With The Rise Of PAOs And Site Networks, What Will The CRO's Role Be?
By Jeremy Weitz, Director of Procurement, Global Clinical Services, Biogen
Over the past several years, pharma companies have embraced an outsourcing evolution away from full-service outsourcing (FSO) models and toward partnerships with functional service providers (FSPs). CROs have successfully adapted to the FSP but with the rise of patient access organizations (PAOs) and site networks, their role in supporting clinical trials is continuing to evolve. (To begin at square one, start with “The Role Of The CRO Is Changing. Why?”)
In part two of this series, explore the more prominent roles PAO and site networks are playing in clinical trial operations, discover how CROs are partnering with them, and get a glimpse at how CROs might reinvent their part of the research ecosystem in the future.
PAOs And Site Networks Rise To The Occasion
Amid the evolving CRO landscape, pharmaceutical and biotechnology companies are also shifting their focus toward improving clinical site relationships, management, and communication. The traditional reliance on CROs to handle every aspect of clinical trial operations is giving way to a more collaborative approach between sponsors and clinical sites. Site engagement has become a priority for many sponsors, as improved site relationships are critical to enhancing patient recruitment, retention, and trial efficiency.
The formation and consolidation trend of site networks and the rise of patient access organizations (PAOs) are part of a broader strategy to centralize and standardize clinical trial site engagement, improve patient engagement, and reduce the burden on trial participants. These networks offer the potential to not only improve trial efficiency but also allow sponsors to access specific patient populations more directly. While CROs have traditionally operated as intermediaries between sponsors and sites, the increasing importance of site networks and PAOs raises questions about the CRO's role in this new paradigm.
Technological advancements are driving the evolution of site networks and PAOs, playing a critical role in transforming clinical trial operations. The integration of digital tools like AI, ML, and real-time data analytics has enabled greater efficiency in site management, patient recruitment, and trial monitoring. These technologies allow for better patient targeting, reduced cycle times, and streamlined communication between sponsors and sites, offering a data-driven approach to improve outcomes. As a result, site networks are leveraging these tools to scale operations while maintaining a higher degree of coordination and standardization across trials.
Furthermore, telemedicine and decentralized trial technologies are reshaping how PAOs operate, creating more flexible and patient-centric models. This shift enables trial participation from diverse geographic locations, minimizing the travel burden on participants and improving retention rates. Digital platforms are facilitating seamless patient engagement, from recruitment to follow-up, and PAOs are capitalizing on these advancements to offer more comprehensive services to sponsors. With these technological innovations, site networks and PAOs are well-positioned to advance patient-centric clinical trial models, significantly improving patient access and engagement while lowering operational costs.
How CROs Are Teaming Up With PAOs and Site Networks
As CROs face diminishing FSO revenue, they are beginning to form alliances with site networks and PAOs. Recent acquisitions and partnerships, such as PPD’s acquisition of Accelerated Enrollment Solutions (AES), ICON’s acquisition of Accellacare, IQVIA’s acquisition of Avacare, and Parexel’s launch of its Site Alliance Network, highlight the strategic importance of these networks. PAOs are also evolving to offer services traditionally provided by CROs, such as project management and patient engagement solutions, regulatory services, etc.1, further encroaching on CRO territory. The expansion of PAO capabilities could eventually rival FSO operations, raising the stakes for CROs to adapt or lose relevance in the clinical trial ecosystem.
What Will CROs Look Like In The Future?
The role of CROs within the clinical trial landscape is likely to continue evolving. One possible direction is that CROs will move toward owning or having an increased financial stake in clinical trial sites, forming deeper integrations with site networks and PAOs. By directly investing in sites, CROs could regain market share control over patient recruitment, trial execution, and site management, ultimately positioning themselves as key players, once again, in the broader clinical trial ecosystem.
Site ownership or partnerships will allow CROs, in the short term, to tap into new revenue streams by offering project management services or additional fees directly linked to connecting sites and investigators with trials and incrementally increasing site fees. In the long term, CROs will position site networks and PAOs to become "on-site CROs," delivering an integrated service model that combines their expertise in clinical trial operations with direct access to patient populations and trial sites. This would not only address the declining FSO spend but also allow CROs to capitalize on the growing importance of site networks and patient engagement.
The recent announcement that Jefferies acted as the exclusive financial advisor to Flourish Research in its sale to Genstar Capital2 highlights the growing trend of private equity investment in clinical research site networks. This deal, with a premium high-teen multiple off of EBIDTA, signifies increased confidence in the long-term profitability and scalability of such networks, driven by the rising demand for efficient and high-quality clinical trials. Past and recent sales of CROs have been recorded in the high teens and reaching an evaluation of >20x multiple off of EBIDTA displaying that this sale sets the high-water mark for site networks. With private equity firms like Genstar Capital stepping in, site networks are poised for consolidation, technology enhancement, and expansion, potentially reshaping the competitive landscape and positioning them as key players in the clinical trial ecosystem, particularly in improving site access and patient engagement.
Moreover, as private equity investment in trial sites continues to rise, CROs will find themselves competing with or collaborating with new entrants in the market. Trial sites have emerged as one of the “hottest” categories for private equity investment3, further underscoring the potential value of site ownership or partnerships. CROs that position themselves as key stakeholders in site networks will benefit from the increased demand for clinical trial services and create new, sustainable revenue streams.
The future of CROs lies in their ability to adapt to the evolving clinical trial landscape. While FSO services will continue to decline, CROs have the opportunity to redefine their role by integrating with site networks and PAOs, offering new capabilities, and leveraging their expertise to maintain relevance in a rapidly changing market. This leads to a potential new future state pendulum, where we may see a shift from FSP to greater direct site services, creating more sustainable and diversified revenue streams for CROs.
Acknowledgements:
The author would like to Siân Smethurst, Sarah Ward, Tara Aldoory, Emilio Da Silva Neto, Jane Twitchen, Rob Cottrell, and Samir Shah for their insights and engaging discussions that have contributed to the development of this article.
References:
- CROSSTREE Capital, Clinical Trial Patient Access Organizations – An Emerging Ecosystem, Whitepaper. 2023.
- Jefferies Acted as Exclusive Financial Advisor to Flourish Research on its Sale to Genstar Capital, September 18, 2024
- Private Equity invests in trial sites as CRO consolidation continues: PitchBook, By Helen Floersh, Fierce Biotech, June 20,2024 https://www.fiercebiotech.com/cro/private-equity-invests-trial-sites-cro-consolidation-continues-pitchbook#:~:text=%E2%80%9CClinical%20trial%20sites%20are%20undoubtedly,%2C%E2%80%9D%20the%20report's%20authors%20wrote
Note: The views and opinions expressed in this paper are solely those of the author and do not express the views or opinions of the employer.
About The Author:
Jeremy Weitz is a procurement professional with over a decade of experience in the pharmaceutical drug development industry. His career spans leadership roles from a biotech CRO to major biopharmaceutical companies, including Biogen and AstraZeneca, where he has overseen the development and implementation of strategic global operations.