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# Are strategic partnerships the winning model for outsourcing?

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A University of Cambridge report assessing the preferred relationship type between pharma and contract research organisations (CROs), showed strategic partnerships will continue as the primary collaboration model.

The study produced by the University of Cambridge has indicated that pharmaceutical companies are increasingly leaning away from one-time transactions with contract research organisations (CRO), to preferred providers and multi-year strategic partnerships.

Using survey data, the research identified that 25 percent of outsourced projects are contracted to transactional service providers, 50 percent are conducted with preferred providers and the remaining 25 percent are managed through strategic partnerships.

Transactional arrangements are one-time, often repeated deals used by pharmaceutical companies in collaboration with CROs, mainly on a project-by-project basis.

In a strategic partnership, CROs are partners working to achieve shared objectives rather than simply acting as a service provider. CROs offer services such as drug protocol development, site and investigator selection, patient recruitment, data collection and management, monitoring and biostatistical analysis. They decide which of their project managers, clinical research associates, scientists, data managers and clinical trial associates will liaise with the pharmaceutical company on the chosen project.

Strategic partnerships can accelerate a drug’s ability to reach market in months compared to transactional outsourcing. This efficiency is vital for drug development, a notoriously lengthy and costly process. For instance, in the US it takes on average 10 to 15 years and over $2.5 billion to develop and manufacture one drug. Most R&D costs are a result of the drug discovery and development process. CROs, which have grown into a multi-billion-dollar industry are mostly utilised in clinical trials. To limit the loss of capital invested into projects, new drugs must get to market fast. Extra time taken during development reduces the time a drug has market exclusivity. Findings from the research disclosed that for each day a clinical trial is delayed, a pharmaceutical company can incur costs between$600,000 and \$8 million.

Sustained benefits for the CRO includes being involved in the pharma company’s future development plans. The study pointed out that this working relationship reduces start-up time by providing a team with an optimal mix of knowledge and experience. A CRO can help support better long-term capacity and resource management, enabling the organisation to be proactive when planning future actions.

Since strategic partnerships occur over several years, feedback, learning and continuous development across clinical trials can be fostered. Planning also allows clinical trials to reduce in duration through assessment of drug development priorities and requirements. The study also showed that supply chain efficiency can benefit from these long-term relationships.

The report identified that clinical development is accomplished using time and materials (T&M) contracts or fixed-price contracts. T&M contracts do not offer financial incentives to lower costs or a study’s duration. On the other hand, fixed-price contracts do prompt CROs to complete trials more quickly, yet they are not flexible under circumstances where changes to the trial are necessary. Thus, outsourcing development to CROs has become a popular cost-effective solution.

A considerable concern for CROs is the lack of transparency related to a pharma company’s pipeline potential. For a CRO, this clarity is often seen as necessary for handling operations. The study revealed that while transparency can be helpful in some instances, strategic partnerships can effectively reduce trial duration when they know a company’s pipeline potential. This knowledge is only valuable when the CRO’s actions differ to the pharma company’s projected pipeline potential.

In order to improve productivity, new digital technologies that allow remote clinical trials to take place and different formats of clinical trials (such as adaptive, basket, and umbrella trials) are becoming more common. New therapeutics moving to the forefront of the industry’s awareness (like cell and gene therapy) require flexibility. Thus, these adaptive and innovative systems are incompatible with the high and fixed economical funding structures utilised in transactional arrangements.

Ultimately, most existing industry alliances could benefit from strategic partnerships. However, transactional arrangements still hold value, particularly when benefits of commitment are limited in projects that do not require a high degree of foresight and dialogue and the likelihood of a trial’s duration being reduced is not great.

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