As large pharmaceutical companies scrutinize the pack of mid- and top-tier CROs to determine who wins the coveted strategic-partnership agreements, there’s a mad scramble among CROs to differentiate themselves from one another and stand out as efficient, high quality, exciting and deserving.

To that end, top-tier CRO Icon—which last week reported less-than-stellar quarterly earnings—has acquired Firecrest Clinical, a Limerick, Ireland-based e-clinical technology solutions company that has developed a site-performance management system currently used by nine of the top 10 pharma companies.

Ten-year-old Firecrest offers a portal through which sites can attend virtual investigator meetings and training sessions on a specific protocol, gain access to all study documents, ask questions or troubleshoot problems in real time and receive support materials, such as videos or 3D animation of the procedures they need to execute for the trial.

“They offer very detailed, very user-friendly guidance to sites on how to handle patients,” said Peter Gray, Icon’s CEO. “We think the value here is in increasing quality and reducing site errors. This has the ability to reduce costs, because when you communicate with sites like this there are fewer inquiries, fewer issues, which means less cost overall for the trial.”

Gray said Icon has worked with Firecrest on a dozen or more trials and has been talking to the company about a possible acquisition for a year and a half. Firecrest has 60 employees.

Icon has four publicly announced strategic partnerships in place, with Pfizer, Eli Lilly, Bristol-Myers Squibb and Merck Serono.

But these lucrative contracts come with a cost. Last week, the typically healthy Icon announced a 40% drop in its operating income for the second quarter of 2011. Costs were up 10%, in large part associated with ramping up for the Pfizer contract. And it’s going to get worse before it gets better, Gray said in a release.

“We are increasing our hiring drive and expect to add significant cost in the next two quarters as we gear up to handle work which will be transitioned to us in the fourth quarter and throughout 2012,” he said.

But ultimately, these deals seem to pay off, so the quest for them continues. And those who watch the drug-development outsourcing space say many more large pharma companies are poised to dole out sizable contracts. This, in turn, has caused a rash of acquisitions of mid-sized CROs by other mid-sized CROs or private equity firms, as they try to climb into the top tier of CROs. Those already in the top tier, such as Icon, continue to tighten operations and add innovative services.

Neal McCarthy, managing director of investment firm Fairmount Partners, said acquiring a company that offers a service like Firecrest can really give a CRO an added advantage. The sites are where the trials are executed and, unfortunately, that’s where many of the mistakes and inefficiencies take place.

“As trials are getting more complex, sites often fail to follow the protocols, and that means their data is useless,” said McCarthy. “The best sites are usually very busy running lots of different trials with different CROs and sponsors, and they may not be well organized. They often have dozens of protocols and case report forms all over the office, and it can get confusing.”

The point of an acquisition like this is to stand out from the pack, added John Kreger, a financial analyst with William Blair who has been covering the clinical research outsourcing space for two decades. “For CROs, the challenge is how do you differentiate yourself in the eyes of your clients?” he said. “Just like that worked really well with Parexel when it acquired Perceptive Informatics, I think this is Icon’s effort to do the same.”

CRO Parexel completed its acquisition of the large, life sciences-focused technology company in 2003, and later added another large player, ClinPhone, building a semi-autonomous group dedicated to software. Initially the markets frowned upon the move, as analysts scratched their heads. But Parexel ultimately emerged victorious, its stock recovering nicely and sizable strategic partnership agreements coming its way.

Kreger said that in recent years, pharma company and CRO shareholders have gotten fed up with widespread waste in the industry, prompting companies to try new avenues for tightening and streamlining operations.

The broader message, he said, is that the drug development process is “horribly inefficient,” from manual documentation to the failure rate. One of the challenges, said Kreger, “is you do all the work to design the protocol and train the sites, then half of the sites don’t enroll anyone. It’s an enormous time and resource sink. This asset is a way to better manage that process. Firecrest gives clients real-time access to information on what the sites are doing and helps push needed information out to the sites.”

Firecrest claims to increase patient recruitment by 10% to 12% and produce cleaner data, with a 40% to 50% reduction in data queries.

Firecrest CEO Gary Hughes said the company was started by a team of principal investigators hoping to find an alternative to the traditional investigator meeting.

“The investigator meeting was two days away from the office—two days of death by PowerPoint—and then it was six or seven months before you’d randomize a patient for the trial,” said Hughes. “By then you’d no longer remember anything from the investigator meeting.”

The company decided to focus on what a site needs to know and when. From there, it developed a system to offer virtual investigator meetings, followed by a service that repackages protocols into a procedure-driven, visit-by-visit guide. The protocol is connected with various algorithms, so that if coordinators or investigators have specific questions during a trial, the answers more than likely are already there for them. If not, they can gain access to a monitor via web chat or email. “It’s over-the-shoulder type of guidance,” said Hughes.

Firecrest, he added, was named after a bird native to the U.K. that’s “small, but feisty, and very territorial.” Icon is hoping this acquisition will help it soar past equally territorial and feisty competitors.

Suz Redfearn