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The outsourcing boom grows for non-core pharma activities

1st April 2013


There's nothing like a darkening economic climate and rising competitive pressures to focus a business's priorities. Like their counterparts in other commercial sectors, pharmaceutical organisations are being forced to re-examine their core and non-core activities to determine where new efficiencies can be found, and to drive greater productivity and competitive agility into their operations.

This is leading to a surge of interest in outsourcing of non-core activities, as pharma organisations attempt to sharpen their practices and reduce time to market.

There are other challenges they need to address, too. The era of the blockbuster drug is over, competition from generic drug manufacturers is increasing, and drug development pipelines are slowing.

Pharma organisations needs to respond by re-evaluating and streamlining their business processes, removing redundancy and repetition to enhance efficiency and reduce internal costs, so that they can move more deftly and exploit opportunities more cost-effectively.

Breaking old habits

This is easier said than done, however. This is an industry where habits and legacy processes are ingrained and there is a resistance to change.

Yet, for many, particularly those worried about their agility and long-term competitive edge, or caught up in the complexities of mergers and acquisitions, it is clear that something must be done to make their operations slicker.

As part of this re-evaluation process, organisations are being forced to go back to basics and to differentiate between value-added business processes and non-core administrative activities that drain time and resources (Fig. 1).

Many companies have already been tightening their operations around core activities such as R&D and marketing, relying on outside vendors to handle non-core activities such as clinical trials.

The submissions burden

The onerous burden of licence submissions is now going this way too. Growing adoption of electronic submissions, particularly eCTD-compliant submissions (based on the electronic Common Technical Document standard) means that managing all of the content and documentation has become a substantial job. This is especially true in Europe, where publishing requirements vary from one country to the next.

As a result, there is now a growing interest in managed services, where an external specialist is enlisted to take over non-core activities, freeing up skills internally. Fortuitously, this growth in demand has coincided with an increasing availability of specialist managed services.

'Strategic sourcing' is proving particularly popular. This is a more flexible form of outsourcing, which draws on the most appropriate combination of offshore, onshore, and onsite resources.

It offers pharma organisations substantial cost benefits (derived from the service provider's superior economies of scale); faster time to market (through rapid access to the right skills and the latest technologies); and the ability to refocus internal energies to more pressing business activities.

In many industries, including pharmaceuticals, take-up of hosted software solutions (SaaS) is accelerating, offering fast, affordable access to the latest applications.

This has led to the realisation that outsourcing needn't stop there. If pharma organisations are going to entrust the management of their software and hardware to a third party, why not go further and let a reputed expert look after some or all aspects of the broader operation?

Nowhere does business process outsourcing (BPO) have greater appeal than in the complex and time-consuming business of regulatory submissions management, where good experts are hard to find, and processes have become increasingly onerous, thanks to the mandate to submit electronically. The opportunity to let external experts host and even co-manage the submissions process offers significant value.

Harnessing the familiar interface of the web, yet with the reassurance of robust security, the outsourced solutions allow users to access, view, edit and share documentation from their office desks as usual. The big difference is that the company no longer needs to own the software, and is able to let go of many of the processes involved in managing a licence submission. What's more, this also gives them the opportunity to quickly and easily scale operations up or down as market conditions and demand dictates.

Lighter means nimbler

Professional managed services are now available to support every function, from clinical trials to post-submission tracking. The list includes medical writing, regulatory consulting and training (Fig. 2).

Letting someone else manage these supporting administrative services could be the key to the dynamism and agility pharmaceutical companies now need to survive and prosper.

As the pharmaceutical industry embraces the eCTD standard for drug licence submissions, organisations with foresight are seizing this as an opportunity to streamline their internal submissions-related processes to achieve multiple gains.

Being experts in the drug development business, but not necessarily in managing documents, pharma companies are attracted to the outsourcing option because it releases them from unrewarding work which distracts them from what they're good at. The more involved the document requirements become the more burdensome and off-putting the submissions process becomes.

Avoiding costly investment

The move to eCTD submissions demands new investment, too - in processes and solutions to manage the documents, and to ensure that the company gains efficiencies from lifecycle management. Many companies, regardless of their size, simply can't afford to build the internal knowledge base and infrastructure to develop this type of competency.

A better option can be to take a 'virtual company' approach, using external partners for specialist activities, as Purdue Pharma has done. This has enabled the company to cope with the peaks and troughs that characterise the pharmaceutical industry - handling processes internally during leaner times, yet outsourcing when the workload expands, rather than hiring additional internal staff.

As well as being able to offload the headache of electronic submissions, outsourcing has enabled Purdue to retain a technological edge by working with external vendors that continuously remain ahead of the technological curve. Keep the baby, lose the bathwater

While some aspects of the development process are clearly proprietary (such as data that is specific to a chemical entity), organisations are not jeopardising their competitive edge by inviting in external parties to run their more run-of-the-mill functions. Indeed, many core processes are common to the whole industry.

The past decade has brought much upheaval to the pharma industry, and the future will bring even greater change. Firms that have committed to adapt their operations accordingly will find a whole new set of opportunities to redefine business processes, refocus their energies, reduce their costs and sharpen their competitive edge.

As for the rest, they may one day find they have to spend a lot of money playing catch-up - that's if it's not already too late.

Adam Sherlock is Managing Director of Image Solutions Europe GmbH, Eschborn, Germany. www.imagesolutions.com.

 





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