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Emerging Biotechs are Here to Stay; CRO Models Will Permanently Change

By Daniel Burch, M.D., Global Medical Officer, PPD® Biotech

Biotech as a lasting and continually growing segment of the drug development landscape

The prominence of biotechs in the drug development dynamic has shifted dramatically over the last decade. Traditional large pharma, challenged by R&D productivity trends not keeping pace with marketplace growth expectations, have been compelled to invest in biotech. Indeed, in contrast to a decade ago, most of the innovative drugs in the large pharma pipeline have their origins in biotechs.1

The venture capital community continues to grow and thrive because of these trends. In 2018, biotech startups acquired nearly $29 billion in funding across the globe.2 Biotechs now permanently occupy a strong position in the drug development landscape.

The growth of CROs in recent decades has further enabled the sustainability of emerging biotech. The “two scientists and a molecule” model is able to succeed not only with the support of venture capital investment but also by a broad range of outsourcing options from CROs that provide the resources and experience needed to run clinical trials.

CRO models will continue to adapt to this change

This landscape shift is proving to be a strong long-term trend. Increasingly, emerging biotechs look to CROs for strategic advice and execution because they may lack the personnel, niche expertise and/or global reach to propel their innovative projects forward.3 However, biotechs that operate in a fast-paced, entrepreneurial environment can become frustrated with the multi-layered accessibility and decision-making of the traditional corporate structure. As biotechs continue to represent an increasing portion of the CRO customer base, they, rightly, expect outsourcing services that cater to their specific needs.

While this demand has certainly propelled the growth of boutique CROs, larger CROs that are traditionally structured to align to large pharma with multiple divisions and complex reporting structures have been adapting.

The “core competency” features CROs have built over the decades to service large pharma – scale, scope and strong underlying quality processes – can readily be seen as “core rigidities” by the biotech segment. In response, global CROs are being compelled to develop more tailored solutions for emerging biotech companies. This should continue to have a beneficial effect on the overall industry as global CROs commence new “biotech-friendly” initiatives, developments that bring obvious benefits for biotechs as a new order is created across the clinical services industry.

Leading CROs have established operational and executive teams that better align with the mindset of smaller, rapidly growing and innovative companies. This approach supports a better cultural fit for biotechs that may have only one or two assets in development. This flexibility and shared sense of passion, urgency and accountability are critical for biotech success. A missed milestone can have immediate impacts on funding and may put the future of the company at risk.

While cultural alignment is an important factor, more concrete structural changes can better enable large CROs to provide a bespoke fit for smaller pharma and emerging biotech. These include:

  • Incentivizing organizations to prioritize small project needs
  • Developing a geographically distributed executive team within arm’s reach of clients anywhere in the world
  • Building out teams of operational leaders to partner directly with smaller clients, helping them navigate the larger organization to find solutions
  • Simplifying bidding and finance processes to more nimbly match the biotech financial and outsourcing models

Bigger can indeed be better

While boutique CROs may still be the best fit for some biotech, many lack the experience and resources rapidly growing biotechs require. Within this new paradigm, large biotech-friendly CROs bring a lot to the table. More importantly, they want to be a key partner who can help solve the age-old challenge – improving R&D productivity and bringing more medicines to patients sooner, by offering:

  • Financial stability that greatly reduces the risk of disruption from lack of funds or being acquired during the life of a study
  • Global resources and operational scalability
  • Rigorous focus on quality delivery via time-tested, but evolving processes
  • Vast set of in-house knowledge and data analytics
  • Ability to take on risk and investment in innovation

PPD has been a part of these exciting changes. For more than 30 years, PPD has worked with these emerging companies in their quest to realize success. Over the past five years, PPD® Biotech has adapted to bring better alignment with biotech companies and simplify their drug development journey. Biotech companies continue to solidify their position in the future of drug development. This means they can and should expect more from their outsourcing partners.

While the nature of the landscape changes, the goal and destination of the journey remains, but the route must be altered to suit the terrain. Emerging biotech now challenges CROs to blaze a new trail of opportunities. Compelled to innovate and adapt their capabilities to suit the different needs of biotechs, CROs ultimately will benefit from traveling this new path.

  1. https://www.cnbc.com/2018/03/26/big-pharmas-scramble-to-invest-in-start-ups-to-fuel-innovation.html
  2. https://techcrunch.com/2019/03/23/corporate-biotech-venture-funding-rises-again
  3. https://www.nature.com/articles/d41586-018-04163-8

This article was created in collaboration with the sponsoring company and our sales and marketing team. The editorial team does not contribute.
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