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BIO DATA POINTS OUTSOURCING INSIGHTS OUTSOURCING INSIGHTS Figure 1: Selected Critical Issues When Selecting A CMO Percent Responding "Very Important" and "Important" By Victor Coker, director of business intelligence, That's Nice LLC Establish a good working relationship Comply with my company's quality standards Effectively handle cross-contamination issues Stick to a schedule 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. 44.4% Protect intellectual property 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. 58.7% 63.5% 63.5% 57.1% Very Important 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 Clients don't build in sufficient time for the project (unrealistic time frames) Clients want to contain cost by doing limited development runs, but still expect successful full scale manufacturing Clients don't communicate with us effectively 2012 2011 2010 Survey Methodology: The 2012 Ninth Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production in the series of annual evaluations by BioPlan Associates, Inc., yields a composite view and trend analysis from 302 responsible individuals at biopharmaceuti- cal manufacturers and contract manufacturing organizations (CMOs) in 29 countries. The methodology also included 185 direct suppliers of materials, services, and equipment to this industry. This year's survey covers such issues as: new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time and assesses differences in the world's major markets in the U.S. and Europe. If you want to learn more about the report, please go to bioplanassociates.com. 8 The CMO Leadership Awards 2012 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. 38.1% 28.6% 28.6% 46% Figure 2: Selected Common Mistakes Biopharmaceutical Sponsors Make With Their CMOs (2010-2012) Percent Responding "Very common" and "Somewhat Common Problem" 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. 30.2% Important 86.1% 92% 82.1% 86.1% 92% 78.6% 86.1% 84% 80.4%