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The Challenges of Building an Effective Structure for Sponsor-CRO Partnership

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White Paper 1 The Challenges of Building an Effective Structure for Sponsor-CRO Partnership Introduction The growth of contract research organizations (CROs) as an industry is inevitable. When the global economy is thriving, life science companies are inclined to develop more products and hire CROs to complement in-house work. When the economy is in a slump as it is today, those companies still hire CROs, but for a different reason: to help cut overhead costs. Studies confirm the CRO industry's growth. Among pharmaceutical companies, more than 65 percent of sponsors participating in a 2008 survey said they use CROs in clinical trials. 1 Over the past decade, the annual growth for drug sponsor spending for CRO services has outpaced annual increases in global spending in new drug development, 13.4 percent versus 9.1 percent, according to a 2010 research by the Tufts Center for the Study of Drug Development. 2 Not only are pharmaceutical companies increasingly outsourcing clinical trials, there is also a growing trend toward hiring foreign CROs and conducting clinical trials offshore. Sponsors are attracted to "offshoring" outside of North America and Western Europe for a number of reasons, including: availability of human resources and technical skills, cost advantages, and the availability of "naïve populations," which refer to people who have not been diagnosed or treated for particular conditions. The latter is important in reducing the number of variables affecting a clinical trial. Among the most popular places for offshore clinical trials are the so-called BRIC countries, known for their large populations and equally large market potential: Brazil, Russia, India, and China. 3 Whether a clinical trial is being outsourced locally or offshore, it is likely that the use of CROs in clinical research will continue to grow. Given this trend, the relationship between a sponsor and a CRO has never been more critical to the overall success of the pharmaceutical industry and yet the sponsor- CRO collaboration is fraught with challenges. How can both parties turn a business relationship into an effective and successful partnership? How can this partnership help reduce the time and cost of getting their product to market? We will explore these questions and consider some strategies. Common Issues Facing Sponsor-CRO Relationship The sponsor-CRO relationship is meant to increase efficiency, in terms of cost and time, for both parties. Sponsors save time and money by utilizing the CROs' staffing resources and expertise, which are readily available at relatively lower costs. CROs increase efficiency and generate more revenues by maximizing their overhead costs. For example, a CRO may use the same staff to support multiple clinical trials for different sponsors in the same region.

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