Will Your CRO Survive the Pharma Consolidation of 2010?

Viq Pervaaz, senior vice president, corporate transactions at Aon Consulting recently wrote an article for Outsourcing-Pharma.com that every CRO should read.  I'll summarize below, but here's a link to the full story: shrinking-market-for-cros

Mr. Pevaaz makes a good case that the consolidation in the Pharma industry is causing -- and will continue to cause -- pain within the research services market.  CROs, and the entire eco-system of service providers around them, will see a significant reduction in their pipeline of compounds (and customers). 

Of course, consolidation means fewer customers... but it goes further than that.  Consolidation also means that well-established pipelines are being pruned back.

Here's exactly what Mr. Pervaaz says:

"Over the last 18 months to 24 months, significant consolidation activity has occurred in the biopharm sector. There are various contributing factors for this including reduced drug development pipelines, patent expirations, an outdated “blockbuster drug” model, excess manufacturing capacity and a sales model which can benefit from an assessment and design standpoint to more efficiently and effectively service the realities of today’s healthcare environment.

As major pharmaceutical organizations are consolidating, so are their respective organization’s drug development pipelines. Many organizations are realizing that consolidating and combining pipelines will not necessarily result in a more effective and efficient drug development strategy and are utilizing this opportunity to “lean” out their portfolios from a strategic vantage.

An organic output of this decreased number of development compounds is that less support is required from the CROs and central labs to support the industry’s clinical development needs."

Now that's pretty dense reading, but the meaning is clear: smaller drug company portfolios means less work for CROs and central labs.

Added to the already slow market, this will put the squeeze on even the larges CROs.  What can you do to make sure you survive this new reality?

Now is the time to double-down your marketing efforts.  Specifically:

1. Build a strong story about how your CRO is different, unique, and valuable to your customers.
2. Get credibility!  Find testimonials from current customers, write case studies of your past successes, and boost your website with free information about the industry, your therapeutic areas of expertise, your patient populations, etc.  Let people know that you are the expert and that you have done all this before.  Make it look easy!
3. Stake out your position.  Are you the cheapest?  The fastest?  The smartest?  The most experienced?  Pick a position and defend it.  By the way, "quality work" and "great people" don't count: those are requirements, not differentiators.
4. Answer one question... "My CRO is the only CRO in the world that _____."  If you can fill in the blank, you're getting close to having a defensible competitieve advantage.
5. Need more ideas?  Read the other blog posts here, or give us a call.  We'd love to tell you how world-class CROs are making profits in these tough times.

Only a solid plan to communicate your true value to prospects and customers will assure that you make it through this perfect storm.

Dedicated to your success,

David