Sponsor trial spending surge will coincide with supplier streamlining

Drug industry spending on outsourced clinical trials will increase during the next five years; however, sponsors are likely to streamline their supplier bases and prioritize efficient, tech-savvy CROs, according to a new analysis.

Analysts at management consultancy McKinsey & Co. made the prediction in a survey this week, explaining that while outsourcing spend could rise by 10% to 30% over the next two to five years, the focus will be on productivity.

“Given the growing importance of the pharma R&D–supplier relationship, the timing may be right for pharmaceutical companies and suppliers to seek opportunities to streamline their relationships and foster more effective collaborations,” the analysts wrote.

Tech-savvy CROs

This demand for more effective collaborations is likely to favor CROs that can leverage technology-driven solutions and financial models focused on efficiency and effectiveness, according to the analysis.

“For example, transitioning from traditional time- or volume-based pricing to outcome-based models can align supplier incentives with pharma priorities for accelerated timelines and tighter cost management.

“Although implementing the robust performance metrics and monitoring systems required for this shift would require an up-front investment of time and resources, the resulting alignment of goals could benefit both parties in the long term.”

CROs that can adapt their data management practices to customer needs are also likely to do well, according to McKinsey.

“To unlock the full potential of their shared data, pharma companies and their key suppliers should establish joint data governance protocols and invest in integrated data platforms that can store and extract insights from multiple data types, such as clinical, genomic, and real-world data,” the analysts wrote.

Strategic deals

Biopharma companies are likely to seek closer, strategic relationships, according to the McKinsey analysts, who cited Icon’s recently established accord with Leo Pharma as an example.

“The relationship between pharmaceutical R&D organizations and their suppliers is shifting from transactional, performance-based interactions to strategic, innovation-driven partnerships.

“To manage these relationships effectively, pharma companies can establish joint governance structures, implement collaborative innovation programs, and, at times, consider equity investments or exclusivity agreements in critical areas,” they wrote.

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