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CRO Leadership Awards 2017

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Strategic Partnerships: What Companies Want, What They Are Getting, And What It Means L A K S H M I S U N D A R among smaller CROs, technical providers, and aca- demic groups. A little more than one-third of clinical outsourc- ing spend goes to strategic partners. The number of sponsors in such relationships is on the rise. Today, 62 percent of sponsors are in strategic partnerships, an increase of 27 percent over 2011. The data also shows a shift in the number of partner- ships individual sponsors are in. While the first wave of strategic partnerships was dominated by sponsors funneling clinical development work to a few CROs, companies have since brought on additional providers. This trend is reflected in a 79 percent jump in the num- ber of sponsors with four or more strategic partners. The number of providers with four or more strategic partners has risen since 2011, too. Taken together, the responses show a continued, inten- sifying commitment to outsourcing and the strategic partnership model in particular. Small and specialty bio- pharma companies, which made up one-third of the sponsors polled, are outsourcing to retain lean business models while working to deliver clinical data capable of attracting a partner, an acquirer, or investors. Larger com- panies are increasingly looking to such small biopharma firms for pipeline candidates and are themselves out- sourcing to reduce fixed costs while accessing expertise. WHAT COMPANIES WANT FROM PARTNERSHIPS These general motivations for outsourcing are reflect- ed in the reasons sponsors give for entering into stra- esponses to the 2011 survey are testa- ment to the then-nascent nature of stra- tegic partnerships. The survey revealed significant disconnects in sponsor and provider perceptions of the dynamics and strengths of strategic partnerships. Approximately half of sponsors said strategic partnerships were failing to meet their expectations in priority areas such as the quality of deliverables, sparing of internal resources, and cost savings. Providers viewed their relationships more favorably, although as many as one-third of respon- dents expressed dissatisfaction in some key areas. Given the long-term nature and complexity of strate- gic partnerships, the presence of problems and discon- nects in the early years of relationships was broadly unsurprising. The questions now are whether sponsors and CROs have worked through these challenges and remain committed to strategic partnerships. To answer these and other questions, Avoca polled 130 profession- als from 79 individual sponsor companies and 84 pro- fessionals from 41 providers about their experiences and expectations for the future. DRIVERS OF INCREASED OUTSOURCING The challenges sponsors faced in 2011 have not put them off outsourcing. In 2011, respondents said 65 percent of their clinical development spend went to providers. Today, the proportion is 69 percent. Large and midsize CROs are capturing 50 cents of every $1 spent with providers, with the rest being shared R Sponsors and CROs have entered into more and more strategic partnerships during the past decade to achieve a range of shared and distinct goals. Yet, while many of the partnerships were unveiled with media fanfare, there is a shortage of analyses of what both sides want out of relationships, the extent to which their expectations are being met, and what this means for the future of clinical outsourcing. To address this gap, The Avoca Group followed our 2011 survey on strategic partnerships with a new canvassing of sponsors and providers. PARTNERSHIPS RESEARCH By L. Sundar STRATEGIC PARTNERSHIPS: WHAT COMPANIES WANT, WHAT THEY ARE GETTING, AND WHAT IT MEANS LIFESCIENCELEADER.COM THE CRO LEADERSHIP AWARDS 2017 20

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