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September 24, 2012
The One-Stop CRO
C&E News has a good articlehttp://cen.acs.org/articles/90/i39/One-Stop-Shops-Emerge-Drug.html out on the so-called "one-stop shop" contract research organizations in pharma - these are the Covances and WuXis of the world, who can take on all sorts of preclinical (and clinical) jobs for you under one umbrella.
The old debate over one-stop shopping has, however, become more nuanced in the current pharmaceutical industry environment. Service firms and their customers agree that much of the decision making comes down to where to outsource workhorse chemistry and where to outsource frontline science. Sources agree that a market still exists for boutique CROs that focus on one node along the discovery/development continuum. And some drug firms say they are working with more than one full-service vendor, negating the supposed advantage of one-stop shopping.
There's more of this sort of thing around than ever, of course, but the merits of the whole idea are still being debated. There's no questions that these companies can extend the reach of an organization that doesn't have all these specialities itself, but that doesn't mean that you can't mess things up, either.
Not every drug firm is scaling down internal research. Sonia Pawlak, manager of strategic outsourcing in chemical development at Gilead Sciences, says drug companies with fully developed R&D operations will likely not see much advantage in working with a one-stop-shop contractor. . .Geographical proximity to a supplier is important to Gilead, Pawlak adds, questioning whether linking research and manurfacturing assets across different continents saves the customer time.
I'm used to looking at these companies from the buying end. When you consider the whole CRO world from the other direction, though, you see a vision of de-risked pharma. These people are going to get paid, whether the preclinical program works out or not, whether the clinical trials work or not, whether the eventual drug is approved or not. It's a contract business.
But they're also never going to get paid more than what is in that contract - they will share in no windfalls, get pieces of no blockbusters. So eventually, you end up with two halves of the whole drug R&D business: a drug company that does little or no outsourcing (along with the small R&D discovery companies that outsource everything they can) are in the part that takes the big risks and goes for the big victories, while the CROs are the part that takes on (comparatively) no risk in exchange for a smaller guaranteed payout.
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