Outsourcing: Boon or Curse?
Outsourcing is nothing new. It has been practiced for decades. Industries such as retail, automotive, and others have used the specialized services of contract organizations to drive down costs and increase efficiencies. The pharmaceutical industry, however, has always closely guarded proprietary projects, compounds, and processes and has only recently, in the face of escalating costs and decreasing R&D productivity, warmed up to the idea of routine outsourcing.
Outsourcing in the pharmaceutical market is certainly on the rise, as evident by the rising numbers of contract research organizations (CROs) and contract manufacturing organizations (CMOs), both in the United States and in countries such as India and China. The types of services offered have also intensified and diversified. Many equipment manufacturers and reagent providers are also now including contract services as a part of their portfolio of offerings.
Cost-cutting definitely sparked this trend, but there is also increased pressure to do things fast and to do it right the first time around. The other factor contributing to this growing trend is the advancement in informatics technologies. The availability of better tools for monitoring quality control and maintaining client confidentiality by preventing data security breaches have been crucial in making companies feel connected and in control of the work being done at a contractor's site.
This month's cover story by senior editor Patrick McGee profiles TAP Pharmaceutical Products Inc., which has taken outsourcing to new heights. TAP owns no laboratories, relies almost entirely on licenses and contract agreements, and functions almost like a virtual company. It outsources nearly all elements of the pharmaceutical pipeline including drug discovery, development, manufacturing, and clinical trials.
How successful is this outsourcing model? It seems to have worked well for TAP, but I am not sure how likely other companies are to adopt a similar business model. TAP has been able to maintain a rigorous control on the design and implementation of its goals by its contractors. It also found this model useful when making go/no-go decisions because there is not much emotional attachment to any particular project.
However, this business model is restricting because there are certain limitations with in-licensing and outsourcing in terms of procuring compounds, pursuing therapeutic areas, or using specific technologies and processes. A lack of emotional attachment can be both a boon and a curse. We hear of numerous examples in the industry where management would have killed a research project, that ultimately resulted in a blockbuster, had it not been for a champion who had emotional ties to the project or compound and actively fought for its survival. It will be interesting to see how the outsourcing trend evolves in the coming years.
:SugarwareZ-098: :SugarwareZ-098: :SugarwareZ-098:
Outsourcing is nothing new. It has been practiced for decades. Industries such as retail, automotive, and others have used the specialized services of contract organizations to drive down costs and increase efficiencies. The pharmaceutical industry, however, has always closely guarded proprietary projects, compounds, and processes and has only recently, in the face of escalating costs and decreasing R&D productivity, warmed up to the idea of routine outsourcing.
Outsourcing in the pharmaceutical market is certainly on the rise, as evident by the rising numbers of contract research organizations (CROs) and contract manufacturing organizations (CMOs), both in the United States and in countries such as India and China. The types of services offered have also intensified and diversified. Many equipment manufacturers and reagent providers are also now including contract services as a part of their portfolio of offerings.
Cost-cutting definitely sparked this trend, but there is also increased pressure to do things fast and to do it right the first time around. The other factor contributing to this growing trend is the advancement in informatics technologies. The availability of better tools for monitoring quality control and maintaining client confidentiality by preventing data security breaches have been crucial in making companies feel connected and in control of the work being done at a contractor's site.
This month's cover story by senior editor Patrick McGee profiles TAP Pharmaceutical Products Inc., which has taken outsourcing to new heights. TAP owns no laboratories, relies almost entirely on licenses and contract agreements, and functions almost like a virtual company. It outsources nearly all elements of the pharmaceutical pipeline including drug discovery, development, manufacturing, and clinical trials.
How successful is this outsourcing model? It seems to have worked well for TAP, but I am not sure how likely other companies are to adopt a similar business model. TAP has been able to maintain a rigorous control on the design and implementation of its goals by its contractors. It also found this model useful when making go/no-go decisions because there is not much emotional attachment to any particular project.
However, this business model is restricting because there are certain limitations with in-licensing and outsourcing in terms of procuring compounds, pursuing therapeutic areas, or using specific technologies and processes. A lack of emotional attachment can be both a boon and a curse. We hear of numerous examples in the industry where management would have killed a research project, that ultimately resulted in a blockbuster, had it not been for a champion who had emotional ties to the project or compound and actively fought for its survival. It will be interesting to see how the outsourcing trend evolves in the coming years.
:SugarwareZ-098: :SugarwareZ-098: :SugarwareZ-098:
