Outsourcing Today and Tomorrow

March 1, 2011
Tim Denman

Applied Clinical Trials

As the name suggests, the Kenneth Getz and Daniel Perlman’s hosted session covered the “Past, Present, and Future of Clinical Trial Outsourcing.”

The speakers discussed the roots of outsourcing in the industry and how it evolved over time from a capacity approach to one that is much more competency based. Getz agreed to speak with Applied Clinical Trials about the session.

Past

In the 1970s and 1980s the industry saw GMP, GLP, and ultimately GCP as an opportunity to begin outsourcing as long as they complied with the regulations. Sponsors were looking for companies to handle the grunt work, especially study monitoring. The budding outsourcing industry was very much a capacity model driven by cost.

The capacity-based model dominated. Ten to 15 years ago a fair amount of responsibility was given to the CRO to provide capacity for a specific task, but as the amount of work outsourced continued to grow, CROs were given the responsibility to manage a full-set of functional activities.

In the last decade responsibilities have shifted further—companies have tried to drive efficiencies in practice.

As a result there is a huge amount of redundancies in oversight—a lot of companies are shadowing everything that the CRO is doing and have the same headcount as the CRO. In response, the model has begun to be challenged.

Present

As a philosophy the industry has shifted from an attempt to control rising costs to one where development speed and efficiency creates the driver of outsourcing. No longer is only the “grunt” work being outsourced, but rather management functions as well. Many in the industry will argue, however, that outsourcing is still a capacity-based enterprise.

Outsourcing is in a transitional phase; sponsors are reducing their internal management in an attempt to limit redundancies with their outsourcing partners. Some CROs and sponsors are operating under a committee form of management.

Future

One major trend the speakers discussed is vertical integration across the R&D continuum. The speakers have seen sponsors looking to enter a more functional based-relationship earlier in R&D: Phase 1, and preclinical. Look for the trend to continue.

In addition, companies are looking to outsource a whole swath of options that were not originally part of the outsourcing model (i.e., clinical supplies, central labs, and medical and technical services).

Some of the largest CROs are managing huge portfolios of projects. The speakers ask: How much capacity can they bring to the table? What role will the smaller CROs play? Will they act as general contractors? Will we have an outsourcing of outsourcing situation?

Every sponsor is approaching outsourcing in a different way. High levels of customization makes it too hard to manage—CROs may ultimately experiment with new business models. Networks of CROs could form as a way to keep pace with the volume.

The future is uncertain at this point, but one thing is sure: outsourcing is here to stay and is continually-evolving.