More than 75% of the researchers polled in a recent reader survey by Laboratory Equipment magazine responded that they use or have used external contract research labs in their work. The vast majority of these contract research labs (95%) are located in the U.S. About 8% are located in Asia, 6% in Europe, 6% in non-U.S. North America and about 3% in the rest of the world. (Multiple responses equal a total number that exceeds 100%).
At first glance you might think that the overwhelming reason why researchers use contract labs is to save costs. But cost savings ranked only the fourth highest reason, according to 31% of the survey respondents. Deemed the number one reason by 44%, certified contract research organizations give the third-party credibility needed to verify a product’s capabilities. Also chosen before cost savings, contract labs have the unique capabilities (42%) and scientific and technological expertise (39%) to perform the testing and evaluation researchers cannot do in-house.
Pharma work
Pharmaceutical and biotech outsourcing of development work, including pre-clinical and Phase I to IV clinical testing, gets a large amount of media attention, especially that which is outsourced to Asian countries. However, Laboratory Equipment's survey respondents chose materials (26%), chemical (23%), environmental (18%) and polymer testing (16%) applications as those they most often outsourced to contract research labs.
The current economic environment is likely to increase the offshore use of contract research labs for about a fifth of the survey respondents.
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The substantial costs and long-term requirements of pharmaceutical and biotech clinical testing make these applications different than most contract research lab work that supplies unique capabilities or expertise. Here, the primary reason for outsourcing is to save costs in the clinical tests, which can account for up to three-quarters of the $1 to $1.5 billion in development costs if done entirely within the U.S. (or comparable European cost structures).Current economic conditions have slowed the growth of contract research organization (CRO) work performed by biophamraceutical companies. However, a recent report by Business Insights states that cost containment and regulatory pressures will continue to drive growth in the CRO marketplace at an annual growth rate of 14% through 2013.
Various types of materials testing makes up the bulk of contract research lab applications, taking up three of the top four spots of survey respondents’ replies.
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There are about 1,100 biopharm-based highly fragmented CRO companies in the world, with the report noting that some of the smaller and mid-sized companies will likely be bought or merged with larger CRO firms. A number of strategic alliances and joint ventures are also possible as these companies look to expand their service offerings and geographical presence.Upgrading capabilities
The offshore CROs also continue to upgrade their facilities and capabilities, increasingly moving to state-of-the-art analytical instrumentation that is faster and more sensitive, allowing researchers to limit the impact of chemical noise on their measurements. Thermo Fisher Scientific, for example, opened a large clinical services facility in Ahmendabad, India, in December 2008 to serve as a hub for packaging, distribution and logistics management of clinical trial supplies.
The specific types of lab work that researchers looked for in contract research labs mirrored those required for the applications. The top three types of work included analytical chemistry (36%) including chromatography and spectroscopy; analysis (34%) including chemical analyzers, computers and software-based tools; and materials characterization (25%) including specialized physical, mechanical, thermal and rheological testing machines.
Analytical chemistry and materials characterization, including imaging, make up the largest group of analyses performed by contract research labs, outweighing pharmaceutical clinical testing.
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In addition to asking why researchers use CROs, Laboratory Equipment magazine equally wanted to know why they choose not to use them. In previous surveys performed by Advantage Business Media editors, the primary response to this type of question was that the respondent researchers were concerned about the release of proprietary information that could jeopardize their competitive position.In the current economic climate, however, the overwhelming response (73% of the respondents) to this question in this survey was the cost involved in using a contract lab. The second-highest response (35%) was due to the researchers’ organizations having in-house capabilities. Proprietary concerns about using a contract research lab was listed as a distant sixth (13%) in this survey.
Nearly a third of survey respondents also listed the cost of contract research lab work as the largest challenge or concern. "Timely results, cost and reliability are my concerns," said a survey respondent executive with a Food Safety Consulting firm. "Turn-around time and cost are mine," confirmed another researcher at Carrier Clinic.
Overall, most researchers were satisfied with their experiences with contract research labs—only 8% of the survey respondents said they had less than desirable results.
Picking a lab
There are numerous questions a potential contract research lab should be asked. A small sampling of these include:
Making use of physical and personnel capabilities that the researchers don’t normally have access to is the primary reason they use contract research labs.
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1. Is the contract research lab audited by a regulatory agency, such as the FDA, EPA, ISO or WHO? Will the lab allow you to audit its facilities?2. Does the lab hold licenses or certifications? Are those licenses and certifications up to date and appropriate to your work?
3. What is the min-max time that you allow for running a test? Will the lab be able to meet those criteria?
4. What is the min/max number of samples you expect to provide the lab? Will they be able to handle those volumes?
5. What is the contract research lab’s inventory of testing equipment and instrumentation? Will this inventory be available for your work?
6. When was the last time their testing equipment and instrumentation was calibrated? Do they keep a log you can review?
7. How does the lab propose to protect the integrity of your proprietary data? Have they had any complaints or security problems in the past?
Real or perceived fears about the high cost of using contract research labs is the overwhelming reason that researchers don’t use them more often.
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8. Who else does the lab provide services to? Are any of these clients competitors
of yours?9. Does the lab keep a log of its staff, indicating experience and capabilities both past and present? Can you review this log?
10. Is the lab financially viable? Have they had any recent program cancellations or
terminations?
11. Has the lab had any violations or fines assessed against it? If so, what are the details and how were they addressed?
12. Is the lab in negotiations to be merged or acquired, or in a strategic partnership that might affect your work?
13. And last, but definitely not least, what is your fallback scenario? Would work-in-progress be available to you or a secondary contract lab?
On average, researchers will spend about 6.6% of their 2009 research budget, or nearly $130,000 on outside contract research lab work.
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Contract research labs offer services that can be used on a temporary or permanent basis. They can augment your existing capabilities or completely replace them. It should also be remembered that the success of these types of labs has carried over into your supplier chain as well, and you might be pleasantly surprised to find out that a supplier of yours for many years has recently expanded to provide contract research lab services as well.For more information, contact:
Keith Bisogno, PR, Thermo Fisher Scientific, www.thermofisher.com