Mid- and top-tier CROs are going through mad scramble in the run to be unique and distinguish themselves from one another as efficient, high quality, exciting, and deserving, as large pharmaceutical companies inspect them to determine the winner in the most desired strategic-partnership agreements.
Top notch CRO, ICON, which reported less-than-stellar quarterly earnings last week, has acquired Ireland’s Firecrest Clinical. Firecrest Clinical is an e-clinical technology solutions company that has developed a site-performance management system currently adopted by nine of the top 10 pharma companies.
The 10-year-old company, Firecrest, has developed a platform through which sites can virtually attend protocol specific investigator meetings and training sessions, access all study documents, resolve queries or troubleshoot problems in real time, and obtain support materials required for the efficient execution of the trial, such as videos or 3D animation of the procedures.
Icon’s CEO, Peter Gray, said: “They offer very detailed, very user-friendly guidance to sites on how to handle patients. We think the value here is in increasing quality and reducing site errors. This has the ability to reduce costs, because when you communicate with sites like this there are fewer inquiries, fewer issues, which means less cost overall for the trial.”
Gray added that Icon and FireCrest have worked together on a considerable number of trials and there have been talks with the company about a possible acquisition for over a year. Firecrest has 60 employees.
Although Icon has publicized 4 strategic partnerships with Pfizer, Eli Lilly, Bristol-Myers Squibb, and Merck Serono, these lucrative contracts come with a cost. Last week, Icon announced a 40% plummet in its operating income for the second quarter of 2011. A 10% cost hike is largely associated with ramping up for the Pfizer contract and it is going to get worse before it gets better, Gray said in a release.
He added, “We are increasing our hiring drive and expect to add significant cost in the next two quarters as we gear up to handle work which will be transitioned to us in the fourth quarter and throughout 2012.”
These deals seem to pay off eventually and so the pursuit for them continues. In addition, those who follow the drug-development outsourcing space say many more large pharma companies are poise d to dole out sizable contracts. An attempt to climb up the top tier of CROs, has caused mid-sized CROs or private equity firms to rashly acquire other mid-sized CROs. Companies like Icon who are already in the top tier continue to strengthen operations and provide innovative services.
The managing director, Neal McCarthy, of the investment firm Fairmount Partners said that a CRO can be largely benefited by acquiring a service provider like Firecrest. Unfortunately, most mistakes and inefficiencies occur at the Site level where trials are actually executed.
McCarthy said: “As trials are getting more complex, sites often fail to follow the protocols, and that means their data is useless. The best sites are usually very busy running lots of different trials with different CROs and sponsors, and they may not be well organized. They often have dozens of protocols and case report forms all over the office, and it can get confusing.”
John Kreger, a financial analyst with William Blair, added that the purpose of an acquisition like this is to be unique from the rest of the pack. It’s been 2 decades now that Kreger has been covering the clinical research outsourcing space. He said, “For CROs, the challenge is how do you differentiate yourself in the eyes of your clients? Just like that worked really well with Parexel when it acquired Perceptive Informatics, I think this is Icon’s effort to do the same.”
A large, life sciences-focused technology company was acquired by CRO Parexel in 2003, which was followed by the addition of another player building a semi-autonomous group dedicated to software called ClinPhone. Although this move was frowned upon by markets and analysts, Parexel eventually emerged victorious with the recovery of its stock and commencement of sizable strategic partnership agreements.
Kreger said that companies are prompted to explore new avenues for strengthening and streamlining operations in recent years since Pharma Company and CRO shareholders have been absolutely dejected with the widespread waste in the industry.
He said the broader message is that from manual documentation to the failure rate, the drug development process is “horribly inefficient.” One of the challenges, Kreger said: “is you do all the work to design the protocol and train the sites, then half of the sites don’t enroll anyone. It’s an enormous time and resource sink. This asset is a way to better manage that process. Firecrest gives clients real-time access to information on what the sites are doing and helps push needed information out to the sites.”
A 10% to 12% increase in patient recruitment and a 40% to 50% reduction in data queries while producing cleaner data is what Firecrest claims to provide with its new technology.
Gary Hughes, CEO of Firecrest, said the company was launched by a bunch of principal investigators in an effort to find an alternative to traditional investigator meetings.
Hughes said, “The investigator meeting was two days away from the office—two days of death by PowerPoint—and then it was six or seven months before you’d randomize a patient for the trial. By then you’d no longer remember anything from the investigator meeting.”
The company decided to emphasize on what the site needs to know and when. This prompted them to develop a system that offered virtual investigator meeting services followed by repackaging of protocols into a procedure-driven, visit-by-visit guide. Various algorithms are linked to the protocol to address any specific questions by coordinators or investigators by already having the answers. If that is insufficient, the site can always contact the monitor via web chat or email. “It’s over-the-shoulder type of guidance,” said Hughes.
Hughes added: Firecrest was named after a bird native to the UK that’s “small, but feisty, and very territorial.”
Icon hopes to soar past equally territorial and feisty competitors through this acquisition.