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Increasing global competition from generics and a glut of expiring patents have forced many biopharmaceutical and medical device companies to rethink their operational strategies.
Since the 2008 financial crisis knocked the global macroeconomic environment off of its feet, clinical research organizations in biopharmaceutical and medical device enterprises faced significant challenges as they entered into a new operational realm. Investors have scrutinized biopharmaceutical and medical device enterprises to operate more efficiently, strategically, and cost effectively in the new economy. Moreover, increasing global competition from generics and a glut of expiring patents have forced many biopharmaceutical and medical device companies to rethink their operational strategies.
Large biopharmaceutical enterprises have divested from existing R&D models, and have paid top dollar to acquire other companies that offered diversified medical product portfolios in their pipelines. For example, in 2009 Pfizer acquired Wyeth for $68 billion, Merck acquired Schering-Plough for $47 billion, and Roche acquired Genentech for $47 billion. In addition, these companies pursued acquisitions in an attempt to mold into the new economic model, which requires cost efficiency, scalability and medical product portfolio diversification on the bottom line, and geographic expansion on the top line. As a result of changes in strategic directions and acquisitions, the biopharmaceutical industry made job cuts in order to consolidate operations. From 2008 to 2010, the pharmaceutical industry laid off over 157,000 employees. While the number of laid off R&D personnel is not confirmed, it is estimated that approximately 8,200 R&D personnel were laid off around that time period (1).
An unfortunate crux of the outcome of the financial crisis is that remaining staff supported lost resources from job cuts, as labor productivity rose on an annualized rate from 0.6%, 2.9%, and 3.1% from 2008 to 2010, respectively. Others left their organizations to seek further opportunities; in a recent poll, 43% of clinical operations respondents indicated that they left their roles because of too many organizational changes, and 29% needed more challenges in their roles (2). Complications associated with staff turnover involve the loss of intangible value that is affiliated with the process. A research study discovered that staff turnover, particularly in the services sector, results in the cost of over 150% to 200% of a staff's annual salary, (3), and 500% of a staff's annual salary for highly skilled professionals, (4). To elaborate, since the nature of clinical trials is highly dynamic, there is a heavy dependence on human skills, which involves specific areas of study expertise, strategic decision-making capabilities, GCP knowledge, and clinical trial business process experience, which attribute toward the cost impact of staff turnover.
While the clinical trial industry relies heavily on human skills, clinical trial technologies and federal regulations have been changing to address industry challenges. Many cloud-based and IT solutions are emerging; these solutions integrate data from a variety of sources and offer enhanced insights and data visualization capabilities in one place. Furthermore, FDA's new guidance on risk-based and centralized monitoring enables clinical trial organizations to practice novel and efficient monitoring methods. The guidance encourages centralized monitors to undergo statistical training, (5).
With drastic changes in biopharmaceutical and medical device strategic initiatives, reform in federal regulations, and the introduction of novel IT systems, clinical trial personnel need to be prepared to fit into the new clinical trial model.
In the early-mid 2000s, there was a boom in clinical-IT systems and data collection solutions. While these tools offered management some insights, they were not as effective and comprehensive as today's IT solutions. Today's clinical-IT solutions not only integrate data from multiple sources, but offer breakthrough and customizable visualizations, real-time data, and cost efficient resolutions in order to assist clinical teams with decision-making. Many enterprises are releasing system-based to cloud-based clinical-IT solutions.
Some biopharmaceutical companies have gone as far as fully leveraging IT solutions to implement virtual clinical trials. Pfizer, for instance, conducted the first fully virtual clinical trial "REMOTE" in collaboration with the FDA, where patients were consented electronically, medical products were sent directly to patients' homes, and patients were to conduct virtual doctor visits. This breakthrough trial design and platform seemed to have worked except for lagging subject recruitment activities, which depended on social media, (6). While subject recruitment was deemed unsuccessful by some, Pfizer indicated that they will use this model in future trials.
