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CRO Leadership Awards 2014

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OUTSOURCING INSIGHTS REPORT LIFESCIENCELEADER.COM THE CRO LEADERSHIP AWARDS 2014 18 K A T E H A M M E K E Director of Marketing Intelligence, Nice Insight s strategic partnerships become a greater focus for both sponsors and CROs, there are some concerns that these types of relationships will nega- tively impact the industry by causing a greater imbalance in an already per- ceived to be unbalanced playing field. These worries tend to come from, and impact, the smaller players in the mar- ket. Smaller clients of big CROs worry their projects will receive significantly less attention than the CROs' strategic partnerships. Small CROs worry there won't be a place for them in the industry, because they do not have as broad an offering and are unable to provide sup- port across the entire development cycle. The first concern comes in the form of long-term contracts from Big Pharma committing hundreds of millions of dollars and requiring significant labor investments on behalf of the CRO. These deals may cause alarm to midsize and emerging companies with a single study or smaller commitment. Yet, Nice Insight data continues to illustrate that CROs with a solid customer perception score from Big Pharma or Big Biotech have similarly strong scores across the other, smaller buyer groups. Having reviewed the scores for several of the well-known nesses can quickly and easily expand expertise and grow their reach by part- nering with a CRO. And since they tend to be smaller and less rigid than the indus- try giants, the advantages of a strategic partnership may come to fruition more quickly. The second concern has been fueled by a handful of high-profile mergers between CROs. Consolidation is nothing new to the outsourcing landscape, but as big com- panies grow even bigger, will they begin to crowd smaller CROs from the market entirely? Nice Insight research suggests this is unlikely. With only one in ten spon- sors agreeing with the statement, "My company's pipeline is strong," it makes sense that over half are increasing their discovery efforts, and roughly one-third of discovery phase spending is on out- sourced work, which is good news for small CROs focused on discovery services. While these fears have legitimate rea- sons for surfacing, it is important to recognize that a global, full-service CRO has the capability to successfully handle projects of different scales simultane- ously. And that just because they are in a strategic partnership with a large pharmaceutical company, it is still within the company's best interest to perform tactical jobs to the same high standards that made the company an ideal strate- gic partner. Further, it should be recog- nized that many tactical projects do not require the same level or focus as long- term, multifaceted projects. This knowl- edge can put emerging and midsize companies at ease with the knowledge that their project will still receive the attention it deserves — and may be reaffirmed by checking the CRO's quality score as perceived by buyers from various categories. L CRO giants involved in multiple strategic partnerships (ICON, PPD, and Quintiles), it is clear that the larger the percent- age of respondents who have worked with the company, the higher the cus- tomer perception score — from emerging to midsize to big sponsor companies. Which means this concern comes more from speculation from businesses that merely know the company rather than actual client dissatisfaction. The research also shows there is both value and need for three types of out- sourcing relationships: tactical, preferred providers, and strategic partnerships. Looking at the data from respondents who work with CROs, we find projects are allocated to each type of relation- ship, but with some variation by com- pany type. In light of the big contracts just mentioned, it is no surprise that Big Pharma has the lowest percentage of projects going to tactical providers at 23 percent. However, the difference goes toward preferred providers (47 percent) rather than strategic partnerships (30 percent). Big Biotechs have the most even allocation of projects, with approxi- mately one-third of their business going to each type of relationship. Biotechs also exhibited the strongest interest in form- ing strategic partnerships, with 50 per- cent of respondents affirming interest. Emerging and midsize companies cur- rently allocate the smallest percentage of projects to strategic partnerships (27 percent), but revealed similar interest levels to Big Pharma in forming strate- gic partnerships — 43 percent are inter- ested, as compared to 46 percent of Big Pharma. There are key advantages to emerging and midsize biopharma com- panies forming strategic partnerships, especially with global CROs. These busi- Building Strategic Partnerships With CROs — Opportunities Exist For Businesses Of All Sizes On Both Ends Of The Deal By K. Hammeke BUILDING STRATEGIC PARTNERSHIPS WITH CROs 0 3 1 4 _ C R O _ R e p o r t s _ O I _ L R . i n d d 1 0314_CRO_Reports_OI_LR.indd 1 2 / 2 0 / 2 0 1 4 9 : 2 5 : 3 0 A M 2/20/2014 9:25:30 AM

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