The CFO’s role in biotech and pharma is one of many hats, but none more important than guiding smart decision-making in one of the core investment areas of the company – enabling the drug pipeline. And guiding the associated investments in support of discovery, clinical trials, and testing, through to marketing and portfolio management, is one of – if not the most – important investment areas for the CFO and for the company.
While juggling multiple CFO mandates such as capital raises, M&A, and other strategic decisions, what’s often overlooked is a high-yield opportunity to maximize revenue and optimize operating expense (OpEx) spend. How? By ensuring your company’s clinical trial contracting process is delivering the most efficient outcomes possible.
Studies show that the top driver of delays in clinical trials is an inefficient contracting process that slows site startups and adds costs through sub-optimal working practices. With the estimated total average capitalized pre-launch R&D costs ranging from $161 million to $4.54 billion [1], and with negotiation delays draining anywhere from $600,000 up to an astounding $8 million per day [2] from a pharmaceutical trial sponsor's budget, it’s a costly oversight hiding in plain sight.
In this article, we explain the potential that advanced clinical trial contracting offers in accelerating time-to-market, de-risking investment, and reducing costs.
Cost Optimization
In clinical trials, much of what drives outcomes may be beyond the control of the CFO – but what can be controlled are the costs associated with end-to-end execution, starting with site launch and set-up. And getting sites launched faster through efficient contract management can have a profound impact on a company’s performance.
A few key indicators:
Clearly, savings generated through improved process efficiency can be reinvested into other R&D areas or brought to the bottom line. But as compelling as impacts on OpEx optimization may be, these outcomes are typically dwarfed by the size of the potential prize in the lifeblood of the company: revenue acceleration.
Revenue Acceleration
For biotech companies, the path to financial stability runs from successful R&D to commercialization of new products. Accelerating clinical trials can have a significant impact on revenue generation: by reducing the time required to start and conduct clinical trials, biotechs can bring drugs to market faster, capturing additional revenue during the period of market exclusivity.
Cycle times at each stage matter: in the clinical trial phase, the goal is to enable rapid site-start up such that the clinical operations team may begin patient enrolment to launch the trial. Accelerating clinical trials by 4-6 months as a result of streamlined contracting processes, can enable earlier market access and increased revenue capture. As a one scenario based on representative metrics, this can yield upwards of $100 million to $1.4 billion in additional revenue. [5].
In the clinical trial phase, the goal is to enable rapid site-start up such that the clinical operations team may begin patient enrolment to launch the trial. With typical multi-site and/or multi-jurisdictional trial end-to-end clinical research phases triggering upwards of 10,000 contracts, process efficiency matters.
Even for emerging biotechs, with smaller sized target patient groups, a typical Phase II or III trial might involve hundreds or thousands of contracts, with further volumes triggered by multiple phases and/or any additional complexities. This extensive contracting process can be further complicated by the pressures of coordinating multi-site and multi-jurisdictional sites, which often introduce significant regulatory and logistical complexities.
By investing in the contracting frameworks and operational processes that characterize mature clinical trial processes, biotechs can not only put millions of dollars on their top line, but also amplify the benefits with OpEx savings as described above.
A sampling of actual results:
What Does Good Look Like, and How Can CFOs Help Solve the Clinical Trial Contracting Logjam?
Getting to good – and then on to great – can involve multiple stakeholders across Clinical Operations, Legal and even Procurement. The path to high performance in clinical trial contracting is not a one-size fits-all solution, but instead requires an integrated operating function aligned to the company’s stage of growth, culture, and maturity.
Done well, a scalable and responsive contracting ecosystem – which involves the integration of contract management technology, legal expertise, and strategic foresight into the operational framework of clinical trials – can reduce negotiation times by 20%-30%, leading to shorter cycle times, quicker trial completions – and the cost – and revenue benefits described above.
What's more, robust contracting operations are designed to handle the nuances of multinational regulations and site-specific requirements efficiently, reducing the time spent in negotiations and mitigating the risks of non-compliance and IP disputes.
How to achieve this quickly – given lean resourcing and competing priorities?
Outsourcing -- long an accepted arrow in the quiver of CFOs for functions such as development, manufacturing, administrative functions, and clinical operations – has now become a model for contracting operations.
Partnering with an external provider – integrating talent, expertise, and technology – can optimize trial costs by accelerating timelines, resulting in incremental gains with each transaction, cumulatively allowing the company to run future trials faster. Additionally, partnering with the right provider can head off costly mistakes in technology investments – often pitched as the “solution,” without solving for the full set of success drivers.
Outsourcing, either as a long-term strategy or under a Build-Operate-Transform concept whereby the provider helps build and initially run the contracting operation with a mix of in-house and provider resources – can not only deliver immediate costs savings and/or avoidance, but also allows companies to leverage specialized expertise without the inflexibilities of full-time employment costs.
Tech-enabled Process Optimization
Recent BDO polls indicate a focus on leveraging tech to optimize operations. With the advent of GenAI, the stakes are now raised, but so is the challenge of making the right investments decisions.
GenAI is not merely a new technology: as language is at the core of GenAI’s power, it’s unique suited to transform a language-centric process such as contracting.
With the pace of adoption moving fast (47% of organizations are quickly integrating GenAI into their operations — for those with very high expertise, it is 73%), biotechs have a significant opportunity to improve clinical trial contracting workflows with GenAI. But doing so effectively requires specialized expertise: how stay abreast of fast-moving innovations highly specific to functions like contracting? What are the right investments to make and how to know where to place bets?
By partnering with the right provider focused on integrating fit-for-purpose AI capabilities as part of its continuously improving services delivery platform, CFOs can avoid the risks of fixed investment decisions in a time of rapid change. Highly motivated to stay ahead of the curve, specialist service providers are typically best placed to invest their own R&D into the highest-yielding technologies and solutions – bringing resultant benefits directly to their client base.
Conclusion
CFOs can play a pivotal role putting focus and organizational resources on what today may be an overlooked target of opportunity: improving clinical trial contracting operations as a means to accelerate revenues and capture material cost savings. But doing so requires specialized expertise and capabilities that may not exist in house or would require inflexible and suboptimal investments in people, technology, and process. Partnering with the right services provider can help fast cycle benefits capture while ensuring sound investment choices to enable the company’s growth trajectory, both immediate- and over the long term.
Factor specializes in providing biotech companies with the legal frameworks and operational processes that characterize mature contracting functions and teams. By integrating talent, expertise, and technology, we empower biotechs to not only accelerate trial timelines but also set the stage for sustainable growth and innovation, ensuring that groundbreaking treatments reach those in need with unprecedented speed and efficiency. Our flexible model provides clients with a range of options from enabling the in-house teams to design, build, scale and execute high-performance in-house contracting functions; through to Factor-operated contracting operations supporting the client’s business.
Sources:
