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The Benefits of Outsourcing R&D Processes to CROs

As a leading contract research organization (CRO), BioAgilytix helps companies around the world with research and development, leveraging expertise in cell-based assays, immunogenicity, biomarkers and pharmacokinetics. We perform assay development and validation as well as sample analysis, lot release testing and ongoing data surveillance after drug products are introduced to market. Committed to helping reduce drug development timelines and costs, we are not alone in this growing industry. In fact, our work represents the larger-scale trend of pharma companies outsourcing R&D to CROs specializing in state-of-the-art technologies and expertise.

The Contract Research Market: Unparalleled Growth

Contract Research Organizations (CRO) are companies that provide clinical research support to the pharmaceutical, biotech and medical industries on a contract basis. CROs are hired to offer research support and conduct clinical trials to safely and efficiently bring life-saving drugs and vaccines to market.

The CRO industry has been evolving over several decades. In the mid-20th century, it took shape with companies that provided basic animal experimentation services. Contract research companies in the 1970s and 1980s expanded into clinical trials as regulatory frameworks emerged. There are now over 1,000 CROs with a select few serving the global market.

In 2019, Objective Capital Partners estimated the global CRO market to be valued at about $30 billion, with opportunities for further outsourcing.1 According to Clearwater International’s report the same year, the global CRO market was predicted to rise to $45 billion by 2022, with a compound annual growth rate accelerating to 12%.

Why Pharma Companies Are Turning to CROs

From research to final drug approval, it can take years to bring a drug product to market. Developing just one new medicine costs about $2.6 billion on average; that includes the cost of failures. Given that just 12% of new drug candidates in clinical trials are ultimately approved by the U.S. Food and Drug Administration (FDA), the risk is high.3 Drug developers are turning to contract research organizations to:

  • Reduce Expenditures: Outsourcing is essentially a risk reduction strategy. Pharmaceutical companies have seen a significant decline in profits in recent years. From reducing or eliminating the need to hire research staff, invest in in-house infrastructure for R&D and manufacturing, and manage an uncertain success potential, working with a CRO has numerous advantages. It can increase success rates and accelerate drug discovery and development, potentially leading to higher profits.
  • Handle Increasingly Complex Drugs and Clinical Trials: Advancements in cell and gene therapies, antibody drug conjugates, products that use cytotoxic compounds, and in vitro and in vivo processing methods have made drug development more complex. CROs are helping make up for the lack of innovation in pharma. Many of them are continuously developing and improving technologies to provide sample analysis, assay validation and lot release testing prior to manufacturing with a commitment to the highest performance standards, accuracy, and efficiency.
  • Reduce Time to Market: CROs already have the skills and infrastructure to provide critical services at a higher level of efficiency. They can modify drug candidates in real-time based on the data collected during clinical studies. Shortened lead times allow pharmaceutical businesses to see a return on their products much sooner, as a range of complexities are managed at every stage of development by an organization built on services that address these.

R&D Outsourcing Business Models

A company that outsources R&D services may utilize a task-based model. This Fee-for-Service approach involves paying for a specific service, such as managing and overseeing clinical trials, screening compounds, synthesizing a reference compound, or analyzing a set of samples. Any required task is completed at an agreed-upon price.

The Full-Time Equivalent (FTE) model is also used. Suited for more complex projects where clients require flexibility across multiple projects to maximize efficiency, it is when a sponsor company essentially hires a team of technical personnel at the CRO. The customer also pays for all materials and other project expenses, which helps minimize the complexities of the contract.

Newer business models are evolving as pharma companies and CROs are increasingly entering strategic partnerships and alliances. Typically, pharma companies oversee the early stages of R&D and then they collaborate with a CRO to further development through clinical trials. Both organizations may ultimately have jointly owned intellectual property rights, work as joint ventures, or create spin-off companies. Fee structures vary from FTE payments to milestone and royalty payments. Biopharmaceutical companies have increasingly turned to partnerships with CROs, biotech startups, and academia.

Outsourcing Strategy

Acquiring a technology vendor is certainly one option available to pharma companies. Outsourcing at the preclinical R&D stage can be quite lucrative, especially if a pharma company chooses to buy-in molecules at a later stage of development, rather than risking an uncertain outcome. But outsourcing doesn’t come without risks. Managing the outsourcing process can become so complex it offsets other cost reductions, while a dissolution of internal R&D teams can weaken a company’s knowledgebase.

It is therefore important to consider how to choose the right partner. A CRO with a track record of success, a compatible business model, and that has measurable performance indicators in place is worth considering. Being advanced from a technological and innovative perspective doesn’t hurt either.

R&D marketplaces have emerged to streamline pharmaceutical research outsourcing. This important trend is evident in research marketplaces such as Here, pharma sponsors can connect with CROs and other organizations, such as biotech startups and academic institutions, by searching for specific service providers. They can use a marketplace platform to manage transactions, projects, and payment schedules. Thus, the outsourcing process is simplified and some key hurdles to partnering with R&D organizations are overcome.

CRO Support Improves Pharma R&D

R&D outsourcing has indeed become a global phenomenon that is here to stay. Pharma companies and CROs have joined forces to leverage their greatest capabilities, speed innovation and drug development, and address pressing concerns such as COVID-19.

At BioAgilytix, we support our partners’ bioanalytical needs from discovery to pre-clinical/clinical development while managing the manufacturing process and conducting post-market surveillance. We offer a wide range of capabilities to support large molecule drug development, clinical testing, and data analysis. Contact us to learn more and/or start working with our team.

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