Offshoring clinical trials to emerging markets around the world is receiving increasing attention as a very attractive alternative. This follows as a natural reaction to already successful offshoring activities in the IT industry. The big question is: Do clinical research capabilities comparable to the US in terms of sophistication and FDA-compliance exist anywhere else in the world? And if they do, are they ready to handle the huge surge in business likely headed their way?

Outsourcing Clinical Trials: A Global Analytical Guide and Comparative Analysis of International Destinations, with Location Attractiveness Index analyzes the key drivers that have made the search for effective clinical trial outsourcing a necessity rather than an option in today's drug development efforts. The current climate of clinical trials in emerging markets across the world is examined. Geographic areas covered include Europe, Latin America, Australia and New Zealand, Africa, Asia and India.

The report also includes the Clinical Trial Outsourcing Global Attractiveness Index. This vital piece of original research includes tables and graphs which rank international locations, according to the following criteria:

•Study Cost Indicators
•Patient Indicators
•Disease Indicators
•Clinical Research Indicators
•Research Personnel Indicators
•Study Site Indicators
•Business Environment Indicators

The index serves as an invaluable starting resource for pharmaceutical companies seeking to outsource their clinical trial functions to international destinations.

Report Highlights

Why Outsource Clinical Trials?

More and more pharma executives are considering outsourcing clinical development as an effective means to make the process cheaper and more efficient. Another attraction of outsourcing clinical development is that it can be implemented relatively quickly. This trend towards outsourcing clinical drug development has already started. Industry analyses of budgetary outlay on clinical outsourcing further support this statement.

Outsourced pharmaceutical R&D spending will grow almost 15% annually for the next five years. The increase forecasted for outsourced spending in the coming years is about double the anticipated increase in general R&D spending. Pharmaceutical companies are finding that by using outsourcing strategically and by effectively integrating external resources with internal capabilities, they can reap dividends by getting better products to market faster.

Reasons why outsourcing is growing as an attractive option:

•Overcoming deficiencies in internal capabilities;
•Reducing financial risk by limiting capital investments such as lab equipment and real estate;
•Allowing biotech companies to hold off from partnering with a major pharmaceutical company, thereby enabling them to keep a larger ownership interest in a new drug;
•Saving significant time and money in the approval process with improvements in quality and speed;
•Enabling companies to pursue approval in a number of countries at the same time by utilizing an international CRO.
•Promotes greater specialization.

Some reasons for a decreasing pool of U.S. based investigators:

•High turnover rate- many investigators are not interested in conducting more trials after the first or second round
•Lack of financial incentives- there has been flat growth in study grant amounts
•Growing protocol complexity
•Onerous burden of compliance
•Slow payment process

Reasons for increasing reliance on non-U.S. investigators:

•Training is comparable to western counterparts and there has been a tremendous surge in efforts to improve cGMP education and compliance training
•Compensation costs are significantly less
•Socially and culturally more acceptable to populations in emerging markets - this is important to ensure high patient compliance
•Affords access to large patient populations - this promises long term growth as there is no immediate threat of diminishing numbers of treatment-naïve subjects

Contract Research Organizations and Outsourcing

During the past few years, contract research organizations, or CROs, have received the lion's share of outsourced clinical research revenue. In 2001, in the United States, CROs received an estimated 60% of the clinical research outsourced from pharmaceutical companies. The CRO market grew from $1 billion in 1992 to more than $8 billion in 2002. CROs enrolled 7 million research subjects in 1992 and 20 million in 2001.

The multi-national availability of CRO services is increasing in the wake of two concurrent trends - the globalization of outsourcing services in general, following the lead of the financial and Information Technology (IT) sectors, and the internationalization of the pharmaceutical sector in the quest for global market reach, which has been facilitated by the International Conference on Harmonization (ICH) and expansion of international trade, travel, and communication.

Trends and Outlook

Recent restrictions, due to heightened security procedures, will increase the need to have a physical presence overseas due to barriers to the importing of foreign talent into the US and the increasing cost, time, and difficulty of moving people and supplies about internationally. Only about one-fifth of respondents provided services internationally in 1998. Over the succeeding years, however, the number of US-based CROs reporting that they had opened up offices overseas rose from one-quarter to one-third.

The location of these offices (11 in 2000 and 20 in 2002), as shown in Graph 2.7, appear to encompass regions considered both "traditional" (e.g., Europe and North America) as well as "non-traditional" (e.g., Asia and Africa) loci for clinical trials. The most significant change from 2000 to 2002 appears to be the increase in offices being opened in Australia, perhaps at the expense of new office openings in Asia. This could be a harbinger of the emergence of Australia as a hub for the provision of CRO services in the Asia-Pacific region.

Furthermore, our survey results indicate that this expansion overseas is particularly evident in the clinical area, with 44% of US-based respondents indicating that the number of clinical trials conducted overseas has increased over the last two years, while only 6% reported that it has decreased.

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