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Why Small Biotech Startups Should Consider Small CROs Rather than Large Multinational CROs?

Patricio Ledesma

Head Of Clinical Operations at Sofpromed

15 August, 2024

Why Small Biotech Startups Should Consider Small CROs Rather than Large Multinational CROs?

In this article you will learn about:

Some multinational clinical research organizations (CROs) have dominated the clinical trial market over the years, including:

  • IQVIA: Formed from the merger of Quintiles and IMS Health, IQVIA is one of the largest CROs, offering comprehensive clinical trial management and data analytics services.
  • PPD (Pharmaceutical Product Development): PPD provides a wide range of services, from early drug development to post-market surveillance.
  • Parexel: Known for its expertise in regulatory affairs and late-stage clinical development.
  • Labcorp Drug Development (formerly Covance): Offers extensive laboratory services and clinical trial management.
  • Syneos Health: A result of the merger between INC Research and inVentiv Health, Syneos Health provides biopharmaceutical solutions through clinical and commercial services.

These large global vendors offer highly costly rates to their biotech clients for a number of reasons.

Reasons for High Prices Charged by Multinational Large CROs

Big CROs typically offer higher service fees than small CROs.

As in other sectors, large companies have more internal and infrastructure expenses, so they need to offer higher prices to maintain profits.

Here are some of the main reasons why large CROs are more expensive:

Services Aimed at Big Pharma

Multinational CROs usually have the world’s largest pharmaceutical companies as their main clients. This means that these CROs are used to working with very high budgets.

Global Reach and Network

International CROs have an extensive global network of trial sites, clinical operations staff, and regulatory experts in several countries, which allows them to conduct multinational trials more easily but also at a higher price.

Quality and Compliance

Maintaining high standards of quality and regulatory compliance across different regions is expensive and requires significant resources.

Experienced Personnel

International CRO vendors employ highly experienced and specialized personnel —often located in countries with high standards of living— whose salaries contribute significantly to the overall costs.

Infrastructure and Overheads

Large CROs have substantial overhead costs related to maintaining their global heavy infrastructure, including offices, technology, and administrative support.

Financial Problems for Small Biotech Startups Due to High Prices of Large CROs

The high prices quoted by large CROs may translate into financial difficulties for small biotech startups.

The budgets of large pharmaceutical companies —which already have many drugs on the market and substantial profits— often cannot be compared with the resources of emerging biotech startups.

Some of the problems faced by small biotech startups are:

  • Limited budgets: Small biotech startups typically operate with limited budgets and funding, making it challenging to afford the high costs of large CROs.
  • Funding challenges: Securing sufficient funding is a major hurdle for small biotechs. High trial costs can deter investors who are wary of the financial risk.
  • Resource allocation: High costs of CRO services can divert funds from other critical areas such as R&D and product development.

Struggles of Small Biotech Startups to Obtain Sufficient Funding

Nowadays it is not easy for small biotech companies to raise funds to run their clinical development programs.

The main challenges faced by small biotechnology startups include:

  • High risk: Early-stage biotech companies are often viewed as high-risk investments due to the uncertainty and long timelines associated with drug development.
  • Investor hesitance: Investors may be hesitant to fund companies that have not yet demonstrated clinical success or market potential.
  • Competition for funds: There is significant competition for venture capital and other funding sources among numerous biotech startups.

Why Using a Large Multinational CRO is Not Necessarily Better Than Using a Small CRO

Clinical trial sponsors may think that using a large multinational CRO is better than partnering with a small CRO. Some biotech companies, and their investors, feel that it is imperative to hire a globally recognized CRO to ensure that their trial is properly developed. Even hiring an industry-leading multinational CRO can be considered beneficial in terms of image and prestige. However, working with a small CRO can have several advantages that big CROs do not provide, such as:
  • Customization and flexibility: Small CROs can offer more personalized and flexible services tailored to the specific needs of a biotech startup.
  • Cost-effectiveness: Small CROs often have lower overhead costs and can offer more competitive pricing.
  • Attention and priority: Smaller clients may receive more dedicated attention from a small CRO compared to a large CRO, where they might be one of many clients.
  • Direct access to upper management: Clients often have direct access to upper management and decision makers in small CROs, ensuring better communication and faster problem solving.

