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Clinical Trials in Eastern Europe

In 2002, companies outsourcing their drug development, including preclinical/clinical services, spent an estimated $2.60 billion in Western and Eastern Europe.

Spurred by the growing volume of clinical work being outsourced to Eastern European contract research organizations (CROs), Europe is poised to maintain its current position as the second largest market for CRO services globally. Annual growth is projected to remain strong, at an average of 10.4% for the 2002 to 2010 period, as drug developers in both the United States and Western Europe continue to seek lower-cost means of conducting clinical trials.

East versus West: How Europe's CRO Market is Developing One of the most noticeable trends in the European CRO market has been Eastern Europe's emergence as a key hub for handling low-cost clinical trials; a direction paralleled by the subdued state of preclinical-clinical research in Western Europe.

Western Europe: Price Controls Subdue Growth Price controls have served to dampen R&D activity in Western Europe, particularly in the high-cost area of preclinical research.

As governments have imposed ever-tighter price control measures, in a bid to cap escalating healthcare budgets, revenue flows to pharmaceutical companies have dried up. The inevitable backlash is being felt by shrinking R&D outlays and migrating sales and R&D activity to the US, where market forces determine drug prices.

At the same time, tighter reimbursement policies have limited access to expensive new drugs, leaving patients no other option but to use cheaper, existing alternatives. Whilst this has caused deterioration in the quality of patient care, there is little hope of the situation resolving itself in the near future. Relatively weak national economies have been compounded by spiralling drug costs and reduced government funds, leading to a depression in the level of preclinical research in Western Europe.

"As this phase of the drug development process is cost-intensive, relying on sophisticated science and expensive testing equipment and facilities, developers are reluctant to commit to high capital expenditures when revenues are relatively stagnant," explains Frost & Sullivan's research analyst Alison Sahoo.1

Western European CROs must also contend with the fact that little business is likely to come their way from US pharmaceutical companies. With the majority of preclinical testing needing to be located in close proximity to central operations, the prospect of US pharmaceutical and biotech companies outsourcing work to Western European CROs is unlikely. Instead, it is mostly the European pharmaceutical and biotechnology companies that are expected to employ local CROs for preclinical projects to support their R&D teams.

Despite this trend, an increasing amount of clinical work is being outsourced to Eastern European CROs.

Eastern Europe: A Beneficial Climate for Clinical Research Low costs and easy recruitment are the twin platforms on which Eastern European CROs are set to take off; both factors having held great appeal for drug developers in the US and in Western Europe.

The significant percentage of clinical trial costs related to patient compensation is also an issue. In the West, these have soared recently and driven clinical development efforts eastwards.

"Compensation of Western European volunteers and medical personnel is now similar to US rates," notes Ms Sahoo. "Additionally, trial centres in the region routinely charge for all expenses incurred, while their Eastern European counterparts bill only for costs incurred over and above standard operating expenses."

In the US and Western Europe, average reimbursements for patients in Phase II and III trials are about $5000. In Eastern European countries such as Poland, Hungary and the Czech Republic considerably lower patient reimbursement rates have attracted attention. Now with the emergence of a new set of countries offering even lower rates of payment, such as Bulgaria, Romania and Serbia, there is set to be a new wave of interest in Eastern Europe. Costs in these countries can be as low as $2000 per volunteer, a major pull when large scale and/or multiple trials are required.


The prospect of saving time, adds a further lure. Highly structured healthcare systems have facilitated coordination of clinical trials. Easily accessible, sizeable and homogeneous patient populations with racial similarities to North America have also made volunteer recruitment a far swifter task than in other regions.

With limited access to new medicines, patients in Eastern Europe are also enthusiastic about participating in studies that would allow them access to novel drugs. At the same time, as patients in this region are typically under medicated, the chances of patients taking competing medications that might skew final study results is avoided. Coupled with a record of excellent patient compliance with protocols, the outcome is high-quality data and an ultimately speedier regulatory approval.

In other regions, patient recruitment tends to be much slower and compliance with study protocols can sometimes be slack. The corollary is prolonged trials and compromised data, which undoubtably means higher costs for study sponsors.

Most leading CROs now have an established presence in Western as well as in Eastern European countries such as Hungary, Poland and the Czech Republic. They are also making forays into Bulgaria, Russia, Croatia, Latvia and Lithuania.

The recent accession of 10 central and Eastern European countries — the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Ukraine, Slovakia, Slovenia and Cyprus — to the European Union means an EU population of nearly 375 million. This expansion has ultimately thrown open large potential drug markets.

At present, many new east European members are identified as attractive drug markets in their own right and have appeal as a base for clinical trials. The comparatively large and well-developed populations of Romania and Poland for instance offer an attractive centre for clinical trials. Trial data is quicker to obtain, regulatory approval generally prompt and marketers' have an advantage in advertising novel products to physicians.

