The New Trends of Global Pharmaceutical Outsourcing: New Developments in Strategy, Market, Service and Technology

JZMed Inc, October 2011, Pages: 215

It has been widely recognized that the global pharmaceutical industry is currently experiencing dynamic change. Primarily due to the low success rate of drug R&D, all world pharmaceutical companies are currently remodeling their traditional drug R&D. They are now focusing on de-risking their R&D effort through utilizing the external resources. The global competitive environment has also forced them to further streamline their manufacturing operation. The cost-reduction strategy is thus being vigorously pursued by all drug companies. In the meantime, all major pharma companies have also realized that they are no longer able to hold everything in house. A networked partnership that best utilizes the external resources has thus evolved in the world pharmaceutical industry.

All these actions have been resulting in the rapid increase in outsourcing demand in almost all aspects of today’s world pharmaceutical industry. As part of the world pharmaceutical industry, the world pharmaceutical outsourcing industry is thus also experiencing dramatic changes at present.

The report, “The New Trends of Global Pharmaceutical Outsourcing – New Developments in Strategy, Market, Service and Technology”, published by JZMed, Inc, a world renowned market research firm specialized in pharmaceutical outsourcing industry, has provided the unique insights into the current development states of this industry. The report is designed specifically to provide company executives, decision makers, business strategists and all other professionals of both drug companies and outsourcing service providers as well as financial investment firms the clear insights of the latest development trends in the global pharmaceutical, biotechnology and outsourcing service industries, including the detailed insights of how the global pharma outsourcing industry is currently developing, what outsourcing strategies are evolving, what new service models and new technologies have been developed, etc.

Based on the in-depth analysis of a series of growth drivers and resistors that will affect the future development of the global pharma outsourcing industry, the report further depicted a clear future development picture of the industry in the following few years, including the future market growth forecasts by 2015 of the entire industry and each of its service sectors.

The report is a must-read book to global pharmaceutical and biotechnology companies seeking outsourcing opportunities, outsourcing service providers looking for their future development direction, venture capital investors interested in the investment opportunities in the global pharma outsourcing industry, and even the government agencies that are interested in learning the current and future developments of the global pharmaceutical outsourcing industry.

Highlights of the Key Findings of the Report

- Under the high pressure of containing the fixed cost, all drug companies are currently reducing their internal capacities in R&D, manufacturing and even marketing. To replace the work left but still need to be done, they are thus increasing the outsourcing proportion in all aspects of their daily operation.

- The global competitive environment is forcing all drug companies to remodel their traditional drug R&D operation. They are de-risking their R&D effort through utilizing the external resources. Almost all drug companies have now established special internal operation units to specifically manage the relationship with all companies they partner or collaborate with. In fact, outsourcing now includes partnership, collaboration, alliance, or any type of their combinations. An integrated virtual operation model is thus quietly evolving in the global pharmaceutical and biotechnology industries and has now been recognized as their new operation standard. The new model is helping drug companies quickly reduce the fixed cost, significantly improve operation flexibility, and immediately have access to the latest technologies and talents around the world. It has become the effective way to help the pharmaceutical industry overcome the difficulties and solve the problems that have been seriously troubling them for years.

- Meanwhile, to increase productivity and efficiency, both drug companies and outsourcing service providers are striving to make improvements in every aspect of drug R&D and manufacturing process. Many CROs/CMOs have put enormous efforts to develop new technologies and services in order to better serve their clients and, meanwhile, to differentiate them from their peer competitors. A series of new technologies such as biomarkers, molecular imaging and companion diagnostics, etc., and new services such as antibody library screening, genomic testing and cell-line development, etc., have thus been developed and become available to all drug companies.

- Moreover, to offset the revenue shortage from the innovative small molecule drugs, almost all pharma companies are now putting increasing effort on the development of innovative biologic products, including raising R&D investment in this area and in-licensing early stage novel biologic drugs from biopharma companies around the world. As drug companies, both large and small, are gradually shifting their focus from small molecule drugs to macro-compounds, the outsourcing service demands for biopharmaceutical products, both R&D and manufacturing, are thus rapidly growing.

- At the same time, all global major pharma companies also increasingly pay serious attention to the emerging markets. They are currently not only focusing on expanding their market space in the emerging countries, but also outsourcing more costly R&D and manufacturing work to these regions, especially for small molecule drugs. Consequently, the emerging countries are rapidly gaining strengths in both R&D and manufacturing of small molecule drugs.

Why You Should Have This Report

- After reading the report, readers will have become immediately clear about what is really going on in the global pharmaceutical outsourcing industry and known which models your company should adopt and what strategies you should take in order to better position your company in the highly competitive global market.

- The report will give you an in-depth analysis on the current bottlenecks in drug R&D, challenges facing the global pharmaceutical and biotechnology industries, and the strategies both major pharma and biotech companies are currently implementing to overcome these difficulties.

- Moreover, you will gain detailed insights on the current development states of each service sector of the global pharma outsourcing industry as well as the strategies the global drug companies are currently taking in each stage of their R&D and manufacturing process. It will thus help you better understand the future development directions of the entire global pharma outsourcing industry and each of its service sectors.

