Slide 1: Outsourcing Relationships and their Evolving Impact on Clinical Trial Performance
Outsourcing Relationships and their Evolving Impact on Clinical Trial Performance Ken Getz, MBA Director, Sponsored Research Program, Associate Professor CSDD, Tufts University Medical School Page 1 // ©2014 ©2013 Veeva Systems VEEVA CONFIDENTIAL www.veeva.com www.veeva.com
Slide 2: Agenda
Agenda • Overview of the current outsourcing landscape • Relationship improvement opportunities • Anticipating the impact of new directions in outsourcing
Slide 3: Global Spending on Contract R&D Services
Global Spending on Contract R&D Services (2012) $33 Total exceeding $110 Billion $US in Billions including ‘consulting’ and $24 contract commercial segments $15 $12 Chemistry, Clinical Non-Clinical Basic Research Manufacturing and Controls Source: Tufts CSDD
Slide 4: Demand for Contract Clinical Services
Demand for Contract Clinical Services 2003 2005 2007 2009 2011 2013e Annualized (Billions USD) Growth Total Global Development $33.6 $41.5 $49.6 $54.8 $63.2 $69.7 7.6% Spending Total Spending on Contract Clinical $4.9 $6.4 $8.5 $10.1 $12.9 $13.7 14.1% Services* *Note: Represents ‘NET’ CRO revenue --
Slide 5: Impact of Transactional Outsourcing on 'Development Speed'
Impact of Transactional Outsourcing on ‘Development Speed’ Tufts CSDD Analysis of sponsor data on 83 NDAs and BLAs (2005) Impact of CRO Usage • ‘High’ CRO usage projects were Protocol Ready to FPFV* 20% Faster submitted more than 30 days Protocol Ready to Study 15% Faster closer to the projected sub
Slide 6: Impact of Transactional Outsourcing on Performance 'Quality'
Impact of Transactional Outsourcing on Performance ‘Quality’ Tufts CSDD Analysis of sponsor data on 83 NDAs and BLAs (2005) – No statistically significant differences on measures of performance quality with one exception. – At the conclusion of a project, databases tend to be unlocked more times on
Slide 7: From Transactional Relationships to Alliances
From Transactional Relationships to Alliances Transactional Relationships Integrated Clinical Research Alliances Ad-Hoc Formalized Capacity-based Virtual/Competency-based Reactive, project task outsourcing Planned, portfolio outsourcing Shadow headcount, sponsor SOPs Lean operation, integrated/coord
Slide 8: Tracking the Transition
Tracking the Transition Proportion of Top 30 Pharma Companies in at least One FSP/Multi- FSP/Integrated Alliance 87% 63% 47% 2004 2008 2012 Source: CenterWatch, 2013 8
Slide 9: Early Measures of Integrated Alliance Impact
Early Measures of Integrated Alliance Impact • Tufts CSDD 2009 study (N=116 Full Service vs. N=89 FSP/Alliance) • Significant start-up cycle time reduction • Significantly lower CRO staff turnover rates • Pfizer (2010) • $20 million net annual savings from consolidating management of 150 to 17 prefe
Slide 10: Early Measures: Average Number of Sponsor FTEs Assigned per Project
Early Measures: Average Number of Sponsor FTEs Assigned per Project 33 12 Transactional Relationships Strategic/Integrated Alliances Source: Parexel, 2011
Slide 11: A More Complete and Mixed Picture Emerging…
A More Complete and Mixed Picture Emerging… 2012 Avoca Group Study – 22% of sponsors have terminated integrated alliances – 16% report no cost savings realized – 17% report no cycle time reductions 2012 Booz & Company Study based on interviews with senior executives: – Misalignment between outsourci
Slide 12: Vantage Partners 2012 Sponsor Survey (81 Companies)
Vantage Partners 2012 Sponsor Survey (81 Companies) • 65% of companies report using fewer than 5 CROs; up from 30% in 2007 • 60% of sponsors in established alliances report that their outsourcing relationships are a more effective way to manage costs vs. competitive bidding But… • 30% report that al
Slide 13: Avoca Quality Consortium 2013
Avoca Quality Consortium 2013 • Areas of high relationship Satisfaction with Relationship dissatisfaction Quality and Effectiveness Sponsors CROs – Oversight of third party 70% vendors – Poor communication of 45% requirements and expectations 17% – Poor communication and inefficient conflict 2% reso
Slide 14: Tufts CSDD 2012 Study on Change Orders
Tufts CSDD 2012 Study on Change Orders Transactional Relationships Integrated Alliances (Average Number per Study) (Average Number per Study) 5.3 4.1 2.3 2.4 2.5 2.2 1.1 1.1 Phase I Phase II Phase III Phase IV Phase I Phase II Phase III Phase IV Source: Tufts CSDD, 2012
Slide 15: Lessons Learned
Lessons Learned Cultural Baggage • Lack of trust and willingness to transfer responsibility • Unchanged mindset of CRO as commodity service provider Poorly Structured • Unclear and unrealistic expectations Relationship • Poor alignment of policies and operating procedures • Poorly defined and deline
