Biotechs to shift outsourcing overseas, finds survey
Clinical trials will move from US and Europe to China and India, finds Booz & Co
As biopharmaceutical companies look to cut costs and improve speed-to-market, more of them plan to outsource r&d and clinical trials and shift this work overseas, finds a survey by US consultancy Booz & Company.
Sixty-seven per cent of respondents to Outsourcing in Life Sciences: A Survey of BayBio Members, conducted by Booz & Company and BayBio, northern California’s biosciences association representing more than 450 companies, predict strong growth in r&d outsourcing. They also think many clinical trials will shift overseas to China and India in the next 2–3 years. Most outsourcing currently takes place in the US (64%) and Western Europe (15%).
Companies send trials overseas for three main reasons: as part of a regulatory approval strategy (36%), to cut costs (23%), and to gain access to patient samples (23%).
The survey, which included online interviews with 32 executives in biopharma companies, reveals that they are also outsourcing for three main reasons: they are deficient in certain internal capabilities (53%); they lack internal capacity (38%); and they need to cut costs (44%).
When selecting an outsourcing vendor, 61% of respondents said they would seek a long-term strategic relationship rather than a fee-for-service arrangement.
According to the survey, the outsourcing process will radically evolve in the next 2–3 years and many biopharmaceutical companies will begin outsourcing formerly core activities such as clinical trial monitoring and protocol development to contract research organisations (CROs).
This shift will be driven by new service offerings in real-time data processing and virtual platforms that allow access to clinical data securely in real-time. Outsourcing more of these critical activities along the entire r&d spectrum will transform the nature of outsourcing relationships.
‘There is a sea change happening in the biopharmaceutical industry,’ says Matthew Le Merle, partner at Booz & Co. ‘Companies first started to outsource to CROs to get r&d done faster and more cheaply. 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.’
Charley Beever, also a partner at Booz & Co, added: ‘The key question that biopharma companies must address is which capabilities to outsource and which to maintain in-house. Making strategic, coherent decisions about what work is outsourced and why, and how CRO relationships are structured and managed, will help companies build a winning business model that adds value, innovation, and competitive advantage.’
