The Recession and CROs

The Clinical Research Organizations (CROs) industry is challenged. Not only is it always difficult to differentiate against the competition without you lowering your prices but clinical research talent costs are increasing (Try to find a good feasibility or business development professional, it's hard ??). On top of that, the Recession we are all expecting has already influenced the biotech market, slowing down investments and making them more budget-constrained.

Considering this landscape, my observations for the past few months is that CRO senior management is looking for ways to optimize their business. The tricky part is how to cut costs without losing your competitive advantage.

In such circumstances, what most senior leaders do is look at the PnL and try to minimize the pre-award investments and mainly the so-called non-billable hours. As much as pre-award costs might sound unnecessary, they are also essential because they are what drives the CRO sales-machine.?

Pre-award costs usually come from all business development activities of a CRO, as well as the processes around submitting an RFP and preparing for the bid defense meeting. Anything prior to closing the contract. Some of these activities are inevitable like I mentioned before, but some of them are just too expensive. Still, the most expensive activities are the ones that require manual labour. Especially, if you are using your best experts for things that require time but at the same time are not related to high skills - like manual data research.?

A lot of CROs have solved this by opening feasibility and info access teams in places where labour is not so expensive. Yet, this manpower is still very specific and requires professional experience to know where and what to search for. Sometimes people might cost you less but then they will require more time to find the right and accurate information and without it how are you going to make an accurate recruitment projection??

With increased competition among CROs you don’t have the luxury to have “crappy” proposals. Latest standards in the space demand a short (10-15 pages max) proposal to the point covering all essential aspects that can make or break a clinical trial (glad to tell you more about it if you are interested so DM me). To achieve that you can’t rely on an inexperienced professional who can only google information without knowing which information is true, how to assess that and what it actually means for the clinical trial.?

You need to trust a real expert that knows how to translate the clinical trial protocol into challenges and opportunities and an action plan with a clear budget that attracts sponsor’s attention and brings you closer to the contract. Many CROs managed to attract these experts. Yet, these experts spend half of their time on manual research or between tools to find the information they need and run their analysis on the clinical research landscape.?

To give you a better understanding of the amount of time these experts can spend on manual work I will use an example with how much time it takes to assess the Standard of Care status quo in different countries. On average a feasibility expert in a top 10 CRO spends 7.5 hours per RFP in manual research and back and forth emails to gather this information for approximately 10 countries and this usually demands 5 business days of engagement of their focus as well as partly the focus of their local colleagues assisting with local insights. This means that if you have worked on 50 RFPs the last year as a CRO, your feasibility experts have spent as much as 375 unbillable hours on just getting a better understanding of the local treatment options, where they can find eligible patients and at what stage do they become eligible (which is essential for all good country selection).?

And this is just the Standard of Care…

Can this be optimized and how??

I guess some companies will choose to automate this process with the help of 3rd party tools (let me know if this is your path and I can share my observations in a DM). Others will try to organize their internal processes better. One way or another, CROs will be challenged to navigate their resources better if they want to be competitive and provide best value to their clients and Recession will make it a “must have” thing.?

Though, I might sound negative, I actually think this is a great opportunity for the smart and agile CROs to stand out. In reality no one knows when and if a Recession will hit us and how and what that would mean for the business. Who the people who think they know it all, I would strongly suggest reading Nassim Taleb’s book: Black Swan :) I personally think every successful business should have a North Star metric around providing real value to their customers and the best businesses in times of crisis are just more focused and creative about how to achieve that.?

P.S. These are just thoughts based on my experience working with CROs for the last few years. I welcome anyone with different observations or confirmation of what I mentioned above to message me or comment as the idea of this article is to share ideas and raise awareness. Thank you!