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Wednesday, 22 October 2014
Core research & development services integral to global pharmaceutical outsourcing
Monday, 23 January 2012

Recently published research from HfS Research (the leading research analyst firm focused on outsourcing and shared services strategies), and co-authored by ValueNotes (a leading provider of business research) shows a major shift in global pharmaceutical companies outsourcing core research and development (R&D) services such as drug development and clinical trials through strategic third-party collaborative partnerships. Key findings in the report discuss the following market dynamics:

  • Over the last few years, the pharmaceutical industry has expanded its focus from primarily R&D to include, among others, sales and marketing and process re-engineering. The industry is attempting to slowly move away from the traditional approach of direct sales.

  • On an average it takes around 10 years and USD 1 billion in costs to develop a single drug. There has been a significant increase in the adoption of a third party collaborative strategy by these firms to reduce R&D costs, shorten drug development processes, and increase profitability through effective sales and marketing efforts. The reliance on partners and collaboration with third-parties to increase the efficacy of R&D efforts is indicative of the new business model for pharmaceutical companies.

  • Most of the R&D challenges are addressed through clinical data management (CDM) services and analytics offerings that provide meaningful data insights. These are some of the popular services, along with other core services such as clinical research and drug safety evaluation that are offered by leading service providers in this industry.

The Asia-Pacific region is growing as a strong outsourcing destination with India, South Korea, China and the Philippines being the major base for outsourcing service providers. Apart from drug discovery, a lot of manufacturing centres have opened in the region. These service providers usually engage full time equivalents (FTEs) for their pharmaceutical clients. Domain knowledge is very critical for this industry and service providers are looking to improve their capabilities by acquiring smaller, niche companies and hiring experienced industry professionals.

The benefits of outsourcing have progressed beyond cost and labour arbitrage in the industry. Similar to other industries, services such as finance and accounting, human resources and billing were among the first to be outsourced. Over the past few years, the outsourced services have moved up the value chain to include core functions such as R&D. Pharmaceutical companies retain their competencies in-house and leverage the support of service providers to increase their productivity.

Trends such as these and others have been explored in the new HfS Research Market Landscape titled “The Pharmaceutical Industry Sourcing Landscape 2011: Pharmaceutical Outsourcing Expands To Include Core Services” . The study investigates industry drivers and the major services outsourced, the service provider landscape and segmentation, and a discussion of trends in outsourcing over the next few years.

If you would like to buy a copy of the report, please click here . Or get in touch with us on  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it


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