Prospects of Outsourcing Clinical Research Projects

A STUDY OF OUTSOURCING CLINICAL RESEARCH PROJECTS TO ASIAN COUNTRIES (INDIA): ITS GROWTH AND FUTURE PROSPECTS

ABSTRACT

Outsourcing is increasingly becoming a trend within the clinical research industry. The pharmaceutical and biotechnological spend on outsourcing was estimated to be $48 million in the year 2008 and is expected to increase to $48 million by 2010 [Bloch et al, 2006].
The concept of outsourcing for the development and global studies on new drugs has become widely accepted in the pharmaceutical industry due to its cost and uncertainty. India is going to be the most preferred location for contract pharma research and development due to its huge treatment naïve population, human resources, technical skills, adoption/amendment/implementation of rules/laws by regulatory authorities, and changing economic environment. But still ‘miles to go’ to fulfil the pre-requisites to ensure India’s success. In spite of all the pitfalls, the country is ambitious and optimist to attract multinational pharmaceutical companies to conduct their clinical trials in India.

The research methodology is done mixing the quantitative and qualitative methods as explained by Creswell (Creswell, J. W., 2003). The questionnaires designed for collecting data had open-and-closed ended questions to obtain both quantitative and qualitative data for the analysis. An extensive literature review of existing trend of outsourcing clinical research project was carried out.

Six interviews were conducted; two interviews to gain an understanding of the process and the activities outsourced by the pharmaceutical industry, benefits and risks involve in outsourcing, why Indian CRO are considered better to outsource the clinical research projects and four interviews to evaluate the strategies employed by the CRO in order to improve the relationship with key clients.

The primary conclusion from this study is that outsourcing is a necessity within the clinical research industry. The study concluded that the many pharmaceuticals from UK are outsourcing their clinical research mainly to Asian countries for fast, cost effective and quality results. The study concluded that the relationship between the client and the CRO is the key element for the future of outsourcing clinical research projects.

Chapter 1- Introduction and Background

1 INTRODUCTION

“Outsourcing allows companies to reduce costs, benefits consumers with lower cost goods and services, and causes economic expansion that reduces unemployment, and increases productivity and job creation.” [Elder, 2009]

According to the American heritage dictionary outsourcing is defined as the “procurement of services or products from an outside supplier or manufacturer in order to cut costs” [Amiti, 2004]

This chapter aims to understand the rationale behind this project which is on understanding the process of outsourcing within the clinical research industry.

The cost of drug development has been consistently on the rise, which has led to the pharmaceutical industry looking for new methods for conducting clinical research [Jayshree, 2005]. These companies have also been trying to develop strategies in order to identify and focus on their core competencies [McIvor, 2000]. This has now been achieved by the process of outsourcing.

Contract research was initially limited to pre-clinical studies and clinical trial services; however it now covers a varied range of activities. [Jayshree, 2005] Outsourcing therefore has become a customary business strategy. [Editors, May 2005]. As time progresses a number of activities are outsourced to service providers such as Contract Research Organisations (CRO). It has been estimated that there are 1200 organisations which are involved in clinical research; these include pharmaceutical and biotechnological in-house clinical management, site management organisations (SMOs), academic and medical centres, private research sites and contract research organisations. These organisations aid in completion of the projects within the stipulated timelines and thereby increase the profit margins of the pharmaceutical companies.

In the US, 60% of the clinical research activities were outsourced to CROs, in the year 2001. The CRO market has been growing rapidly ($1 billion in 1992 to $8 billion in 2002). This growth is evident not only in terms of revenue generation; but also in the number of patients being recruited in clinical trials (7 million in 1992 to 20 million in 2001). Therefore there is an increasing demand in the pharmaceutical industry for outsourcing activities to these service providers. [Jayshree, 2005]

In order to meet the project requirements and timelines the pharmaceutical companies attempt to select the best service provider from several CROs. There is an intense competition between these organisations. I.1 illustrates the results of a survey conducted by Contract Pharma in 2005 wherein the respondents have graded the various characteristics they expect from a CRO in terms of very important and / or important.

