Over the last years the pharma industry has been restructuring its research and development activities, facing constant pressure from patent expiry, generic competition, and declining revenues. Contract Research Organizations (CROs) are responding to these changes by constantly improving their service offerings to obtain market share.
Mike Jagielski, President & CEO of KCR, talks about the most pressing challenges in the CRO industry and what kind of business model will support innovation. Watch the interview from PCT 2015 and read more of Mike’s comments below.
How do you envision the future relationship of a CRO with pharma and biopharma companies to achieve mutual R&D targets?
Mike Jagielski (MJ): It is interesting that you talk of mutual R&D targets as I think it is not that easy to fully align targets between pharma and the CRO world due to the differences in our business models.
Pharma and biotech companies are responsible for developing new medicines for patients. Our task as a CRO is to support a certain part in the drug development process. We are here to make this process easier, faster and provide access to patients and investigators. The intellectual property developed and invested in by pharma is the molecule, the biologics; contrary to the CRO whose intellectual property investments focus on operations capabilities as well as investigator and patient access.
So there is a difference and this narrows down the discussion about mutual alignment of R&D targets. The CRO industry is a service sector and I think we are well advised to perceive ourselves in such a way. We service pharma and biotech to help them achieve their targets. Our focus has to be on improving these services.
What kind of a CRO-specific business model will support innovation?
MJ: When I was asked a similar question two years ago, I answered that a business model based on billable hours would not allow the most innovative approaches. Yes – billable hours to some extent make the CRO business model somewhat transparent and understandable, but it does not really reflect the value you truly add.
Let me give you an example: if you price a project in the conventional way: 2 million Euros, Phase 2, 2 years duration. If you were a pharma or biotech company, how much worth would it add to be able to complete the project 5 months earlier? Of course this is a difficult question to answer, as many projects do not succeed in delivering the expected results. However, it is still worth asking. The question could also be put the other way: what would you say, if the project was 6 months late?
I can see two paths; and they should be followed both at the same time. Somehow the time component should be influencing the service fees. Again an example – a project is executed over 2 years, the CRO who finds a way to do it faster and with less resources, should be able to charge higher fees as a return of the CRO investment in efficiency.
The second path could be the introduction of a general CRO infrastructure fee. We are used to paying for license costs and hosting by software companies who in turn reinvest the money to make the software better. All benefit from this. The CRO now provides for its customers a Quality Management System that aligns processes with various software capabilities like EDC, CTMS, eTMF, for example. Delivery quality and efficiency depends on how all of these components play together.
Having a good Quality Management System (QMS) and technology solution in place is expensive, but it adds to transparency, as it reflects the access to the environment a CRO has and what kind of license fee it uses, which depends on the capabilities the CRO is able to offer. In such a situation you would not only be competing on rates. I am not sure the environment is quite ready for this.
What are, in your eyes, the most important developments KCR underwent in 2015? How did the company respond to the innovation trend?
MJ: Despite all the efforts and developments in the process and technology area, I think that moving the KCR head office to Berlin has been the most critical step for us as a company in 2015. The move has sent a signal to our clients and employees that KCR has been developing fast to be a very competitive small/mid-size CRO. We understand that process, technology and culture have to continuously progress for the company to be able to compete at the highest level. Technology projects are simple necessities for the service sector. We have to be fully digital in all areas of delivery in order to stay competitive with larger CROs. I think we have made a few smart decisions in this regard which are beneficial to our customers.
What will be your challenge for 2016? Has the company entered or developed any new areas?
MJ: The answer is simple. We are going to continue our development path as a full service CRO provider that can align execution excellence and technology capabilities with the agility of a smaller organization. We see this is not only valuable as an offering for biotech and small/mid-size pharma, we see this also as a need for large pharma for targeted sourcing of projects with special operations requirements. The industry sometimes tends to forget that one of the main reasons why the CRO sector developed was a need for flexibility, which was not that easy to implement “in-house”. It is ironic that CROs today are often perceived as non-flexible, but this is just beside the point.
We want to be seen as a knowledge service provider for biotech and pharma. We will continue to improve each of our focus areas to deliver on the highest possible standard, whilst looking for innovative ways to add new technologies to the process execution. In addition, we will have to focus on developing concepts to get closer to patients - a challenge that KCR and the whole CRO industry has already accepted, I think.
Do you see any other future trends?
MJ: Despite the usual remote monitoring, risk based monitoring (RBM), direct patient engagement, I think we have to pay attention to the role of the Clinical Trial Administrator (CTA). The CTA role is going through a major transformation, from a paper TMF organizer to a systems specialist and process manager as we enter more and more into the eTMF space. Maybe this will be comparable to the transformation Data Management went through with the adaptation of EDC, IWRS and eDiaries. We have to watch out and manage it accordingly. This development has a huge value creating potential.
KCR is a Contract Research Organization (CRO) providing strategic clinical development solutions for the pharmaceutical, biotechnology and medical device industries in Europe, Israel and the U.S. More than 300 professionals support clients with full-service capabilities across our three main service areas: Trial Execution (TE), Functional Service Provision (FS) and Late Phase (LP). Focusing on knowledge, quality and innovation, KCR delivers high value solutions customized to clients' needs. Headquartered in Berlin, Germany, KCR operates across 19 countries in Europe as well as the U.S. For more information, visit www.kcrcro.com.
KCR: We see human behind every number.
Associate Director, PR & Marketing
mobile: (+48) 605 053 164