Investors Reward Innovation and Seek Decentralization in Clinical Trials Technology and Pharma Services

The clinical trials technology and pharma services markets have long been ripe for innovation. Despite their role as an essential component of pharmaceutical development and efficacy, clinical trials have mostly succeeded in spite of themselves — typically crossing the finish line snarled in their own inefficiency, expense, and red tape. Slow and cumbersome recruitment efforts can send a trial back to square one on a dime, wasting valuable time and money: the average clinical trial comes with a price tag measured in millions of dollars per day and typically takes upwards of 10 years to complete. In addition, the historical centralization of activity has only served to extend timelines and diminish access and equity, reducing data accuracy across underrepresented populations.

In a recent amplification of fundraising activity, however, investors are taking note of companies that provide unique solutions to these enduring issues, investing in companies bringing technological advancements to the forefront of the clinical trials and pharma services ecosystems. Companies looking to follow suit have a massive opportunity to not only have successful financial outcomes but also genuinely change the healthcare landscape for the better, ultimately benefitting patients who desperately need new treatments to improve or save their lives.

Investors Are Quickly Taking Notice of Disruptive Technology That Increases Efficiency

With the recent innovative technology deployments in the clinical trials and pharma services environment, more data is flowing through the pipes than ever. Workflow service providers and data & interoperability companies are leveraging automation and technology to disrupt outdated models, benefiting trial sponsors and patients. Companies are also taking advantage of recent AI and machine learning advancements to absolve workflow issues, bringing immense value to pharmaceutical companies with increased process capacity, speed, and flexibility.

In 2021, the largest 20 pharmaceutical companies spent ~25% of their revenue, on average, on drug research and development (1). With the sheer volume of dollars funneled toward these efforts, it stands to reason that investors are eagerly searching to find and back solutions that make clinical trials more efficient and affordable.

As the ecosystem strives to become more streamlined and connected, tech-enabled health solutions that previously thrived under an initial operating umbrella may find more favorable homes under new, larger ownership with enhanced connectivity and reach. Our team recently worked with Inspirata on the sale of its digital pathology business to Fujifilm Corporation — a transaction that represents a bridge being built in the technological gap between pathology, radiology, and oncology to facilitate a more collaborative approach to care delivery (2). Large, diversified conglomerates, including Fujifilm and many other competitors with healthcare business stakes, are positioning for the rapid advancements on the technology front to stay competitive over the long haul and continue serving the pharma ecosystem.

Aspects of the clinical trials process that have historically served as speed bumps, like patient recruitment and randomization, have also seen massive improvements and increased attention from companies looking to disrupt stale processes. Randomizing a patient into a trial (successfully matching for the trial therapy and study) has historically generated far less than a 3% likelihood of success. This issue is newly being confronted with automation, machine learning, enhanced PCP networks — and even social media campaigns — to match suitable patients to the correct trials and address workflow issues.

We also recently worked with the team at SubjectWell, the largest engagement platform for matching patients with chronic health conditions to new care options, on a $35 million fundraise to accelerate the growth of its existing software-driven recruitment efforts(3). SubjectWell serves nearly all of the largest pharmaceutical companies in the world, matching patients using its proprietary software engine and producing randomization rates far above industry standards.

“SubjectWell expands access to clinical trials by engaging the 96% of the population that has never participated in clinical research,” said SubjectWell CEO Ivor Clarke. “This approach allows us to engage a much more diverse patient population as we register 250,000 new patients per month.”(4)

Medable, a cloud platform for patient-centered clinical research, last year announced a $304 million fundraise, the proceeds of which are focused on “using digital technologies to make clinical trials accessible for everyone everywhere, bringing effective therapies to patients faster.”(5)

Technological innovations that increase efficiency — and the companies that deploy them — have therefore piqued investor interest and turbocharged funding activity. Faster trials and increased patient recruitment success can save customers hundreds of millions of dollars in direct costs and time to market. A value proposition that compelling to pharmaceutical companies is a bright green light for investors who may want to tap into the pharmaceutical market without taking on the risk of potentially landing on the wrong side of a failed clinical trial.

Decentralization: Bringing Trials to All Patients

Efforts to decentralize the clinical trials process have not only made it easier to recruit qualified patients, they have also served to increase the diversity and representation of patients that are ultimately admitted. This increase in patient recruitment, retention, and data diversity leads to an increased sample size of accurate data and faster trials — ultimately saving money and lives. All of the above can be compelling to investors. In some cases, it may also contribute to satisfying the Environmental, Social, and Governance (ESG) mandates of their underlying Limited Partners.

Two larger trends in healthcare have played a major role in decentralizing the ecosystem: consumerization and the implementation of remote patient monitoring technologies. Companies like Walmart, CVS, Kroger, and Walgreens have begun to move into the primary care and clinical trials spaces, broadening the access and scope of trials. Remote patient monitoring technologies allow patients to be observed in their own homes at any step of the process, and the data garnered can efficiently return to stakeholders in a free flow of information, saving precious time and money.

Investors have taken note of companies taking steps toward decentralization, shown in fundraisings such as Paradigm’s $203 million Series A, announced in January 2023. The platform was created with the mission to “build a more equitable clinical research ecosystem” and “make clinical trials a care option for all patients.”(6)

Our experience in the market suggests that if a company has the ability to contribute to decentralization — thereby decreasing time and cost and increasing access and data accuracy for the broader population— this further adds to the appeal for investors.

Checking the Sector’s Vitals

The clinical trials technology and pharma services sectors are much sturdier compared to others in the broader healthcare landscape, only further facilitating investor activity in the space. Drug sales are generally resistant to macroeconomic conditions, leading to the sector’s defensible position against the broader market. Although the industry saw a slight decline/flat trend of -4.7% in transaction activity and volume from 2021 to 2022, the change was substantially smaller when compared to the 21.5%(7) drop in broader healthcare technology and digital health.

Investor attention on the space is at an all-time high, and not just on the private markets side. In a year where strategics lie largely dormant on the M&A front with their market caps hammered, we have seen robust interest, and more strategic activity happening here than in any other space.

Investors of all stripes are looking for consistent year-over-year growth, diversification in the customer base and areas of focus, strong gross margins through competitive differentiation, and a clear path to profitability.

A Future of Innovation and Activity

Over the last few years, companies have worked to breathe new life into the lagging clinical trials and pharma services sectors, infusing innovative technologies into historically inefficient components of the clinical trials process. Patient randomization and recruitment have always been clunky, failure-prone constituents, and clinical trials data has been traditionally tough to unlock.

Clinical trials technology and pharma services companies have raised millions to focus on placing the right patients in the proper trials, speeding up workflows, and cutting costs. The ecosystem’s decentralization has also contributed to making trials more accessible and equitable while reducing timelines and budgets. Sturdiness against macro conditions and the relative viability of individual, innovative companies continue to drive investor demand in these sectors.

The Cascadia team is active in ongoing discussions with companies and investors in the clinical trials technology and pharma services sectors. We are happy to lend our insights and experience as you evaluate your own next steps.

Reach out to our team to learn more



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