Albeit clinical-IT innovation is exciting, clinical trial personnel are not yet equipped with the appropriate skills to analyze and comprehend IT offerings. In sponsor outsourcing, for instance, data visualization and insight misinterpretation can led to suboptimal decisions. As interviews with a clinical project manager indicated, their group misunderstood a data visualization, which identified enrollment under performance at several sites, and the group, subsequently, spent a significant amount of resources on unnecessary activities. The visualization merely suggested that the site was lagging in subject enrollment, and proper interpretation would have led to enriched decision-making.
With changes in clinical trial analytical technologies and the need to find efficient and cost-effective operating models (as they relate to scalability), come opportunities to outsource many of the clinical trial functions that were previously internalized, such as site payments, data management, biostatistics, PK/PD, and regulatory document/records management functions. From 2009 to 2011, outsourcing expenditures to CROs increased by 6.6%, and in-house R&D expenses associated with internalized clinical operations reduced from 74% to 62% from 2010-2011, (7); this trend is likely to continue in the future. Moreover, some sponsors have formed long-term strategic partnerships with CROs and have integrated their business intelligence/IT capabilities in order to enhance productivity; Roche, for instance, partnered with Quintiles, which recently launched the Infosario platform that offers data integration and visualization solutions. Also, Pfizer formed a strategic partnership with ICON to amplify innovation and reduce operational costs.
While outsourcing has its advantages, the concept presents new challenges for sponsor personnel; outsourcing requires employees to be equipped with advanced skills and capabilities to perform their roles, such as centralized monitoring. Moreover, sponsors have embraced the outsourcing model as well.
Unfortunately many disasters have occurred with the outsourcing model and subsequent reversals to insource due to a lack of advanced employee skill sets. In an interview with a clinical program manager, they mentioned clinical trial quality was unmanageable with its outsourcing model, and that the group resorted to re-insourcing activities, which included site monitoring, resulting in higher costs, duplicative efforts, and lower productivity. This example demonstrates that suddenly changing strategies from outsourcing to insourcing without redesigning outsourced organizational structures to support re-internalization exhibits ruining effects on business productivity and financial sustainability. For sponsors, one of the most important facets in implementing the outsourcing model is to ensure that personnel are properly equipped with skills to operate within this model, including analyzing and interpreting data and overseeing outsourced activities via risk-based and centralized monitoring practices.
Though the outsourcing model is not right for every company, as more enterprises start adopting the model, sponsor clinical operations personnel will need to hold necessary skill sets in order to efficiently oversee and manage CRO clinical trial activities. The new sponsor role is not to conduct day-to-day clinical trial responsibilities, but to be more accountable by making business decisions and enhancing quality management through efficient oversight. Further, with the increasing availability of insights and data visualization solutions, clinical trial personnel will not only need to exhibit clinical research expertise, but also demonstrate statistical, mathematical, business and financial expertise, and strategic decision-making capabilities in order to analyze data, interpret visualizations, and make optimal business decisions to efficiently resolve their dynamic clinical trial situations, accordingly.
While the FDA released detailed guidance on risk-based monitoring, many clinical operations personnel have expressed confusion as to how they are to conduct risk-based monitoring assessments. Part of that bewilderment includes a lack of familiarity with qualitative and quantitative risk assessment techniques. In addition, despite the availability of data integration capabilities, many sponsor IT systems require personnel to perform manual data integrations in order to obtain customized visualizations that fit unprecedented situations. By equipping employees with the appropriate skill sets, clinical operations personnel could fully leverage the benefits of the outsourcing model.
Clinical trials have entered into a new realm. With scrutinizing investor expectations, the amelioration of IT-system capabilities, the introduction of the outsourcing model, globalization, and changing FDA regulations on risk-based and centralized monitoring, existing clinical personnel need to be equipped with business operational/analytical skill sets, and new recruits must exhibit not only clinical, but analytical/statistical capabilities in order to successfully operate in newly-transformed organizational structures that focus on productivity, scalability, and cost savings.
—Moe Alsumidaie, President and Chief Scientific Officer, Annex Clinical
Alsumidaie can be reached at email@example.com, or found online at his website: http://www.annexclinical.com