1.2 RESEARCH TITLE

A study of outsourcing clinical research project to Asian countries (India), its growth & future prospects

1.3 RESEARCH BACKGROUND

As time progresses a number of activities are outsourced to service providers such as Contract Research Organisations (CRO). It has been estimated that there are 1200 organisations which are involved in clinical research; these include pharmaceutical and biotechnological in-house clinical management, site management organisations (SMOs), academic and medical centres, private research sites and contract research organisations. These organisations aid in completion of the projects within the stipulated timelines and thereby increase the profit margins of the pharmaceutical companies.

In the US, 60% of the clinical research activities were outsourced to CROs, in the year 2001. The CRO market has been growing rapidly ($1 billion in 1992 to $8 billion in 2002). This growth is evident not only in terms of revenue generation; but also in the number of patients being recruited in clinical trials (7 million in 1992 to 20 million in 2001). Therefore there is an increasing demand in the pharmaceutical industry for outsourcing activities to these service providers. [Jayshree, 2005]

Clinical trials are designed to help us find out how to give a new treatment safely and effectively to people. With escalating pressure on research and development (R&D) cost-containment across the global pharmaceutical industry, there is increased focus on reducing the cost of clinical development. The additional problem of delayed development is also affecting new drug introductions, losing incremental revenues. This dual challenge of accelerating clinical development and reducing costs has forced major pharma companies to look at alternative destinations for sourcing patients for their global studies. Exploration on these lines guides pharma industry to take interest in the countries like Latin America, Eastern Europe and Asia. Amongst Asian countries, India stands out prominently due to its huge treatment-naïve patient’s population, English speaking doctors and a large pharmaceutical presence that has dominated the world market due to cheap generics. As the multinational drug companies in the United States and Western Europe look east to outsource research and clinical trial activities, countries such as India will gain proficiency and expertise, assisting its move from generic and speciality contract manufacturing to innovative drug discovery and development in its own right, setting the stage for increased global competition. [Unknown, website:http://www.cyfuture.com/history-ofoutsourcing.htm].

India has emerged as a strong base for clinical trials in recent times. Due to the multitude of benefits it offers, the country is fast growing as a centre of conducting clinical trials for many international companies. India, with its huge patient base, low cost advantage, completion of cilia trial on time, improving infrastructure, and with a strong government support is witnessing a double digit growth in its clinical trial market. All major pharmaceutical companies and Clinical Research Organisation (CROs) have already started conducting their clinical trials in India, and with improving infrastructure, industry friendly regulations and trained workforce, the growth is only likely to increase in future.

1.4 RATIONALE FOR CHOSEN TOPIC

I decided to do my research on outsourcing because my personal interest and also clinical research outsourcing became the most important factor in the economic growth of many developing countries. I strongly believe that this paper provide some good literature along with some organizational evidences which will be beneficial to other pharmaceutical industry to outsource their clinical trials to India.

Further as I have chosen my area as a clinical research outsourcing from European countries to many developing Asian countries along with the risk involvement in it so I will be collecting theories and information from pharmaceutical companies which will provide some evidence to the topic. In addition to the theories, I will be interviewing the mangers of pharmaceutical companies to find out their opinion and on that basis I will further review my topic.

Also my personal interest in this topic is that I have worked in the clinical research industry for around 3.5 years. I know many of the processes and whole flow of the study completion. I have worked in CRO for top pharma companies like Pfizer and GlaxoSmithKline so I know all the insights of clinical research its importance, criticality and confidentiality. Also by working on this thesis I will get to know UK pharmaceutical market and how they carry out their clinical research. It will definitely help me in my job search as I want to work in clinical data management field in UK pharma or CRO.

1.5 RESEARCH QUESTIONS:

They are a means to structure, focus and direct the dissertation and to reconcile the objectives with the primary research.

