When price competition heats up, don’t let quality slide- but make sure your customers knows where they’re paying for "above and beyond" quality; otherwise, you’re in a race to the bottom.
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From 2020 to 2021, and to some extent 2022, price was rarely an issue for clinical research providers. Prospects were flush with cash and eager to invest in all the clinical research “extras” that were created during COVID.
Amongst all the said extras that were created, I was pleased to see a number of CROs and other service providers invest in genuine quality initiatives to improve the level of service provided to biopharmas and many stakeholders across the industry (yes, even to sites).
These quality initiatives cost money to provide and were reflected broadly in price increases:
More than ever, difficult trials are staffed by highly experienced people…at higher rates.
The number of third party vendors involved on a typical trial significantly expanded, with many of those vendors being niche service and technology providers and almost always incremental costs to the total cost of the trial.
Service providers who historically dabbled in enterprise software only for internal corporate purposes (accounting, finance, resource planning, CRM, etc.) started adopting enterprise software for external facing operations (CTMS, safety reporting, eTMF, etc.).
New roles were added to drive increased quality of service delivery and mitigation and management of risk.
Towards the back half of 2022 and into 2023, prospects stopped buying the extras like they used to. Price competition is heating up rapidly. Projects are taking longer to sell and start up, and the ones that do get sold are canceling at higher rates. Biotech bankruptcies are on the rise, and I expect more to follow as lending and fundraising conditions deteriorate.
As a result, clinical research providers are taking a hard look at recent and planned investments, roles, offerings, etc. to determine what needs pared back or eliminated - especially those that may create a competitive price disadvantage.
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Identify those areas which, if pared back or eliminated, would genuinely reduce the long-term quality of your service delivery. Preserve these areas by every means possible.
Perhaps the best means to do this is separate these areas in your pricing as distinct items that are obvious to the customer (and your teams). Be clear on the following:
Are they optional?
What benefits does the customer lose if the item(s) are not selected?
Do other areas/items increase in price or duration if a key quality-enhancing service or technology offering is not selected?
Review internally:
Do those items need to be priced more aggressively?
If the price is largely set based on what a third party is charging you, can you negotiate a better deal?
Can items be tiered into different levels of service?
Can items be grouped together into packaged pricing?
Don’t let quality slip! Maintain those offerings that create long-term differentiation for your organization. Use your pricing as a way to make clear to customers why these items are so important, what they stand to lose by not taking advantage of them, and how you can creatively work with them to tailor those offering to your customer’s specific situation.
