What's AstraZeneca looking for in a CRO?

AstraZeneca ($AZN) is facing down a slim pipeline and a truncated R&D budget, and the pharma giant has wasted no time reaching out to third parties, inking three CRO deals in the past month and change alone. So, what is AZ looking for in potential partners as it doubles down on drug development? We asked Menelas Pangalos, the company's executive vice president for innovative medicines.

Pangalos said in an email that AZ's latest outsourcing deals with Charles River Laboratories ($CRL), WuXi AppTec ($WX) and Pharmaron fall in line with its global strategy: "Partnering with best-in-class medical and scientific institutions and introducing greater flexibility into our operations."

The company seeks partners who are willing to share risks and rewards in drug development, he said, and AZ has strategic teams tasked with keeping close ties around the industry, helping the drugmaker identify ideal partnerships that jibe with its R&D strategy.

AZ uses an evaluation framework called "The 5 R's" to assess its R&D projects, Pangalos said. "At every stage of every project we ask, 'Are we pursuing the right target, the right exposure, the right safety, right patient and right commercial opportunity?'" he said. "We invest our resources in those projects where we have the highest level of confidence that they will become valued medicines that patients need and payers want."

Last week, AZ teamed up with "preferred strategy partner" Charles River for safety assessment and drug metabolism and pharmacokinetics testing services. Charles River Chief Scientific Officer Nancy Gillett said the CRO snagged the deal through a competitive RFP process, and she believes the company stood out because of its broad range of capabilities and sites.

Over the past few years, Charles River has beefed up its IT capabilities to make clients' data available in real time, and Gillett said the CRO takes pride in staying on the cutting edge of trends in safety and discovery. Furthermore, she said one of the keys to reeling in Big Pharma deals is flexibility--being able to deliver results the way the client wants them, not according to an internal template.

Charles River is AZ's latest partner, but it's certain not to be the last. Pangalos said about two-thirds of the company's late-stage pipeline is the product of outsourcing, and AZ's neuroscience discovery operation will be almost entirely outsourced, replacing the use of its internal wet labs with CROs and academics around the world.

AZ's outsourcing push is at once an effort to jump-start its stilted pipeline and also an affirmation of what R&D chief Martin Mackay recently said: "No single company has all the solutions to the healthcare challenges of today." AZ is hardly the only drugmaker facing budgetary woes, and the resulting demand for fast, efficient discovery and testing makes it a good time to be a CRO, Gillett said.

"With all the changes in pharma and shrinking of the industry and the need to focus on a more cost-efficient model, there's been a lot of challenges," Gillett said. "The silver lining for CROs is that they're really becoming a much more necessary partner. CROs are going to remain an essential link in terms of bringing therapeutics all the way to market." -- Damian Garde (Twitter | email)

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