(I need your inputs regarding how to reference this portion of work as I have taken it from your notes)

Research is an organised and systematic way of finding answers to questions. Questions are central to research. If there is no question, then the answer is of no use. Research is focused on relevant, useful, and important questions. Without a question, research has no focus, drive, or purpose.

Research questions:-

1) To understand the UK pharmaceutical/clinical research Industry.

2) To define the nature and characteristics of outsourcing

3) What is the importance of Clinical Research industry?

4) What is the relationship between pharmaceutical industry and CR industry?

5) Why outsource clinical research?

6) Why outsource clinical research mainly to Asian countries?

7) What are the effects of outsourcing clinical research on a pharmaceutical industry?

8) How to improve relationship between pharma and CRO in the process of outsourcing?

9) Which elements are most important for relationship between pharma and CRO both now and in future?

10) How to manage performance throughout the outsourcing process to improve its future?

1.6 RESEARCH AIMS AND OBJECTIVES

Outsourcing is a fascinating field which now forms a core component of business within the clinical research industry. This chapter aims to understand the aims and objectives which are intend to be completed during the course of this project.

1.6.1 Aim:

To understand the growth and future prospects in outsourcing of clinical research projects from UK Pharma to Clinical Research Organisation in Asian countries.

This research was conducted in order to understand the process of outsourcing within the clinical research industry. This research is mainly based on pharmaceutical companies in UK and Europe who outsources their most of the clinical trial work to overseas companies mainly in Asian countries .The actual aim of this research is to find out why there is an increase in outsourcing of clinical trials to Asian countries and what are the future prospects for both pharma companies and CRO where the projects are getting outsourced. This research also talks about what benefits the companies have due to outsourcing its clinical trials to developing countries.

1.6.2 Objectives:

The following are the objectives of the research

1. To understand the current scenario of outsourcing within the clinical research industry.

2. Analysis of UK’s Pharmaceutical industries where companies are going for outsourcing

3. What are the various reasons behind outsourcing?

4. Analysis of Clinical Research Organisations in Asian countries were outsourced jobs get done.

5. Overlook on the procedure of outsourcing and the basis on which selection outsource company is being done.

6. To identify the risks and benefits involved in outsourcing from the perspective of a client and service provider.

7. To develop a questionnaire in order to establish the internal views of a leading Pharmaceutical (Client) and CRO (service provider) on outsourcing.

1.7 THE STRUCTURE OF DISSERTATION

This paper consists of following chapters which are,

Dissertation document structure:

Chapter 1: Introduction

In chapter 1, an introduction to outsourcing and clinical research industry was given in order to provide the reader a good background of outsourcing and clinical research industry. The

Chapter also addresses why UK Pharma companies choose CRO in Asian countries (India) for outsourcing and the relationship between them.

Chapter 2: Literature review

This chapter provides background information on the processes of outsourcing as well as gives an overview of outsourcing within the clinical research industry.

Chapter 3: A structured research methodology

A background on the research methodologies, knowledge claims, research strategies, and data collection was given as the first part of this chapter. The implemented research process and methodology for this research study was explained subsequently. The last part of the chapter addressed the validation process and the objectives achieved through the research study.

The author of this thesis selected a research methodology mixing the quantitative and qualitative methods as explained by Creswell (Creswell, J. W., 2003). The questionnaires designed for collecting data had open-and-closed ended questions to obtain both quantitative and qualitative data for the analysis. An extensive literature review of existing trend of outsourcing clinical research project was carried out.

Chapter 4: Company Case

Chapter 5: Data Collection and Analysis of the project

Six interview were conducted from the UK Pharma and CRO in India to gain an understanding of the process and the activities outsourced by the pharmaceutical industry, benefits and risks involve in outsourcing, why Indian CRO are considered better to outsource the clinical research projects and what is the future prospects of outsourcing clinical research by developing good relationship between client and CRO.

