CRO

CRO (not GRO, for those of you who may have misread the title) stands for Contract Research Organization. These groups outsource the test and research of the various drugs and medical devices that pharmaceutical companies develop. Companies like Quintiles and IMS Health Services perform the informatics and database management of the research.

For a drug to pass the FDA (Food and Drug Authority of the US), a drug normally has to go through at least three phases, which include clinical trials and research. Clinical trials usually involve more than 1,000 patients with the same homogenous symptoms for each trial with a corresponding number as the placebo control. According to an article in Business Week, this approval process could cost around $300 million to $800 million each, running on average four to five years per drug. (If things go right! Hello, Murphy!!)

I posit that if there are at least 20 drugs in the pipeline with the approval costs running an average $500 million each, this market for outsourced FDA approval could run $2 billion a year. If only five percent of either the data management or transcription is outsourced to the Philippines, then this is a $100-million industry.

The skilled professionals needed are medical researchers and IT data managers, both of whom we should have plenty of.

My Two Cents: I am almost sure I am conservatively off by a factor of 10, which means the industry should be in excess of $1 billion a year.

Taxes

I am currently serving as a trustee for a school. As a novice in a non-profit environment, I am seeing a lot of parallels to government. One, we have to make sure the costs of providing basic services are under control and that would include bad debt costs; and two, the school fees we charge are fair and reasonable and just enough to cover costs. If the service only covers a few students, then those students have to pay incrementally more.

In government, I would imagine we also have to provide basic services but keep the costs down and then figure out a way to fund them through taxes – income, excise, VAT – and other service charges.

I have not seen the numbers but I am sure Mr. Bañez’s budget for computerization pales in comparison to his counterpart at the IRS (US Internal Revenue Service). He needs more funds to train and develop better professionals as well as better systems for transparency. Even though less complicated than US taxes, the amount of filings will still swamp his office on April 15.

I have a few suggestions:

aa. Simplify further. Simplify the tax code enough that it can be filed on a 5 x 8 index card. (A suggestion that will be hard to accomplish.)

bb. Spread the tax filers to quarterly. Instead of having everybody file on April 15, maybe A to G can file in the first quarter and then H to M in the second quarter and so on. Spread the pain versus burst.

cc. Outsource. If the function is not critical to the mission of an organization, it should be outsourced. What functions? This I will leave to the organization’s leadership.

My Two Cents: We are definitely in the right direction in terms of collection. Now, if we can only convince the spending side of the equation to reduce unnecessary waste.

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Dickson Co is CFO (C is for Cheap) for both Dfnn and HatchAsia.com. For comments and suggestions, e-mail twocents88@yahoo.com.