Dude! Why now? Why ClinPhone?

That was what we wanted to ask Josef von Rickenbach. Founder, chairman and CEO of Parexel, a contract research organization (CRO) with 7,300 employees, he recently offered $192 million for ClinPhone. It’s not clear at this writing if any other bidders will appear, or whether the deal will go through.

“I cannot really comment very specifically on the deal,” von Rickenbach said. European and U.S. financial disclosure rules prevent him from saying anything except elaborating on previous statements like the one in this press release.

With that line of inquiry closed, we asked him about the industry in general.

von Rickenbach acknowledged that a slowdown in FDA approvals of pharmaceutical products or the coming period of patent expirations could affect the entire CRO industry. “Unless more products get on the market, we will all be in trouble,” he said.

No Movement

von Rickenbach started Parexel in the 1980s, and eventually enlisted Mark Goldberg to lead one of the more robust technology groups in the CRO industry. One of the interesting things to watch in the years ahead will be whether other CROs are obliged to beef up their in-house technology divisions.

von Rickenbach himself has been watching electronic data capture (EDC) since its infancy. “For a very long time, there was not a lot of traction,” he says. “We used to have a product called SiteBase, a data capture technology, just before the web came out,” he recalled. “A couple of large pharmaceutical companies made it their standard. It didn’t get a lot of traction. The whole notion didn’t get a lot of traction.”

Now, von Rickenbach suggests, that is changing.

EDC Emergence

“The industry is more receptive. The pressure to find ways to do things more efficiently is ever increasing,” he says. “The other change is that the technologies themselves have actually become more user friendly, more reliable, more robust, more adaptable to our environment. The technologies have gotten better. There is no question about that.”

One dynamic in the industry is that sponsors strongly suggest or explicitly require that a CRO use a particular supplier of EDC. Could that change? Could CROs start to guide sponsors to their own proprietary EDC solution? Said von Rickenbach: “Most client companies have favorites. I would expect that a company like ours would use more than one platform. As a leading CRO, it would be difficult to have only one technology. One technology doesn’t always apply optimally in every [trial].”

‘A Standard’

Is EDC more important to the CRO industry today? He said that depends. How is importance defined? “The frequency of use has increased substantially in the recent past,” von Rickenbach said. “I think [EDC] will become a standard.”

In some instances, he says, sponsors are gravitating toward EDC in the absence of hard evidence that it will save money. He expects such savings to appear eventually. But he doesn’t sound adamant on the point; and some observers in the industry have stopped discussing whether EDC will save money—or just a) provide cleaner data and b) shift costs around a trial budget.

What about interactive voice response (IVR) systems? They’re getting renewed attention as tools that can manage drug supplies and even cutting-edge adaptive trials.

Build vs. Buy

“Clearly, from our perspective, IVR is a technology that matters and is important,” von Rickenbach says. “We are a leader in the industry providing these types of technologies and services. We have a commitment to the space. It’s one of the technologies that has proven its worth many times over in terms of managing logistics. We continue to feel this is an opportunity.”

In general, we asked, how does he decide whether to own a technology or partner with a firm that specializes in developing it? von Rickenbach made it clear that he does not make such decisions personally, waiting for a blinding, Hollywood-style insight. Instead, he said, Parexel collectively assesses what clients need and what competitors can do.

Glacial Pace

“What we are truly guided by is what is best for the customer and what is best for the trial,” he says. “If there is already a very good solution, why would we bring in another? It’s no secret that we don’t have a central lab. Why is that? There are other companies that have great central labs. For us to push a central lab just because we have one is not in the best interest of clients.”

Parexel’s chief stressed that while the industry has always looked at new technologies, the time lines of both individual trials and portfolios of studies means that any new tool, any new process, can only be introduced slowly. Old tools and new generally must be used together, for years, resulting in higher costs during the transition.

‘This is hard’

“Historically, certainly our industry has not been on the forefront of using and adopting these technologies,” von Rickenbach said. “For good reasons, actually.”

Outsiders, he said, may not appreciate the subtleties of adding a new piece of software in the middle of a multi-year study of living human beings. Adding technology in the life sciences, he argued, is different than updating a Windows PC. “Let’s not kid ourselves,” von Rickenbach said. “This is hard.”

von Rickenbach also expressed a few thoughts about the higher prominence of the CRO industry. He does not seem to be an Oprah WInfreyesque fountain of emotion, but clearly telegraphed that the new visibility for CROs has both positive and negative aspects, offering more stature to companies providing outsourcing to pharma but also exposing them to the same artillery fire besieging the sponsor community.

“Our industry is playing a really important role in the biopharmaceutical space,” he says. “That has been true for a long time. But it is more broadly recognized.”

He continued: “Part of being more visible, being more mature, playing a more important role, means we have to touch more audiences. I am somewhat perturbed by the misunderstandings that people have.”

Editor’s note: This article is from Rickenbach’s conversation with the business press at the 2007 Drug Information Association meeting.

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