Life Science Leader,  June 2013

Big Pharma respondents admitted there is a greater likelihood for a CRO that started off as a tactical provider to become a preferred provider – 92% as compared to 72% for CMOs.

It should come as no surprise that when looking for new trends in pharmaceutical development and outsourcing, the industry giants often referred to as Big Pharma are the most popular topic of interest. Big Pharma has been a leader in identifying ways to maintain or improve profitability while simultaneously making efforts to speed up the process of bringing new drugs to the market. While these giants receive their share of flak (often times from the media inciting the general population), they are also a source of inspiration and guidance for the biopharmaceutical industry and a signal of what’s to come.

As such, Nice Insight reviewed the behaviors and preferences among Big Pharma respondents who participated in the pharmaceutical and biotechnology outsourcing survey over the past two years to share the findings. Big Pharma comprised 29% of the respondent base in 2012 and 30% in 2013. Two key data points came from the profile information collected on Big Pharma that will benefit CROs and CMOs that offer drug development services. The first is that outsourcing expenditure increased from 2012 to 2013, with a 6% point uptick in companies that spend an excess of $50 million per year—from 49% to 55%. The second is that the average number of unique services outsourced increased from 4 to 6*. Both of these factors indicate that Big Pharma is maintaining its stance on outsourcing as a cost savings strategy.

Complimentary to the rise in spending and increased number of services outsourced, eleven of nineteen outsourced services tracked in the survey showed an increase of 5% or more among Big Pharma respondents. Eight more services showed an increase from 1% to 4%, and only one, Fill Finish, showed a slight decrease (-2%) in demand as compared to last year. Clinical research revealed the highest increase of 13% points, up from 33% in 2012 to 46% in 2013; this was followed by analytical testing, which rose 11% points, from 34% to 43%; and bioanalytical testing, which climbed 8% points from 26% in 2012 to 34% in 2013. Process optimization and product characterization also showed an increase of 8% points. However, despite this increase, fewer than one-in-five Big Pharma respondents will engage an outsourcing partner for process optimization or product characterization in the next twelve months.

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In addition to the differences in outsourcing behaviors from 2012 to 2013, there were some differences in how Big Pharma engages CROs and CMOs. Most notably, Big Pharma respondents expressed a stronger interest in forming strategic partnerships with CROs – nine out of ten said they are interested as compared to eight out of ten expressing interest in a CMO strategic partnership. To further this notion, Big Pharma respondents admitted there is a greater likelihood for a CRO that started off as a tactical provider to become a preferred provider – 92% as compared to 72% for CMOs. This disparity continued when asked about the likelihood of a preferred provider becoming a strategic partner; 87% of Big Pharma respondents agreed it is likely for a CRO as compared to 69% who agreed it is likely for a CMO.

If your business is looking to partner with Big Pharma, understanding this customer group’s outsourcing motivations and needs will aid in creating customized communications that specifically address those needs. As a drug innovator, it may make sense to consider how the outsourcing strategies employed by Big Pharma would work for your business.