Chapter 6: Conclusions and Recommendations

The primary conclusion from this study is that outsourcing is a necessity within in the clinical research industry. The study concluded that the many pharmaceuticals from UK are outsourcing their clinical research to Asian countries for fast, cost effective and quality results. The study also concluded that the relationship between the client and the CRO is the key element for the future of outsourcing clinical research.

CHAPTER 3 RESEARCH METHODOLOGY

3.1 INTRODUCTION

In the previous chapters I have presented the overall background to the topic and also supportive literature to the outsourcing of clinical research along with relationship building in between CRO and pharma. The main aim of this chapter is to outline the research methodology used for this topic. In this chapter we will provide and discuss the content of the research approach towards the topic and designing of it used throughout the study of it.

3.2 RESEARCH PROCESS

This is traditional and highly structured view of research process. This model also provides research as neat and orderly process, with one stage leading logically on to the other. As provided in step 1 research topic can be identified as a result of your course, work, job, interest area or general experience. On the basis of research topic in order to narrow down the research area, research problem is defined which focuses on particular research problem with small enough of investigation. Next step is to tell how exactly the research is to be conducted which is followed by the collection of the data which includes primary and secondary data. After analyzing and interpreting this collected data final report is being written.

3.3 NATURE OF RESEARCH PROBLEM

Conducting research in the real world was a challenge for dissertation due to the lack of a central body/authority to provide information related to pharmaceutical and CRO confidential data regarding outsourcing of clinical research. The followings are some of the key challenges faced during the research process:

3.3.1 Lack of transparency

An effort was made to address some questions through the questionnaires related to the outsourcing of clinical research and its benefits, the risks you face when you outsource processes to the CRO, the key issues that lead to a loss of business from the clients, and the competencies that differentiate the CRO from its competitors. These questions were either not answered or answered with uncertainties by some respondents. The author has to take out the information through indirect ways of addressing the questions over the interviews conducted with some of the Operational managers and employees in person or through phone interviews. This indeed increased the time and effort in the data collection phase in the research process but was overcome with certain limitations.

3.3.2 Inadequate references:

The author had struggled to find good references or documents related to outsourcing clinical research, its future and all the other relevant data was offered either through the common portal or the business department’s sites. The lack of academic case studies on information security, publications, or white papers was a challenge for the extraction of information in the literature review and data analysis.

Despite the above challenges, the objectives of the research as mentioned in Section 1.4 were the pillars of the research methodology and the research process was implemented to achieve them.

3.4 RESEARCH METHOD

Research method tells about the methodologies used for the research topic. The main aim of this method is to discuss and select the appropriate method to achieve the research objectives which also provide the structured and systematic way throughout the process to perform the research.

A Research Method is nothing but a way in which the data is arranged to get desired output. It can also be defines as a systematic and orderly approach to the collection and analysis of data. In any research collected or gathered is always called as samples or data, which is raw, specific, untreated, undigested and therefore largely meaningless. The analysis arranges the data in a meaningful manner and resolves research questions. So it is very important to select a correct analysis method on the correct set of data to get accurate results and outputs for the research problem. There are several different analytical methods, which are commonly used in business and management research works. These methods vary according to the nature and scope of the topic and thesis, the sources of data to be used, the purposes of gathering data, the amount of control in obtaining the data, and assumptions to be made in analyzing the data.

3.5 RESEARCH DESIGN

Research design is a ‘Science of planning procedures for conducting studies so as to get the most valid findings’ (Vogt, 1993, P.196). Research design will give you detailed plan and guide about focus of your research. Research design is a strategic research approach which is adopted to answer the research questions. The research approaches are classified as exploratory, descriptive or analytical research. Exploratory research is generally conducted for the topics where hardly any few or nothing to refer for the researcher in terms of work done by previous researcher. Researcher conducts the exploratory research for three main purposes a) diagnosing a situation, b) Screening alternatives, C) Discovering new ideas.(Zikmund,200). In general exploratory research is meaningful in any kind of situation where there is not a exact understanding in order to proceed with research (malhotra, 2004).

