A continuing shift towards strategic outsourcing and offshoring of research and development and clinical trials can be expected over the next few years, as biopharmaceutical companies strive to cut costs and bring products to market more quickly, a new study concludes.
The study by consulting firm Booz & Company found, for example, that 67% of survey respondents from bioscience companies in California, US predicted strong growth in R&D outsourcing. The responses also suggested many clinical trials will move overseas to China and India during the next two to three years.
Several biopharmaceutical companies will start outsourcing formerly core activities such as clinical trial monitoring and protocol development to contract research organisations (CROs), Booz & Company forecasts.
This trend will be driven by new service offerings in real-time data processing and virtual platforms, allowing stakeholders around the world to access clinical data securely as it arises, Booz & Company notes, adding that farming out more of these critical activities along the entire R&D spectrum “will transform the nature of outsourcing relationships”.
Companies first began outsourcing to CROs “to get R&D done faster and cheaper”, comments Matthew Le Merle, partner at Booz & Company.
“However, this study clearly signals that biotech executives are now looking for more – more value, more expertise, and more innovation. This means we will see outsourcing relationships evolve from transactional to strategic, which will require new capabilities on both sides.”
Booz & Company teamed up in mid-2011 with BayBio, the bioscience association for Northern California, to conduct a survey and interviews of 32 executives from biopharmaceutical companies.
Other key findings of the study included:
• Most outsourcing among the respondents currently occurs in the United States (64%) and Western Europe (15%).
• Biopharmaceutical companies send trials overseas for three main reasons: as part of their regulatory approval strategy (36%); to cut costs (23%); and to gain access to patient samples (23%).
• Companies are outsourcing mainly because they lack certain internal capabilities (53%); lack internal capacity (38%); and need to cut costs (44%).
• Growth in offshoring of R&D functions drives demand for technology solutions such as real-time data collaboration and globally accessible data storage.
• When selecting an outsourcing vendor, the majority of survey respondents (61%) will seek a long-term strategic relationship rather than a looser transactional, fee-for-service arrangement.
“The survey results clearly show that outsourcing is here to stay,” says Booz & Company partner Charley Beever. “The key question that biopharma companies must address is which capabilities to outsource and which to maintain in-house.”