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Outsourcing is now firmly entrenched in the pharma industry. While pharmaceutical companies have been outsourcing back-office activities for many years now, they are increasingly turning to external partners for research and development activities that traditionally were retained in-house.
Today, the pharmaceutical and biotech industry has the highest level of R&D outsourcing across all high-technology industries, according to a recent PwC report. And demand for outsourcing services is increasing, allowing pharmaceutical companies to focus on core competencies.
Other reasons for outsourcing include gaining access to new technology capabilities, faster response time, and improving processes, according to Kalorma Information.
In the past cost reduction was the main driver, Gens and Associates have noted.
Tapping New Capabilities
Resource and cost pressures, combined with the need for specialized knowledge, are increasingly leading pharmaceutical companies to outsource drug discovery activities, such as biology services and lead optimization — the final stage in the discovery process before a compound moves into preclinical studies, according to experts at Kalorama Information.
In parallel, life-sciences companies have been partnering more frequently with academia and nonprofit organizations to bolster drug discovery.
The Clinical Trial Process
Partnership with CROs continues to expand amid growth in developing markets and an improving global economy. A 2016 Nice Insight CRO and CDMO (contract development and manufacturing organizations) outsourcing survey found that 77% of companies outsource services or operations to CROs, CDMOs, or CMOs organizations.
Typically, companies are outsourcing a high number of tactical activities. For example, a Cutting Edge Information survey found 83% of the top 10 and top 50 pharmaceutical companies outsource responsibility for clinical data management. Among activities these companies are outsourcing include traditional trial monitoring responsibilities and data management.
Companies are looking for more than to simply lift and shift activities with a majority of pharmaceutical companies (69%) seeking strategic partners, the Nice survey found. Other research indicates that there is an even split between a strategic and tactical approach to outsourcing.
Phase II projects are most commonly outsourced (63%), followed by Phase I activities (58%), preclinical work (53%), and Phase III (51%). Even postmarketing studies have a relatively high rate of outsourcing (39%).
According to a Gens and Associates 2016 survey, Pursuing World Class Regulatory Information Management (RIM), Strategy, Measures and Priorities, regulatory activities that companies most frequently outsource include investigational or new marketing application submission publishing, small maintenance submissions, local affiliate submission publishing, safety case processing, and safety reporting. The survey of 52 companies found that the biggest driver for regulatory outsourcing is deriving greater flexibility to manage spikes in submission volume (86%), followed by a push to improve operational efficiency (82%), with cost reduction being the third highest priority (78%).
Challenges in the Relationship
Despite more companies choosing to outsource, problems with the vendor relationships continue. In fact, a survey of pharmaceutical R&D leaders found that managing outsourcing was the biggest day-to-day challenge they faced.
Loss of control, IP, and confidentiality remain among the main concerns for companies. Poor communication and cultural barriers are also cited as significant challenges in the outsourcing relationship.
Successful outsourcing relationships require careful planning and selection, continual vendor oversight and evaluation, and resource commitment to managing the relationship.
The Changing Face of Outsourcing
While outsourcing has grown across the industry, there has also been huge consolidation.
Perhaps the biggest CRO/vendor merger of the year was the $18 billion deal between Quintiles and IMS Health that the two companies described as creating a “distinctive global real-world evidence solutions platform.”
It’s likely that during 2017 more alliances, mergers, and partnerships will form as the outsourcing industry seeks to meet the growing demands of life-sciences companies. (PV)