Sponsors overlooking mid-tier CROs in post-marketing
Predictions that mid-tier contract research organisations (CRO) would struggle as sponsors turned to top players for scale and niche providers for specialist work look to have been overstated. However, the trend has now been identified in analysis of demand for post-marketing services.
“Large CROs are clearly ahead in Phase IV as their scale fits very well with this type of work”, Kevin Olson, president of ISR Reports, told Outsourcing-Pharma following a survey of sponsors’ post-marketing activities.
Scale helped the top five CROs account for close to 60% of service providers used by respondents over the past 18 months. With specialists taking their fair share, possibly because one-third of respondents prefer them for risk management, large CRO gains came at the expense of the mid-tier.
Respondents were also more satisfied with the performance of large and specialist CROs than mid-tier players. In general satisfaction with biopharm outsourcing has increased over the past decade, Olson said, but in post-marketing mid-tier CROs lag a little behind their smaller and larger rivals.
Winning business
Sponsors are still hesitant to outsource post-marketing work, Olson said, with the exception of Phase IV non-interventional trials. In recent years biopharm has overcome its conservatism to outsource work it previously did in-house, but this attitude shift is still taking place in the post-marketing sector.
“Safety is the last domino in the chain to fall”, Olson said. Sponsors are more willing to outsource post-marketing safety activities when they have a long-term relationship with the CRO. The breadth of services offered by larger CROs gives them more opportunities to win the trust of sponsors.
Having experience and a “body of work” is even more important than a prior relationship though and this gives post-marketing a high barrier to entry. Buying an established player is a way of overcoming the barrier.
In June David Windley, equity analyst at Jefferies and Company, said: “Many players have already built out specialised Phase IV capabilities but additional tuck-in acquisitions wouldn't be a surprise.”
