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Procurement's Billion dollar impact

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By: Sakthi Prasad
Content Manager

calender29 Nov 2017

In collaboration with Harini Sridhar -- Senior Research Analyst and Sulaikha Mohamed -- Research Analyst

Global pharma R&D expenditure is expected to increase 4.5 percent to $177.6 billion in 2017, with U.S. accounting for about $75 billion, according to R&D Magazine.

Patient Recruitment and Retention (PR & R) is an important step in the drug discovery process and about 20 percent of clinical trials are terminated due to things going wrong in this stage.

Recruitment delays in clinical trial range between 11-16 percent across all phases with a typical PR & R cost being 1-15 percent of the trial budget.

Delays in recruiting patients for clinical trial not only affect the drug’s speed-to-market, but also affect prospective patients’ timely access to crucial medicines.

In a mid-to-large sized pharma company, PR & R typically falls within the ambit of procurement organization. Given the importance of this crucial link in the drug discovery process, sourcing teams are tasked with picking the right supplier besides careful budget planning.  In other words, more than $2 billion is riding on the sourcing decision, i.e., picking the right PR & R partner.

Know your Vendors

With more than 40 percent of PR & R being outsourced to CROs, Patient Recruitment Organizations (PROs) and Site Management Organizations (SMOs), supplier selection acts as major criteria in the success of trials within the established timelines.

The suppliers in this space can be categorised as follows:

Vendor Type

Services Offered

Site Recruitment Service Scope/Expertise

Success Rate

Sub-contracting

Example

Contract Research Organization (CRO)

Provides end-to-end clinical services but recruitment is not provided as a standalone service

Medium

Medium

Medium-high

inVentiv Health Clinical (PRG), PRA International (Patient Recruitment Services), PPD, and so on.

Patient Recruitment Organization (PRO)

Main offering is patient recruitment and retention

High

High

Very Low

BBK Worldwide, MMG, RESolutions,Clinical Site Services, and so on.

Site Management Organization (SMO)

Recruitment is not a standalone service, but act as an alternative to PRO

Medium-high

Medium-high

Low

Synexus, Exodon,  Clinlogix, and so on.

Given the complexity involved in choosing the right partner, sourcing managers can make use of Beroe’s proprietary Supplier Identification model as a starting point before setting out to create a long list of suppliers (as part of pre-RFI process).

Example Model Template:

S. No.

Supplier Identification Parameters

Core Competency

Sourcing teams to rank the parameters in the order of importance -- 1 to 8

CRO

PRO

SMO

1

Therapeutic Expertise

M

H

M

1

2

Patient Access and Databases

M

H

H

3

3

Clinical Trial Budget Constraint

H

M

L

5

4

Demographic Scope

M

M

H

2

5

Protocol Design and Development

L

H

M

6

6

Patient Retention

H

H

M

8

7

Site Management & Performance

M

M

H

4

8

Communication with KOL*/ Physicians and Investigators

M

M

H

7

BEROE MODEL OUTPUT

PRO

H -- High (Most Favourable Vendor)
M --Medium (Partially Favourable Vendor)
L -- Low (Least Favourable Vendor)
* Key Opinion Leaders

Based on the above example, if a sourcing team ranks the parameters as per their order of importance, the model says the optimal partner for their upcoming clinical trial would be a PRO. Of course, this is not a final answer as there are many more nuances involved.

Once a procurement team ranks the criteria based on the trial’s priorities, they need to find answers for the following questions that will further help in long-listing the right vendors:


  • What is the spend capacity for the current trial?
  • Do you prefer an end-to-end service or a functional service for the trial?
  • Are you aware of the service gaps based on suppliers’ past performance?
  • Are you aware of the level of qualitative sub-contracting done by the suppliers?

Overall, Beroe’s Supplier Identification model would help sourcing teams to set out in the right direction.

Conclusion:

With the help of the right vendor, sourcing teams can not only increase a drug’s speed-to-market but also help improve their company’s bottom line by weeding out unnecessary costs associated with clinical trial delays. Prioritising the supplier identification criteria would help the sourcing teams to compile an optimal list of suppliers before launching the RFI/RFP process.

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