Outsourcing of drug discovery functions to regions such as Eastern Europe is driven by the hunt for new sources of expertise as well as the need for cost-efficiencies. And it is coming not just from the large pharmaceutical or biopharmaceutical companies but from smaller biopharmaceutical players, says a new report.

“Increasingly, we are seeing that these moves are being made not only to realise cost savings, but also to take advantage of knowledge in these countries,” comments Bruce Carlson, publisher of Kalorama Information.

To keep pace with competition from China and India, many CROs in the former Soviet bloc countries have assembled the most experienced chemists available and are providing services that include preparation of custom libraries, advancing screening hits into discovery leads, and designing libraries that target important biomolecules such as kinases and ion channels, Kalora Information notes. Many also offer, or plan to offer in the near future, in vitro biological screening of the chemical libraries they build.

CROs emerged in Russia and Ukraine as the Soviet bloc broke up in the early 1990s, the report points out. This dissolution meant funding for science was drastically reduced, so a number of very experienced and highly educated chemists “essentially found themselves out of work”, Kalorama Information observes. Today, funding for academic research in Russia and Ukraine remains limited, leaving a pool of highly trained chemists still looking for employment.

This has driven the more entrepreneurial academics to set up CROs, which operate mainly out of Moscow in Russia and Kiev in Ukraine. But the drug discovery CRO landscape in Eastern Europe is still very fragmented, with a large number of private companies in competition, Kalorama Information notes, identifying the market leaders as US-Russian integrated CROs ChemBridge and Chemical Diversity.

According to Kalorama’s report, Outsourcing in Drug Discovery: The Contract Research Organization (CRO) Market, 4th Edition, the global market for drug discovery was worth US$7.2 billion last year, 14.3% more than in 2008.