How Sofpromed Helps Small Biotech Companies

Sofpromed is a small CRO that focuses on providing cost-effective solutions tailored to the needs of small biotech companies. Sofpromed has a lot of experience working with small biotech startups and understands very well the needs and particularities of this type of companies. Working with Sofpromed has some very valuable advantages: Flexibility and Adaptability As a small CRO, Sofpromed can adapt more readily to changes in trial protocols or unexpected challenges, providing a more responsive service. Customized Services Sofpromed offers flexible, tailored services that align with the specific needs and budgets of small biotechs, avoiding unnecessary costs. Expert Guidance Sofpromed provides expert advice on regulatory strategies, patient recruitment, and trial design, helping to navigate the complexities efficiently. Efficient Patient Recruitment Sofpromed utilizes advanced recruitment strategies to ensure quick and efficient patient enrollment, shortening the duration of the recruitment period. Technology Integration By integrating innovative technologies like electronic data capture (EDC) systems and remote monitoring, Sofpromed streamlines data management and reduces operational costs. Focused Expertise With a focus on small and mid-sized biotech companies, Sofpromed offers dedicated attention and specialized expertise, ensuring high-quality, cost-effective trial management. Cost Transparency Sofpromed maintains transparent pricing models, helping clients understand and manage their budgets effectively (avoiding extra costs and unexpected change orders). Cost Savings Sofpromed’s reduced service costs can help small biotech companies stretch their limited budgets further and allocate more resources to other critical areas. Improved relationships

Thanks to its small size, Sofpromed builds stronger, more collaborative relationships with its clients, fostering better communication and project alignment.

Conclusion

There are quite compelling arguments for small biotech startups to consider working with small CROs rather than large multinational vendors.

Using a small CRO will not always be better than using a large one. Of course, all companies can fail, regardless of their size. However, it is not true that using a large CRO is always a guarantee of success and customer satisfaction.

Currently, several small biotech companies realize that they cannot afford the prices of multinational CROs —sometimes while still running a study— and have to look for cheaper alternatives that maintain adequate quality standards.

By leveraging the strategies and services offered by small CROs like Sofpromed, small biotech companies can conduct clinical trials more affordably and efficiently, increasing their chances of bringing new therapies to market with a smaller budget.

Please contact us at info@sofpromed.com if you need more information about Sofpromed’s CRO services

Patricio Ledesma

Patricio Ledesma (B.Eng Concordia University, Montreal, Canada and Master’s Degree in Clinical Trials, University of Seville, Spain) is the Head of Clinical Operations and Founder at Sofpromed CRO. Patricio is a professional consultant providing comprehensive, one-stop expert advice and guidance to biotechnology and pharmaceutical companies worldwide in the field of clinical trials and drug development. He is personally and enthusiastically devoted to helping biotech Chief Executive, Operations, Scientific, Medical, and Regulatory Officers in the planning and execution of phase I-IV clinical trials across North America, Europe, Asia-Pacific, Latin America, and Middle East regions. You can contact Patricio at: +34 607 939 266  pledesma@sofpromed.com 

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Patricio Ledesma

Patricio Ledesma (B.Eng Concordia University, Montreal, Canada and Master’s Degree in Clinical Trials, University of Seville, Spain) is the Head of Clinical Operations and Founder at Sofpromed CRO. Patricio is a professional consultant providing comprehensive, one-stop expert advice and guidance to biotechnology and pharmaceutical companies worldwide in the field of clinical trials and drug development. He is personally and enthusiastically devoted to helping biotech Chief Executive, Operations, Scientific, Medical, and Regulatory Officers in the planning and execution of phase I-IV clinical trials across North America, Europe, Asia-Pacific, Latin America, and Middle East regions. You can contact Patricio at: +34 607 939 266 pledesma@sofpromed.com