Life Science Leader, December 2011

By the close of 2011, two prescription drug stories had picked up so much momentum that even people outside the pharmaceutical industry had heard about them in the news. One of these topics was the end of the patent life for a blockbuster drug and how the availability of generic versions means savings for drug consumers, but comes at a cost for the drug developer.

The second story, however, is good news for both consumers and drug development industry. In 2011, the FDA approved 35 new drugs, which represents the second highest approval number in the past decade, following 37 approvals in 2009. This high number may be a sign that some of the efforts the FDA has made to expedite new drug approvals, like establishing the Priority Review, Accelerated Approval and Fast Track approaches are becoming more effective.

By sharing highlights from the reported behaviors among outsourcing peers in the Life Sciences industry, Nice Insight aims to offer guidance on how to optimize the partner selection process. Some of the key findings from 2011 involve data on how companies choose partners, and which markets they look to for different services. For example, businesses that outsource drug development tend to use a combination of 2.5 different methods to select a partner. Survey respondents indicated they are most likely to seek advice from consultants (68%) followed by referrals (53%) and visiting trade shows/industry events (41%) when they need to subcontract a project to a new partner.

Outsourcing budgets among respondents stayed consistent across 2011 and are anticipated to remain steady for 2012. Efforts to reduce spending may not take shape in the expected ways, as respondents indicated a strong preference for outsourcing to businesses in established markets. When it comes to specific services, for each of the sixteen listed in the table, the majority (51%+) of respondents indicated they would look for a business in an established market to fulfill the need. Overall, CROs or CMOs in the USA and Canada were awarded the largest percentage of projects outsourced amongst the respondent group, at 36%, while Western Europe received a share of 11%.

Sixty-nine percent of respondents chose a CRO in an established market for analytical testing projects, which likely reiterates the importance of subcontracting this service locally. Two-thirds of respondents said they outsource within the established markets for product characterization, bio-analytical testing, consultants and regulatory support. Only one in ten respondents indicated that they would consider an emerging market first for their analytical testing projects. Similarly, regulatory support (13%) and consulting services (14%) were seldom sought from emerging providers.

However, respondents indicated that chemical synthesis was the service most often outsourced to emerging markets at 27%. Additionally, approximately one in five blending, custom manufacturing and packaging projects is typically outsourced to an emerging market. When CROs and CMOs from emerging markets are engaged, China is most popular market, receiving 17% of projects, followed by India with an 11% share. Argentina and Brazil combined carried a share of 9% and Eastern Europe acquired 7% of outsourcing projects.

Reviewing how and where outsourcing dollars are spent helps to establish baseline measures for whether the process and procedures of sponsors are working efficiently and effectively.Evaluating existing practices including everything from where and how new partnerships are formed, to whether a local or international business makes the most sense for the project under consideration, will help identify the type of contract organization that will make the best long term partner. In 2012, Nice Insight will continue to share information on the best practices, and further assist drug developers in avoiding pitfalls in partner selection to help facilitate the process of bringing new medicines to the patients who need them.