Slide 16: Risk-Sharing Collaboration Inefficiencies
Risk-Sharing Collaboration Inefficiencies Interrupted Uninterrupted All 91.5 86.5 82.0 74.9 Months 70.2 66.0 17.0 15.8 16.4 Clinical Phase* Approval Phase** Total Phase*** * p=0.0131; ** p=0.4147; ***p=0.0116 Source: Tufts CSDD 2013
Slide 17: Customization and the Margin Squeeze
Customization and the Margin Squeeze Functional Area Activities/ Proportion Proportion Primary Tasks Keeping Outsourcing Relationship In-house Models Used Design & Planning 80% 20% Niche Site Operations Selection 30% 70% Full, FSP, Alliance Contracts & 40% 60% Full, FSP, Alliance Budgets Start-Up 20
Slide 18: A Lopsided Landscape
A Lopsided Landscape Type of Relationship 15 Largest Midsize/Niche CROs CROs Transactional (full, niche) services 29% 59% Functional service provider 33% 19% (FSP)/Multi-FSP services Integrated alliance services 39% 22% Source: CenterWatch (N= 40 CRO companies); December 2011
Slide 19: Anticipating Landscape Change
Anticipating Landscape Change Small CROs Mid-Sized CROs Major CROs • Focus on small • Mixed strategies: focus • Aggressive pursuit of sponsors relying on on transactional market share transactional market or enter • Declining margins; higher outsourcing integrated relationship fixed costs market • D
Slide 20: Active Unique Investigators Filing Form 1572s World Wide
Active Unique Investigators Filing Form 1572s World Wide 27,751 27,861 27,924 25,558 14,553 10,215 1992 1996 2000 2004 2008 2012 Source: FDA’s Bioresearch Monitoring Information System File (BMIS)
Slide 21: Key Cost and Cycle Time Driver: Site Performance
Key Cost and Cycle Time Driver: Site Performance (N= 15,965 sites participating in 153 global phase II and III clinical trials) Well Exceed Fail to Enroll a Enrollment Targets Single Patient 13% 11% Meet Enrollment Under Enroll Targets 37% 39% Source: Tufts CSDD, 2011 21
Slide 22: Doubling the Time to Complete Enrollment
Doubling the Time to Complete Enrollment Increase in Planned Study 2012 Screen to Duration to Reach Target Completion Rates Enrollment Overall 56% 94% Cardiovascular 59% 99% CNS 61% 116% Endocrine/Metabolic 41% 113% Oncology 78% 71% Respiratory 59% 95% Source: Tufts CSDD, 2012
Slide 23: Clinical Trial Process Inefficiencies
Clinical Trial Process Inefficiencies Phase II/III Programs Coefficient of Cycle Time Variances Study Design and Approval .8 Site Identification .9 Pre-Visit to Contract/Budget Sent to Site 1.1 Contract/Budget Sent to Site to Contract Execution 1.0 Contract Execution to Site Initiation 1.2 Site Init
Slide 24: Major CRO Strategies - Short-Term
Major CRO Strategies - Short-Term • More rapid adoption of technology solutions and practices • Drive higher levels of coordination and operating control • Improve access to investigative sites and study volunteers • Reduction in operating complexity • Fewer countries • Smaller and concentrated numb
Slide 25: Assistance Reducing Protocol Complexity
Assistance Reducing Protocol Complexity Typical Phase III Protocol 2002 2012 Total Number of Endpoints 7 13 Total Number of Procedures 106 167 Total Number of Eligibility Criteria 31 50 Total Number of Countries 11 34 Total Number of Investigative sites 124 196 Total Number of Patients Randomized 72
Slide 26: Innovate to Add Value and Advantage
Innovate to Add Value and Advantage Investigative Site Patient E-Clinical Protocol Design Performance Recruitment and Solutions and Feasibility Solutions Retention Covance’s Medidata Quintile’s Digital Icon’s ICONIK Xcellerate Solutions’ Patient Unit methodology Designer Parexel’s Parexel Icon’s Fir
Slide 27: Integrating Real-World Data Elements
Integrating Real-World Data Elements • Electronic Health Records • Claims-data • Payer data • Patient reported outcomes and perceptions data • Socioeconomic, Psychographic and demographic data • Environmental data • Digital and Social Media data • Mobile Health applications data • Operating data 27
Slide 28: Longer-Term Landscape Changes
Longer-Term Landscape Changes • Changing CRO-Site relationships • Acquisitions • End-run to major health care provider settings • New entrants from major life sciences solutions and services companies serving massive health systems (e.g., Cerner, Siemens, Philips) • New relationships with patient ad
Slide 29: Open Innovation-Driving Drug Development
Open Innovation-Driving Drug Development InBound Outbound Areas of Target Identification and Clinical project management and operations Focus Validation Study Conduct Lead Identification and Data collection, management and analysis Optimization Post-approval project management and Preclinical Testin
Slide 30: Q&A and Thank You!
Q&A and Thank You! Ken Getz, Director of Sponsored Research and Associate Professor CSDD, Tufts University School of Medicine 617-636-3487 Kenneth.getz@tufts.edu