While making an early entry into these 'virgin' markets might seem an attractive proposition, potential entrants would do well to tread cautiously. Patient populations in many of these new EU countries are relatively small. They are, therefore, unlikely to be able to support more than one or two trial centres for each CRO.

Trial providers wanting to expand their operations are likely therefore, to be compelled to spread their resources over many countries. This strategy brings with it its own set of problems, because each country has distinct political, economic, cultural and regulatory dynamics.

These profound national differences make expansion a complex, time consuming process and in response many CROs, particularly the smaller firms, have taken to partnering with established providers rather than setting up their own facilities.

Nevertheless, exciting opportunities await CROs in Eastern Europe. Those able to skillfully negotiate unstable terrains such as Russia may not only benefit from low costs but also from its large population pool and untapped contract research market.

Heading to the East There are nearly 375 CROs active across Europe, several of which are small companies with less than a $5 million sales turnover. The degree of competition and technical change is less intense than that in the US, but higher than the nascent Asian market.

Europe like other regions, has high levels of market concentration. European CRO revenues are dominated by a troika of companies — Quintiles, Covance and PPDI — that collectively account for just fewer than 30% of all sales in the region.

"These companies benefit from strong pan-European operations as well as full-service offerings in preclinical, clinical and commercialization services. Among the most successful CROs in Europe are those that leverage Eastern Europe's favourable environment for clinical studies," notes Ms Sahoo

By 2007, total European CRO market revenues are projected to be a healthy $4.26 billion (Figure 1). Attracted by this, several new participants are poised to enter, intensifying competition and whittling the share of the current market leaders.

With new states now added to the EU fold, CROs have lucrative new markets to penetrate. Some have already set up operations in Eastern Europe, some are attempting to consolidate their presence and others are beginning to test the waters.

Quintiles has established offices in Bulgaria, Russia and Croatia. Icon has a facility in Latvia, Paraxel a site in Lithuania and the fast expanding company, AbC.R.O,is conducting its Phase II, III and IV clinical trials in the ultra low-cost regions of Bulgaria, Romania and Croatia.

A similar trend is mirrored in the US. Evidence Clinical & Pharmaceutical Research, which provides Phase I through to phase IV clinical trial services, has a growing presence in Eastern Europe. In addition to the Republic of Georgia (Tbilisi), the company has offices in Russia (St. Petersburg, Moscow and Kemerovo, Siberia). It has also established relationships with over 200 medical institutions in Russia, Belarus, Bulgaria, Georgia, Latvia, Lithuania and the Ukraine providing a solid platform from which to expand operations.

Furthermore, German-based Scope International, performs Phase I through to IV clinical trials for companies throughout Europe by leveraging its own two facilities and partnering with other CROs. Through a network of partners in Eastern Europe, Scope arranges low-cost clinical trials in Croatia, Estonia, Hungary, Lithuania, Poland, Romania, Russia and Ukraine.

These are just a few of the growing number of CROs looking to capitalize on the inherent advantages of Eastern Europe. For all of them, the key competitive factors are likely to be reputation for research quality and thoroughness, project completion time, price and knowledge of local regulatory environment, language and culture.

A Bright Future for CROs Not just in Eastern Europe, but also across the world, CRO revenues are on the rise. Growth across all the major regions — North America, Europe, Asia and Latin America — is expected to be spurred by the need for drug developers to control costs, accelerate product development and use technology to rapidly identify and advance promising drug candidates. The increasing globalization of biotech and pharmaceutical companies is likely to lend further impetus to the expansion of CRO activity.

From its side, the CRO industry is evolving to meet the increasingly exacting demands of pharmaceutical and biotechnology companies. Today, the function of CROs is no longer restricted to solely providing clinical trial outsourcing services. Instead, many CROs are offering a full complement of services that guide products from inception to the commercial stage.

Nearly 18% of all drug tests worldwide are currently outsourced to CROs with every indication that this percentage is likely to rise in the future. The key appeal of CROs lies in the fact that they can, in many cases, conduct preclinical safety assessments and human clinical trials much faster than similar studies performed internally by pharmaceutical and biotech drug developers. Such time savings are vital for drug developers for whom each day of market delay translates to a hefty $1.3 million in lost sales.

Supported by these trends, the global CRO industry is poised to turn in a solid performance. The annual average increase, over 2002 to 2007, is forecast to be a hearty 13.1%, translating to a healthy revenue expansion from $7.78 billion to $14.37 billion.

Growth rates are expected to surge in the emerging markets of Asia and Latin America, but all eyes will be on Eastern Europe as it strengthens its claim to be the new Mecca for low-cost clinical trials.

Raju Adhikari is the industry manager, pharmaceuticals and biotechnology at Frost & Sullivan, UK.

Bibliography 1. http://






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