Launch of Encore site network could signal beginning of consolidation wave in site sector
Some notable shifts are afoot in the site sector of the clinical trials industry.
Last week, Jacksonville, Fla.-based site group JaxResearch Systems and recruiting company Inclinix announced they were teaming up to launch a new site group called Encore Integrated Clinical Research. That closely followed site group RxTrials’ announcement that it had hired away the head of Quintiles’ Prime Sites program and one of Sanofi Pasteur’s regional clinical trials managers to beef up business development.
Michael Koren, founder and CEO of JaxResearch and now CEO of Encore, said the new group, once ramped up, will be an affiliation of independent clinical research sites that share SOPs and the technology platform pioneered at JaxResearch. Koren said he’s currently in discussions with several sites about joining. Some are established sites, while others are “emerging,” he added.
The model will marry Inclinix’s recruiting technology—some of which involves applications that use Google Maps and public database information regarding 1572s—with robust databases Encore will keep on each study conducted by each site that joins, said Koren. Thus, the two will combine their site-mining information to offer sponsors an enhanced way to both conduct site selection and recruit patients.
JaxReseach is the umbrella company for the 14-year-old, multi-specialty Jacksonville Center for Clinical Research (JCCR), which already consists of eight sites in Florida and one in Panama. JCCR will be part of Encore, an acronym for ENcouraging COmmunity Research and Education.
Robust site groups staffing up and/or launching new site groups is all part of the wave of industry consolidation that’s just starting to hit the site world, said Mark Lacy, CEO of Austin, Texas-based, six-site group Benchmark Research.
“What’s going on right now is the tip of the proverbial iceberg,” said Lacy, who predicted that the next three years will bring much change in the site industry. “For sure, we will see a lot of activity in the two classic models—the alliance or network of well-established, independently-owned sites and the owned-site model—whether it be through mergers and acquisitions, like Radiant, or organic growth, like us at Benchmark.”
And, he added, collaboration can take many forms, from very informal site alliances to networks whose members all offer the same unique selling point such as using the same technology (like Encore), to alliances based on therapeutic areas and geographic regions.
“We are likely to see more study brokers and site consultants, and almost assuredly some new and unique models that are yet to be created,” Lacy predicted.
Why so many changes now? Koren said as the economy improves, some of the more professional players in the site space are starting to feel more confident about spending money on business development efforts. This coalesces well with the drug development industry now looking to sites for something different, or better.
“We recognize that there’s dysfunction in the industry,” said Koren. “The past models of drug development are becoming inefficient, not producing new products as fast as they used to. The overhang of drugs coming off patent soon is a monster for drug sponsors. Replacing those products is going to require effective and efficient resources at the site level.”
In addition to site network collaborations and other alliances underway among investigative sites, Lacy said some investment firms, smelling opportunity, have been knocking on doors of sites. Word on the street is that sites are receiving offers and that a new wave of site management organizations (SMOs) is soon to launch. “There’s a bit of a ‘there’s gold in them thar hills’ atmosphere,” he said.
Most of the SMOs of the 1990s—companies that bought many sites in an effort to garner numerous trials from sponsors—crashed and burned. “We had a landscape littered with failed SMOs—a novel idea based on sound business principles but poorly executed for the most part. A great idea, perhaps before its time,” said Lacy.
Said Koren, “SMOs, in my opinion, were just cash-flow mechanisms and not really focused on the operational end of sites and the excellence and consistency that should be there.”
“This go around, due to both macro and micro economic and market forces, my guess is that this movement towards consolidation will result in far more success, although the road is sure to be rocky,” Koren said. “I think we will end up with an industry that is no longer cottage in nature but will likely reflect the industries the site industry serves, pharma and CROs.”
For sites that may mean if you’re not big or very good at what you do, you may not make it through the current wave of site groups looking for new members and investment firms seeking possible acquisitions.
“While there will be many winners,” Lacy said, “the list of losers is likely to be far longer.”