The vision of Life Science Leader is to be an essential business tool for life science executives. Our content is designed to not only inform readers of best practices, but motivate them to implement those best practices in their own businesses.
Issue link: https://lifescienceleadermag.epubxp.com/i/85321
OUTSOURCING INSIGHTS OUTSOURCING INSIGHTS OUTSOURCING INSIGHTS Affordability received the lowest benchmark average of the key outsourcing drivers, at 69%. However, there was a mod- est increase of one percentage point over the last year. And interestingly, affordability dropped in priority when selecting a CMO from third place in 2011 to fifth in 2012. This change is supported by a trend we continue to see in research results – while price is important to sponsors, it tends not to be among the highest defining factors in selection decisions. At the same time, sponsors indicated that CMOs are improving their ability to provide accurate pricing on projects, which was reflected in an increase from 53% in 2011 to 62% in 2012 for the lowest scoring CMO in our survey. As motivations for outsourcing shift from tactical to strategic, CMOs gain the opportunity to take on a more significant role in drug development. This change was part of what prompted Nice Insight to add a customer perception measure on con- tract manufacturers' ability to innovate. This driver indicates By Victor Coker, director of business intelligence, That's Nice LLC CROs provide independent development services for the pharmaceutical and biotechnology markets. CROs have evolved from offering basic support, to providing a wide range of clinical, central laboratory, and analytical services that meet the present demand of the market and its spon- sors. Currently, smaller CROs are consolidating (as defined by revenue market shares) and, coupled with acquisitions, are expanding and adding new services. As a result, there is a build up in early-stage research segments, creating a downward pull on growth rates and a severely price sensi- tive marketplace. Many management teams within these CROs have simply focused on pricing structure as a primary lever to sustain growth and encourage brand awareness amidst the current constrictive economic conditions. To investigate the validity of this business practice, we reviewed the Brand Index data from the recently released Nice Insight Contract Research and Manufacturing (CRAMS) report. First, we identified the top 10 CROs of which our survey respondents were most familiar — respondents indicated they either know the company well and/or have worked with the company. The companies were as follows (in no particular order): ICON (Prevalere Life Science), Lancaster Laboratories, Millipore, Huntingdon Life Sciences, Nanosyn, Boston Analytical, Covance, EMD Chemicals, West Pharmaceutical Services, and Capsugel. We found that the top 10 companies rated similarly on the perception of pricing; however, this close match in rankings did not transfer over to brand awareness. For example, Lancaster Laboratories and Capsugel aligned closely in pricing, rating 5.5 and 5.8 out of 10, respectively. In terms of awareness, however, 42% of respondents indi- cated they were either familiar with or had worked with Lancaster Laboratories, whereas only 20% indicated the same of Capsugel. the CMO's ability to improve on the sponsor's in-house capa- bilities by using or developing customized solutions. While this measure ranked sixth in priority among the overall respondent group, the CMOs fared well, with the benchmark for innova- tion being 72%. This means that pricing structure alone is not an indica- tor of brand growth or recognition. Most management teams within the CRAMS industry view marketing as simply a support function to sales, instead of a tool to increase awareness among current and potential custom- ers. Understandably, the problem of establishing an ade- quate benchmark for marketing ROI can make it a daunting investment. However, our observations from the Brand Index data indicate that the companies with the highest awareness — and thus the most productive pipelines — are those communicating a differentiated value to the appro- priate target audience. It follows that the ability to leverage the product or services of an organization through targeted marketing could significantly improve lead generation. Since Nice Insight began researching sponsors' preferences and practices in pharmaceutical outsourcing, it has become evident there are two distinct groups of CMOs. The first is the well-established, well-funded, and highly process-driven CMOs within Big Pharma. And the second is "everybody else." This second group tends to articulate their core competency as the reason to engage them on a project, which doesn't necessarily position them strongly for consid- eration. As the contract manufacturing industry continues to compress, it is essential to have a clear understanding of sponsors' needs and build messaging that focuses in on the key drivers for outsourcing. Survey Methodology: The Nice Insight Pharmaceutical and Biotechnology Survey is deployed to outsourcing-facing pharmaceutical and biotechnology executives on an annual basis. The 2012 sample size is 10,036 respondents. The survey comprises 500+ questions and randomly presents ~30 questions to each respondent in order to collect baseline information with respect to customer awareness and customer perceptions on 170 companies that service the drug development cycle. More than 800 marketing communications, including branding, websites, print advertisements, corporate literature, and trade show booths are reviewed by our panel of respondents. Five levels of awareness from "I've never heard of them" to "I've worked with them" factor into the overall customer awareness score. The customer perception score is based on six drivers in outsourcing: Quality, Innovation, Regulatory Track Record, Affordability, Productivity, and Reliability. 28 The CMO Leadership Awards 2012