Eli Lilly has stepped up its strategic outsourcing of drug development capabilities by signing a five-year agreement with Thermo Fisher Scientific that expands the companies’ existing arrangements for the supply of clinical trial materials.

Under the new agreement, Thermo Fisher Scientific’s Fisher Clinical Services business will take over responsibility for Lilly’s in-house clinical trial materials manufacturing, packaging and labelling operations on-site at the Lilly Technology Center – North in Indianapolis, US. The transition should be completed this coming summer.

In addition, Fisher Clinical Services will handle the distribution of clinical trial materials throughout North America for Lilly by the end of 2010. The five-year agreement includes the purchase by Fisher Clinical Services of Lilly’s clinical trial manufacturing and packaging equipment.

It also involves some potential redundancies at Lilly, which said “employees impacted by this expanded agreement and qualified individuals in the Indianapolis community will have the opportunity to apply for roles with Fisher Clinical Services”. Lilly told the Associated Press that 115 staff, including 80 full-time employees, will have to apply for jobs at Fisher Clinical.

The company put the expanded relationship with Thermo Fisher, a US-based medical equipment, products and services company, in the context of its new operating model, designed to speed the delivery of innovative medicines to patients and reduce fixed costs. Last September Lilly unveiled a restructuring programme that will see its workforce cut from 40,500 to 35,000 by the end of 2011.

Strategic outsourcing

The company has been one of the forerunners of strategic outsourcing among the Big Pharma giants. In August 2008, Lilly came to an innovative research and development outsourcing arrangement with Covance, which involved the contract research organisation (CRO) acquiring and operating Lilly’s Greenfield Laboratories facility in Indiana, US.

The two companies also signed a 10-year service agreement, building on an existing strategic collaboration under which Covance conducted preclinical toxicology and early-stage clinical work for Lilly. At the same time, Lilly farmed out the majority of its clinical data management work in the US to another CRO, i3, and its clinical trial monitoring work in the US and Puerto Rico to Quintiles Transnational.

Lilly has since continued in a similar vein. Last November, its year-old strategic agreement with Ireland’s ICON, under which the CRO managed Lilly’s clinical data in Canada, Latin America, Australia and Asia, was extended to Japan.

In March, Covance and Lilly expanded their long-term strategic alliance with a three-year biotechnology services agreement. This entails Lilly transferring analytical testing for bioproducts to a new US$15 million biotechnology facility under construction by Covance on the Greenfield campus it bought from Lilly.

According to president and chief executive officer Marc Casper, Thermo Fisher’s new agreement with Lilly “offers both companies many opportunities for process improvement and technological innovation, all with the purpose of assuring that patients around the world receive their clinical trial medicines and supplies quickly and efficiently”.

Ralph Lipp, vice president, pharmaceutical sciences research and development for Eli Lilly, noted that the agreement consolidated a two-decade relationship with Fisher Clinical Services while leveraging Lilly’s fully integrated pharmaceutical network (FIPNet) strategy of collaborating in areas that were not considered strategic or core for the company to own.