Linked fortunes
If the fortunes of bio/pharmaceutical companies are now closely tied to the macro-environment, then too are the fortunes
of CROs and CMOs. CMO revenues and margins are directly impacted by the declining unit volumes and growing customer demands
in that they help absorb the lower prices being paid by governments and insurers. Providers of preclinical toxicology and
API process-development services have seen their revenues stagnate as more rigorous graduation criteria and decreasing venture-capital
support have reduced the level of early-development activity. In these changing times, CROs and CMOs have two choices: they
can continue their traditional strategies of passively bobbing up and down on the rising and ebbing tides of the industry
or they can seize the opportunity to help bio/pharmaceutical companies deal with their increased exposure to the macro-environment.
Clinical CROs have shown the way on how service providers can help bio/pharmaceutical companies adapt to their new realities.
Although originally just a source of supplemental labor, they have come to set the standards for quality and innovation in
the running of clinical trials. In particular, they have led the way in the use of information technology to revolutionize
the way in which clinical data are collected and analyzed. CRO-driven technology innovation has enabled faster review and
analysis of clinical data, flexible trials designs, and patient-reported data using mobile devices.
Similarly, clinical packagers have been in the forefront of adopting sophisticated packaging and printing and logistics technologies
and practices to reduce the costs of clinical-trial materials while ensuring supplies get to patients in a timely manner.
All of this has enabled clinical research to be conducted faster and more cost-effectively.
CMOs have lagged behind other service segments in identifying technologies and practices that can help bio/pharmaceutical
companies respond to the changing macro environment. In particular, they need to find more flexible and lower cost manufacturing
solutions to address a medical marketplace that is more focused than ever before on managing total expenditures.
The ability and willingness of CROs and CMOs to contribute to the remaking of the bio/pharmaceutical business model, and especially
to the ability of bio/pharmaceutical companies to respond to the macro-environment, is likely to determine their long-term
success.
Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, Twitter@JimPharmSource, info@pharmsource.com
,
http://www.pharmsource.com/.
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