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Top 8 Pharmaceutical Outsourcing Trends

Pharmaceutical Outsourcing Trends

Today, whether it is arguing with insurance companies over which medicine is worth covering or not, chasing new cures for previously untreatable maladies, or facing public backlash over ever-increasing drug prices, pharmaceutical companies are faced with a consistent challenge in the marketplace - to do more with less.

Therefore, it is not a surprise that the pharmaceutical outsourcing industry continues to get bigger as the years go by, and grabs a larger share of the dollars spent by Pharma companies on preclinical, clinical, and post-clinical services. This has a lot to do with the fact that pharmaceutical industries are facing most of the problems plaguing other industries who want to undertake outsourcing as a valid, cost-saving option. At the same time, outsourcing pharma is never an easy task. There are many questions left to be answered, such as - "which services can be outsourced without losing total control of the process?" or "What is the uptake of ITO and BPO in the pharma industry, and "where are the trends headed?" In this article, we will look at the recent pharma outsourcing trends and try to understand the future direction of pharmaceutical outsourcing.

8 Pharmaceutical Outsourcing Trends for the Future

The overall outsourcing expenditure has been steadily increasing year upon year for the pharma industry, with a 6% increase in the number of companies spending more than $50 million per year or more on outsourcing their services. Let us have a look at some of the main outsourcing trends which can help explain this rapid outsourcing expansion -

  1. SFA and Back-office Automation Will Remain Steady Earners

    The pharmaceutical industry is characterized by years-long R&D cycles, as well as an acute need for speed when it comes to time-to-market. As a result, traditionally sales force automation and other back-office automation services have been the main money earners when it comes to pharma outsourcing.

    Future trends indicate that these 2 areas will remain the bread-and-butter earners for the pharma industry in the years to comes, with 44% of the organizations planning to outsource more back-office operations after enjoying considerable success with their initial outsourcing stint.

  2. New Outsourcing Services Raise their Hand

    A whopping 80% of the pharmaceutical companies are open to outsourcing new services provided it helps them reduce costs. Therefore, it is not surprising to see more than 43% of the companies using contract service providers as secondary suppliers for clinical materials and other secondary supplies. Some of the new services which are gaining popularity when it comes to pharma outsourcing include -

    • Analytical and Testing Services
    • Clinical trials, Phases I-IV
    • API Manufacturing
    • Solid Dosage Manufacturing
    • Formulation Development
    • Clinical Trials Material
  3. Pharmaceutical Companies Will Seek New Deals in Emerging Markets

    With rising costs and public outcry against their practices, pharmaceutical giants the world over are struggling to generate revenue at a rate their investor expect them to. This is compounded by the fact that global pharma companies stand to lose more than $17 billion from expired patents by the time 2016 ends.

    Therefore, pharma executives are now more than eager to acquire upcoming businesses which show promise, while striking new outsourcing deals across previously untapped markets. 2015 was a landmark year for pharma and biotech companies, as they struck partnership deals amounting to $462 billion, which was more than 22% as compared to the previous year.

  4. The Advent of Robotic Process Automation

    For any pharmaceutical company, R&D costs are an increasing challenge which significantly affect their bottom-line. Over the past few years, leading pharma firms have radically re-evaluated their business operations and implemented strategic CRO (Contract Research Organizations) and CMO (Contract Manufacturing Organizations) partnerships as part of their outsourcing strategy.

    Today, the arrival of RPA (Robotic Process Automation) in their field of pharmaceutical R&D and manufacture promises to change the game, as by using digital robots to perform high-volume and repeatable tasks, CROs and CMOs can execute recurring processes faster, and more efficiently. This is further accentuated by the fact that RPA solutions are easily implemented without impacting IT-managed infrastructure or technology resources, thereby saving companies considerable time and money while outsourcing.

  5. Outsourcing Firms Will Continue to Consolidate

    Pharmaceutical outsourcing is a large and fragmented industry, as a result of which there are many attractive targets for larger service providers who seek a better market presence. This is the reason why larger outsourcing firms are continuously on the lookout for fresh CROs with high-impact clinical research pedigree to bolster their burgeoning ambitions.

    Future trends point towards a larger focus on acquisition activities for specialty technologies when it comes to branching out into newer territories, as well as buying small-to-medium sized CMOs in order to achieve a better market footprint.

  6. A Monumental Shift in Top Outsourcing Motivations

    For most industries, the top motivation for outsourcing remains cost-savings. Surprisingly though, recent studies have revealed that for most of the companies belonging to Big Pharma, the top motivation for outsourcing is improved quality (54%), better time-to-market (49%), and finally, decreased costs (45%).

    This trends shows that there is more to pharma outsourcing than we know, as cost-savings are not that big a motivator, as compared to better quality. In light of the recent attacks on big pharma for their price fixing schemes and other similar public affairs, it is heartening to know that quality is taking center stage when it comes to outsourcing.

  7. Less Transactional, More Relationship-based Partnerships

    In the coming few years, we are going to witness major pharmaceutical companies undertake a gradual shift from transactional outsourcing relationships to a more strategic, relationship-based models. Recent research suggests that both small and large pharma companies will decrease their use of fee-for-service models in favor of preferred-providers with whom they will enter into long-term partnerships. Such strategic, mutually beneficial partnerships should increase by more than 28% in the coming years.

  8. Service Bundling will become an Important Outsourcing Strategy

    Service bundling will help to drive further efficiency with CROs when it comes to outsourcing, and can help redefine back-office operations by helping companies take an end-to-end process view that overrides traditional outsourcing boundaries. This would ensure reduced costs and increased strategic flexibility will helping pharma firms simplify multiple functions.

    In the coming years, most pharmaceutical companies anticipate service bundling across trial planning, conduct, technology, and related reporting services.

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