Sector Report

Here is our “deep dive” market insight on clinical trial site networks (or SMOs) following a series of discussions with top executives of site networks, CROs, and private equity investors. In our view, site networks help address what is arguably the number one structural “pain point” in drug development today — the life sciences industry’s reliance on a fragmented universe of sub-scale standalone clinical trial sites.

Key Takeaways

1. Site management organizations/SMOs (or site networks) exist to bring economies of scale to an otherwise fragmented universe of standalone clinical trial sites. Site networks need to take care in determining which specific dimension of scale they are trying to achieve. One strategy that came up in many of our conversations was the need to build scale in geographies with targeted demographics given the elevated focus on clinical trial enrollment diversity.
2. Acquisitions are the preferred growth strategy for many site networks that we spoke with. This tends to result in a faster path to financial success/breakeven, whereas starting a clinical trial site from scratch takes time and investment. However, some site networks have seen success with de novo expansion strategies since there are no integration issues.
3. We find that a hybrid strategy of dedicated and embedded sites helps to diversify a site network’s operating profile. Dedicated sites allow for the maximum control over operations since there are no competing day-to-day priorities that normally exist at a medical practice. However, embedded sites can take advantage of existing doctor-patient relationships, making it easier to recruit in therapeutically complex clinical trials in specialty disease areas.
4. We are hearing more about “preferred provider arrangements” between sponsors and site networks — similar to that which we have seen evolve between sponsors and CROs over the past couple of decades. Also, we are seeing site networks expanding into areas traditionally reserved for CROs, e.g., protocol design, medical monitoring, and data management.
5. The use of standalone independent clinical trial sites still has advantages. That said, to be successful with standalone sites, sponsors and CROs need to seriously rethink their site relationships with a greater focus on collaboration and communication. This sounds simple, but it would require significant culture change.

In the dynamic healthcare industry, staying ahead of trends is essential for informed decision-making and seizing opportunities. Please reach out to our research team for more information.