Outsourcing still the way forward

During the past two decades, outsourcing has become increasingly prevalent as the way to gain competitive advantage. This trend has led to a significant increase in the number of services and functions available for outsourcing, and there are emerging opportunities for niche outsourcing to contractors that provide specialized sets of tools and access to cutting-edge technology.

There are a number of key driving forces behind this growth. Commercial drugs cost approximately $800 million (€540 million) to develop, but less than 50% of new products return the development cost. Outsourcing can help companies avoid or suspend significant capital investments. A survey conducted by Datamonitor indicated that most pharmaceutical companies believe that outsourcing is the most effective method for restraining R&D costs.

Scientifically, the challenges are also increasing with the growing complexity of molecular entities, and their resultant chemical and physiological properties. Pharmaceutical trends indicate a small pipeline of the traditional 'blockbuster products'. Of the 81 products approved by FDA for the first time in 2007, only 17 were brand new molecular entities. It should also be noted that 55 of the top 500 pharmaceutical products will lose marketing exclusivity in the US in 2008 — products that equate to world sales value of $77 billion (€52 billion). With a greater number of generic products on the market, life cycle management, and patent and litigation support is increasingly important, and often the expertise of contract research organizations (CROs).

Outsourcing to a specialized CRO clarifies decisions, and minimizes research time and risk at every stage in the development and life cycle management of a drug delivery system. It can also rapidly provide greater insight into the physicochemical properties of APIs, product design, development issues and dosage form stability earlier in the R&D process. Comprehensive understanding of physicochemical properties can aid successful acceleration through regulatory submissions and assist reduction in late stage failures — principles encompassed in the quality by design initiative of FDA.

Pharmaceutical companies also face substantial business risks, which are becoming more widespread because of the increasingly stringent regulations. Sharing operations management and financial responsibilities with an outsourcer enables efficient and timely risk management, as well as improved internal resource planning, which allows companies to expand their R&D pipelines and increase the possibility of developing a formulation that will reach the marketplace.

Providing immediate access to advanced technologies, CROs and contract manufacturing organizations can lead to substantial reductions in drug development cycles and time-to-market as they facilitate increased productivity and extensive cost savings. Outsourcing will also allow companies to focus on their core competencies and on activities that are key to their sustained productivity and success.

Looking ahead, consumer empowerment is a main force transforming the pharma industry. The growing trend towards personalized medicines creates huge opportunities for pharma organizations by enabling them to enhance their traditional offerings and exploit entirely new market spaces. The specialized expertise offered by contractors will potentially play a great role in this development. Finally, outsourcing manufacturing processes will increase as companies downsize their production facilities, many of which currently operate below capacity.

Outsourcing has emerged as a viable solution to the challenges facing the global pharmaceutical industry. Companies have recognized the need to leverage their in-house resources and expertise with specialized partners, which has led to the development of a contract service industry specific to the pharmaceutical industry. From early R&D through to manufacturing, competent contractors can help companies achieve numerous benefits. Pharmaceutical innovators must now look at what they need to do to push forward, such as patent extensions and patent protection.

Claire Madden-Smith is commercial director of Molecular Profiles (UK).