The conclusions are based on an Avoca Group survey in which 89 sponsors – including both Big Pharmas and mid-sized drugmakers - were asked to assess contract research organisation (CRO) performance according to a number of criteria.
The key finding is that sponsor ‘satisfaction levels’ – defined using measures like overall project success, resourcing and regional expertise - are higher for strategic partners than for CROs engaged in more traditional client-vendor relationships.
However, while this suggests strategic CROs are delivering in areas in which they already have expertise, the other key finding – that around 25 per cent of all strategic deals are still scrapped ahead of time – indicates that there are still some improvements to be made.
Jefferies & Company equity analyst David Windley who spoke with the survey group said: “Avoca highlighted that this percentage matched quite closely with the proportion of sponsors who were not satisfied with the achievement of their top five objectives.”
These five objectives are: reduced cost; improved quality; a more efficient use of internal staff; operational expertise; and general process improvement according to Windley who adding that: “Failing to improve on these objectives remains a risk to CRO business stability.”
More deals to come but… smaller
The Avoca survey also looked at the both the type of sponsors that have formed strategic partnerships – predominantly larger companies – and the type of CROs they have selected, which again are the larger research organisations.
This finding coupled with the fact that only 47 per cent of respondents have formed such partnerships so far suggests – according to Windley - that while more strategic deals are likely they are going to be of a smaller scale and involve mid-tier pharmas and smaller CROs.
“The R&D dollars spoken for in already-announced strategic partnerships are likely larger than the dollars that future deals can generate. Plus, it seems likely that midtier CROs will win at a moderately higher rate in the future than they have to date.”