Research conducted for this project was largely exploratory, which involved brand equity research; a research wherein the researcher determines the favorability of a particular brand among its customers [Trochim, W.M.K, 2006].

In order to fulfill the aims and objectives set for this project a schedule of tasks to be completed was drawn up:

1. A comprehensive study of article and reports which dealt with basic outsourcing as a concept.

2. A study of articles and reports related to outsourcing within the clinical research industry to provide an insight into the functioning of pharmaceutical companies.

3. Evaluation of the information gathered so as to compile a literature review.

4. Preparation of questionnaires as tools to obtain the generic information about outsourcing within a leading pharmaceutical company.

5. Selecting relevant interviewees for conducting the interview.

6. Preparation of questionnaires in order to interview key people within the organisation who were responsible for ensuring that deliverables are met in a timely manner.

7. Conducting the interviews

8. Transcription of the responses obtained during the interviews

9. Analysing the responses obtained and generating the results.

10. Conclusions and recommendations from the results obtained.

These tasks required a comprehensive collection of information from various sources. The collection of data for analysis and interpretation was done in two phases:

1. Desk Research

2. Field Research

3.5.1 Desk Research

The desk research comprised a comprehensive and extensive literature review in order to gain a thorough understanding of the industry, outsourcing. This took place during the first four weeks of the project. The reading material covered a range of internet articles and industrial reports. The majority of the articles were found by using internet research. This method of research involved the extensive use of the Internet especially the World Wide Web [Berry, D. M. (2004)]. The search engines used to look for information included Google, Yahoo, MSN, Google Scholar and the UWIC library search hub. Some reports were also provided by the Industry Supervisor.

The articles were read and the information which was relevant to the project aims was reviewed and included in the literature review which forms the second chapter of the thesis. Some of the well known reports such as the Tufts reports and a report by Alison Sahoo, (2006) on Pharmaceutical Outsourcing Strategies did not only provide very good background information but also provided a plethora of information on outsourcing.

Name of report

Kind of information provided

McKinsey Reports

These reports provide comprehensive information on issues such as consolidation, licensing, biotechnology pipeline, outsourcing within the industry etc [McKinsey & company website, accessed on 12 Dec 2009]

Tufts Reports

Strategic information for drug developers, regulator and academic researchers to help improve the quality of pharmaceutical development, review and utilisation [Tufts website, accessed on 15 Dec 2009]

International Biopharmaceutical Association Publications

The publications give information on product updates, news and industry trends, these journals have articles on the current issues related to the industry [IBPA website, accessed on 20 Dec 2009]

William Blair & Company reports

These reports provide information on research providers and high quality growth companies. [William Blair and Company website, accessed on 22 Dec 2009]

International Monetary Fund reports

These reports provide information on high quality research and publish articles by a variety of guests on a number of topics [IMF Staff Papers, accessed on 27 Dec 2009]

3.5.2 Field Research

The research on the subject of outsourcing included the construction of questionnaires and interviewing internal members of a leading CRO in order to fulfil the aim of the project. There are two types of research classified on the basis of type of questioning:

1. Quantitative research

2. Qualitative research

Quantitative research is research which uses a combination of inferential statistics and descriptive statistics as tools to analyze data and draw conclusions. It involves random sampling techniques to enable valid and credible sampling from a particular population.

This kind of market research includes surveys and questionnaires which express a statistically significant result. [Bradburn et. Al. 1988]

Qualitative research, on the other hand, generally precedes the quantitative research. It aids in understanding a problem, setting up a hypothesis and determining the route to be taken for the quantitative research. This type of research is expensive and does not progress as rapidly as its counterpart. The number of respondents in this type of research is few and therefore the results of such a research cannot be extrapolated to the entire population [Malhotra, 2006].

The essential guide to doing research

The research carried out in this study was qualitative in nature and hence did not generate a large amount of statistical information.

