than chemical manufacturing; this may also be a factor in the number of companies represented.
在临床和毒理学评价中，大多数任务的技能要求相同，倾向于大的集团
Figure 3 Contract chemical synthesis organizations (data from Deutsche Banc Alex. Brown, Equity Research, Pharmaceutical Outsourcing 1999)
The Buying of R&D
Management of outsourcing is a much more complex process than that of internal R&D. While the selling of R&D is a well-advanced process, the buying is not. Many companies incorrectly regard this as a normal extension of their in-house efforts with little training being given to the R&D people who manage it. Alternatively, they consider outsourcing as part of the purchasing function. The process of ?buying? R&D can be divided into the following segments:
外包的管理是内部R&D更复杂的问题。二者选一，他们认为外包作为够买功能的一部分，买R&D可以分成下面几步。
? The identification of potential partners 潜在伙伴的调查 ? Selection of a preferred partner 选择首选合作伙伴 ? Negotiation of a contract 合同商谈 ? Management of the work 工作管理 ? Reporting of results 结果报告
Identification of potential partners is itself a complex process, with more than 1,000 companies in the business of offering contract pharmaceutical services.
潜在伙伴的调查是个复杂的过程，大约1000多个公司提供合同制药服务。
Reflecting the complexity involved, certain of the larger CROs are increasingly offering a wider menu of services, in an effort to capture ?one-stop-shop? outsourcing. However, the risk for the buyer in
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