The Net Financial Benefits of Single Vendor Integrated CDMO and CRO Drug Development Services

Background: Drug and vaccines development is expensive with risky prospects for marketing approval. Furthermore, operational inefficiencies have long plagued drug development processes, contributing to high costs and development risks. Recently, drug industry observers have pointed to organization fragmentation between functions as a substantial source of operational inefficiencies. However, there is little evidence in the literature of the impact of cross-functional integration. Methods: To remedy this shortfall, we gathered information on the impact of integrating multiple contract development and manufacturing organization (CDMO) and contract research organization (CRO) services with one vendor and used that information to populate an expected net present value (eNPV) model of the development and commercialization processes for drugs tested in oncology indications and determined whether integration yields higher eNPVs. Results: We examined the net financial impacts of using full and partial integration capabilities for individual and multiple pre-approval clinical phases. If full integration is applied only to phase 1, phase 2, or phase 3 for monoclonal antibodies (mAbs), the increase in eNPV is $1,451,000, $3,141,000, and $62,932,000 per oncology indication, respectively. Conclusions: All primary results showed net financial benefits to integrating clinical trial and manufacturing processes in drug development (all eNPV deltas are positive). Sensitivity analyses also demonstrated the value of integration across functions for wide variations in estimated benefits and industry development and commercialization metrics. Although the focus of this study is on oncology drug development, the integration methods can be applied more broadly across other therapeutic areas, suggesting that the qualitative results may be generalizable.