Full-service outsourcing has traditionally ruled the roost in the clinical world, but increased competition from functional service providers (FSPs) has prompted contract research organisations (CROs) to bring this more flexible offering under their roof through strategic acquisitions. We spoke to leaders from one of the few remaining standalone FSPs to find out the benefits of FSP collaborations and the future of the market.
Q: What trends do you see taking place in clinical outsourcing?
David Kelly (DK): One of the major pushes when we established the company 13 years ago was the start of the pendulum swing away from full-service outsourcing to more of a customisable solution. More companies started taking greater ownership in the development of their compounds versus handing them to a CRO and letting them run with it however they saw fit. If you’re not in that global top 20, it’s hard to dictate your terms because these CROs are often significantly larger than the companies they’re partnering with.
George Sawicki (GS): There is certainly a gravitational pull to the FSP model. Many larger FSP players have now been acquired by CROs, which has made them even bigger. We’ve noticed a lot more traction for a company that’s our size; companies that use more of a boutique shop while always ensuring the number one priority is quality. Most CROs will say they have an FSP solution as part of their service offering, but this means the two sides of the business are left fighting for the best talent.
Q: Can you explain the main benefits of working with an FSP?
GS: The main benefit we always hear is that sponsors gain back strategic control. With the FSP model, sponsors are able to tell a vendor like us or work collaboratively with us for our clinical expertise as to when there should be additions or subtractions based on the ebb and flow of a clinical trial. It’s a little more ringfenced. They have their footprint on the execution of the trial, but still use a vendor to take care of it.
DK: Another significant benefit is cost. The full-service model is typically very expensive. At KPS, our outsourcing services are up to 40% less.
Q: How can a company decide whether the FSP model is right for them?
GS: They need to evaluate how much they can do in-house. Some companies are built to do certain services with their own headcount. They also need to know there is some resourcing that is needed inside their walls to help run that FSP partnership. When we talk to clients, we tell them there is a commitment to be embedded and engaged with this model, because there will be touchpoints and communication throughout. When you look at the financials, the FSP model is usually the right choice. It is more a matter of whether they are ready.
Q: David, what was your vision when you founded KPS Life and how has the company evolved?
DK: At my last stop working for a sponsor company, they were mostly using the full-service model. I saw the inefficiencies, cost overruns and lack of control. This was around the same time that a lot of the larger FSP players were getting acquired by CROs. The writing was on the wall that there needed to be another standalone FSP provider, and that was my vision to jump in and effectively challenge CROs for quality, cost and handing control back to the sponsor.
Our growth has been very aggressive. It has been contained. We’ve maintained the same quality footprint that we originally started the company with. But 13 years ago, I never realised we’d be supplying services to pharmaceutical companies in 50-plus countries around the world.
Q: What advice can you share for a seamless FSP collaboration? Also, any tips for putting together a request for information (RFI)?
GS: We have a playbook for setting every engagement up successfully, and we need the sponsors to buy into that. It includes steering committee meetings and governance charters. If things have not gone as well as initial planned, it’s because we don’t have that collaboration. A lot of the RFIs that we receive are written as if we are a CRO. There are requests like unit cost, whereas the FSP model is based on embedded resources typically FTE driven or some percentage of an FTE. For everything we do, the goal is across the portfolio rather than an isolated trial.
DK: In our most successful collaborations, we essentially become virtual extensions of those pharmaceutical companies. Our people might be badged KPS, but they look, feel, smell and work just as if they were working officially for the sponsor.
Q: As outsourcing trends continue to evolve, what is on the horizon for FSPs and KPS Life?
DK: I certainly expect to see increased market share for FSPs. As more of the global top 20s start to morph towards this model, the smaller players will look to those global 20s for their trends. Specifically on the horizon for KPS is geographic reach. The clinical research business is becoming a global business, so we need to grow in that direction. We’re in 50-plus countries, but there are some specific regions where we don’t have significant penetration.
GS: I also think we need to evolve with being able to offer additional services that may not be part of our core competency, such as central laboratory. Thus far, we’ve taken more of a direction to partner with other standalone companies that can offer those services. Some sponsors like to have control of all their vendors, but some have come to us and said: “I like those other offerings. Can you put that into your proposal and manage that?”
DK: To add on to that, even though we are looking at bringing those different services under the KPS umbrella, we certainly have no future plans to be a CRO. We see the cost-effectiveness and the control of developing a clinical compound in the FSP model to be far superior to what you see in the full-service arena.
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