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OUTSOURCING INSIGHTS OUTSOURCING INSIGHTS OUTSOURCING INSIGHTS 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. 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. Survey Methodology: The Nice Insight Pharmaceutical and Biotechnology Survey is deployed to 40,000 outsourcing-facing pharmaceutical and biotechnology executives on a quarterly basis [Q4 2011 sample size 2,619]. The survey is composed of 1,000+ questions and randomly presents ~30 questions to each respondent in order to collect baseline information with respect to customer awareness and customer perceptions of 300 companies that service the drug development cycle. More than 1,200 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, Accessibility, Regulatory Compliance, Pricing, Productivity, and Reliability, which are ranked by our respondents to determine the weighting applied to the overall score. If you want to learn more about the report or how to participate, please contact Victor Coker, director of business intelligence at Nice Insight, by sending an email to niceinsight.survey@thatsnice.com. 14 LifeScienceLeader.com The CRO Leadership Awards 2012