Adopting outsourcing to combat rising costs

Intensifying the financial strain are increasingly complex clinical trial requirements and high drug failure rates with only 15percent of new drugs entering development expected to reach the market. To control rising costs and generate new breakthroughs therefore, companies are looking to outsource their drug discovery processes.

As a result, pharma companies are increasingly eager to form alliances with biotechnology firms, university research centres, contract research organisations (CROs), specialised niche vendors and general service providers. Such partnerships are facilitating the drug discovery process. For instance, CROs provide expert geographic coverage enabling companies to allow clinicians of different locations to simultaneously view and discuss data, resulting in improved testing and
turn-around times, and ultimately enhanced data quality.

Consequently, the scope of outsourcing has expanded with the trend to outsource processes such as finance/accounting, clinical trial data management, drug manufacturing, logistics and human resources and parts of IT gaining momentum. Accordingly, the European drug discovery outsourcing market is forecast to expand from US$3.2billion in 2004 to 5.1billion by 2011.

Companies who outsource their operations should, however, ensure that they retain control over their business processes and proprietary knowledge. Firms are likely to select outsourcing partners with an established track record, which possess capabilities to meet varied scientific and operational requirements. Also, companies seeking to combat high costs can benefit greatly by selecting an outsourcing partner from lower-wage countries such as India and China.

By 2010, more than 40percent of R&D is projected to be outsourced to more specialised firms in order to efficiently maintain a strong and vital pipeline for new blockbuster drugs.

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