It was decided, with the consent of the University and the Industry Supervisors, that the aims and objectives of the project could be fulfilled by interviewing relevant people within the CRO itself.

There were four interviews, in total, which were conducted. Two interviews were conducted from the members which belong to pharmaceutical company and other two were conducted from CRO, which is service provider for this pharmaceutical company.

3.6 Data collection

There are two main types of data collection primary data collection and secondary data collection.

Primary data is the one which can be obtained by researcher directly, by observation or measurement of phenomenon in a real world without any disturbance of third party involvement. (walliman,2005). In every case researcher is answerable for his sources and should be able to argue in defense of quality of his sources.

In secondary data the information is subjected to the source of reference. The main difference between primary and secondary data is, Primary data is originated by researcher for specific purpose of addressing the problem where as secondary data have been already collected for the purpose of other than problem (Malhotra, 2005).

In the data collection process, both questionnaires and interviewing methods were adopted. The interview data were analyzed using the immersion approach (Robson, C., 2002)

The questionnaires were designed to include open ended questions and closed ended questions in order to give the participants the flexibility to add more comments and points and not be restricted to the answers provided for any question (Creswell, J. W., 2003).

3.6.1 Review of secondary resources:

* Related research papers, journals, industrial white papers, and surveys were researched, collected, indexed, and reviewed by the author. The objective of this step was to have a good repository of all journals and conference proceeds addressing the topic of outsourcing, different methods of outsourcing, clinical research industry, pharmaceutical industry , and increase in the outsourcing of CRO projects to developing countries like India , china etc.

* During the course of the research, the author had either read or skimmed through more than 50 journals, whitepapers, conference proceedings, and books. Only 50 references regarded useful to the research were indexed and documented.

3.6.2 Identifying Interviewees:

It was of paramount importance to select the right people to interview from a plethora of people, each skilled in their own field. With the intention of obtaining the maximum amount of information from the interviewees about outsourcing within the clinical research industry, people who were crucial to increasing the business opportunities for the leading pharmaceutical were chosen for these interviews. These people form a bridge between the top pharmaceutical companies and the CRO; hence it was decided that they were the best in the field of outsourcing within the CRO and therefore were selected for the interview. The questionnaires for the interviews were prepared accordingly.

The field research was carried out in two phases:

1. Phase I: Preparation of questionnaires

2. Phase II: Conducting the interviews

Phase I (the preparation of the questionnaire) required the author of this thesis to have an appreciation of the challenges of the industry and the current state of the art with respect to outsourcing in order to be able to target the questions in the most appropriate manner. There were two different questionnaires employed and these were directed at two different business activities that could be outsourced. These were:

1. Questionnaire for members belonging to pharmaceutical company.

2. Questionnaire for members who are part of CRO

Structured interviews:

Two questionnaires (A and B) were created and were sent to Pharmaceutical Company (Pharma) and the CRO (Clinical Research organisation) respectively with specific and direct questions related to the areas of research interest. A preliminary interview with the head of Outsourcing Department in the pharmaceutical company was conducted to explain the purpose of the research and seek his opinion on the questionnaires and their objectives. Some of the heads of the departments did not have the chance to fill questionnaire and requested the author to fill them during their interviews.

Mailed/Online questionnaire

Both questionnaires A & B were sent to the appropriate participants. The participants were invited based on their management involvement and based on their strong background on the outsourcing issues. The questionnaires were sent via email to them and the feedbacks were received through email.

Both questionnaires A and B were developed as an output of this phase with different sets of questions addressed to the two categories of respondents (pharmaceutical company and Clinical Research Organisation). The questionnaires were sent and assistance offered to clarify the questionnaires questions if needed.

The background information was obtained by a comprehensive study of the available literature and that has been reported in Chapter III. This chapter aims to report the results obtained during the interviews which were conducted as part of the research.

3.6.3 Questionnaire for members belonging to pharmaceutical company related to outsourcing

This questionnaire was designed to obtain informat