Highly-Specialized Expertise Helps Pharma Focus on What They Do Best
The discovery, manufacture and marketing of drugs is complex business indeed. So complex, in fact, that even the biggest of Big Pharma routinely outsource major components of the drug development and commercialization process. 2013 was no exception – according to Nice Insight, the dollar amounts being spent on each project grew modestly through 2013 even as the overall number of projects remained fairly level.
Pharma is Global
A fairly big component of the drug industry’s complexity is globalization – research, manufacturing, and transportation have scattered worldwide. It’s becoming less and less unusual to come across a drug discovered in the U.S., with process development completed in the EU, and manufacturing & packaging performed in India…for marketing in Japan. That’s today’s reality, with a global life sciences industry geared towards core competencies, cost management and risk mitigation.
Outsourcing drug commercialization steps isn’t a new phenomenon. But track what’s been outsourced over the last 20 or 30 years and the results are telling: a shift from secondary & tertiary functions (think HR, IT and Accounting) to mission-critical functions such as drug development, regulatory affairs and drug (or key API) manufacturing.
Cost Savings Still Matter – But is it the Key Driver for Outsourcing?
In that piece I mentioned earlier, Kate Hammeke – Director of Marketing Intelligence at Nice Insight (What Can 2013 Outsourcing Trends Lead Us To Expect In 2014?) – laid out the case for continued modest growth in pharmaceutical outsourcing for 2014, primarily driven by pharma companies seeking internal cost savings.
But outsourcing isn’t solely a financial consideration any longer. Hammeke notes that quality and reliability expanded their modest lead over affordability as key CRO/CMO selection criteria:
“For the past two years, research data has shown that quality (1) and reliability (2) consistently rank highest among the six key drivers of partner selection. This ranking isn’t likely to change in 2014, even though there has been some shuffling in the rankings of other attributes — namely a rise in the importance placed on regulatory track record and a decrease in prioritization of affordability.”
(Read the article at Life Science Leader)
It’s not unexpected, by any stretch. Back in 2011, in a piece at Pharmaceutical Online, Jim Zhang reviewed the broadening of outsourced services. Jonnatha Mayberry likewise pointed out the importance of both broadening CRO/CMO services and increasing niche expertise in a piece last year at Pharmaceutical Processing.
This is why companies such as Neuland place so much emphasis on the importance of both the highest regulatory standards and excellence in advanced pharmaceutical and biopharmaceutical niche chemistry and manufacturing, while offering clients a comprehensive range of CRO/CMO services. It’s about finding providers with competency in essential – and increasingly complex – segments of drug commercialization, from discovery through manufacturing and beyond.
Global pharmaceutical outsourcing will always – to some degree – be a budget-driven decision. But it is no longer the sole – or in many cases even the dominant driver – in contract research and manufacturing.
What’s your take on the 2014 outlook for global pharmaceutical outsourcing?