- The report will thus help you figure out the clear trends of the latest developments in the global pharma outsourcing industry, including the market growth trends, new outsourcing strategies being implemented, new outsourcing services and technologies being developed, and new outsourcing destinations currently evolving, etc.

- The report will also facilitate you learning both the current market values and the future growth potentials of the global pharmaceutical outsourcing industry, including each of its service sectors.

Scope of the Report

About Author

Executive Summary

- New operation models of global pharmaceutical industry: Open innovation, extensive outsourcing and integrated virtual operation
- New development trends of global pharmaceutical outsourcing
- New strategies currently implemented by major pharma companies
- New outsourcing trends in emerging markets

Chapter One - New Operation Models of Global Pharmaceutical Industry: Open Innovation, Extensive Outsourcing and Integrated Virtual Operation

Summary
1.1 Introduction
1.2 Challenges currently facing global pharma companies
1.2.1 Challenges from internal operation
1. Low R&D productivity due to high failure rate
2. Escalating cost of drug R&D due to low efficiency
1.2.2 Challenges from external environment
1. Price containment by government
2. More scrutiny on drug safety
3. Still high expectation by shareholders
1.3 Global pharmaceutical outsourcing industry after financial crisis
1.3.1 Current state of global pharma outsourcing industry
1.3.2 Changes of outsourcing demand by major pharma companies after financial crisis
1.3.3 Changes of outsourcing demand by biotech companies after financial crisis
1.3.4 New outsourcing development trends after financial crisis
1.4 Evolving of new outsourcing models
1.4.1 Contracting out a whole block of R&D functions
1.4.2 Virtual ownership
1.4.3 Networked Partnership
1.4.4 Open source innovation
1.4.5 More involvement of academia in drug R&D

Chapter Two - New Development Trends of Global Pharmaceutical Outsourcing
Summary
2.1 Introduction
2.2 Global CRO consolidations
2.2.1 Mergers and acquisitions between global CROs
2.2.2 Global CRO acquisitions by private equity (PE) firms
2.3 Emerging of new technologies and their current service states in pharma outsourcing industry
2.3.1 Increasing applications of biomarkers in drug development
2.3.2 Companion diagnostics become necessary for effective drug development
2.3.3 Emerging applications of molecular imaging
2.3.4 Cell line development and optimization – the key technology in manufacturing of protein-based drugs
2.3.5 Single-use bio-equipment becoming widely accepted
2.4 New outsourcing services developed by global CROs
2.4.1 Generation and fast screening of antibody libraries
2.4.2 Genomics testing
2.4.3 Diagnostics outsourcing
2.4.4 Development of biomarkers
2.5 New drug R&D strategies
2.5.1 New R&D focuses
2.5.2 Less R&D budget but more positive results
2.5.3 More R&D budget is being reallocated to preclinical and toxicology research
2.6 New outsourcing trends in each stage of drug R&D and manufacturing value chain
2.6.1 Analysis of cost structure of entire drug R&D process
2.6.2 New trends in global drug discovery outsourcing
2.6.3 New trends in global preclinical development outsourcing
2.6.4 New trends in global clinical trial outsourcing
1. Globalization has become a “must” for any advanced clinical trials
2. Genomics testing becomes increasingly involved in clinical trial
2.6.5 New trends in global contract manufacturing
1. Current trends of global contract manufacturing
2. Outlook of future development trends of global contract manufacturing
2.6.6 New trends in global drug formulation outsourcing industry
2.7 New trends in global biologic drug development
2.7.1 New trends in global biologic drug R&D
2.7.2 New trends in global bio-contract manufacturing
2.7.3 New trends in global biosimilars
2.7.4 Opportunities for CROs/CMOs in biosimilar market
2.8 Growth trends of global pharmaceutical outsourcing market
2.8.1 Current market value of global pharma outsourcing
2.8.2 Outlook of future growth trend of global pharma outsourcing market
2.8.3 Outlook of future growth trends of each outsourcing service sector
1. Market growth forecast of global drug discovery outsourcing
2. Market growth forecast of global preclinical development outsourcing
3. Market growth forecast of global clinical trial outsourcing
4. Market growth forecast of global contract manufacturing service
5. Distributions of each service sector in total global pharma outsourcing market

Chapter Three - New Strategies Currently Implemented by Major Pharma Companies
Summary
3.1 Introduction
3.2 New R&D strategies currently implemented by major pharma companies
3.2.1 Reduction of R&D budget
3.2.2 Changing of R&D models
3.2.3 Narrowing down of therapeutic focuses
3.2.4 Shifting of product portfolio focuses
3.2.5 Establishing smaller internal R&D organizations and pursuing more integrated virtual operation model
3.2.6 Pursuing more external networked partnerships
3.2.7 Strengthening technical capability
1. Focusing on genomics and proteomics research
2. Reallocating more R&D budget to toxicology study and preclinical research
3. Reprioritizing development focus onto later stage drug candidates
4. Streamlining clinical trial process
3.3 New strategies in manufacturing
3.3.1 Reducing internal manufacturing capacity for small molecule drugs in particular those off-patented ones and increasingly outsourcing them to low cost regions
3.3.2 Not only still retaining internal manufacturing facilities for biologic drugs but also further enhancing their capability and capacity
3.4 New strategies in R&D outsourcing
3.4.1 Increasing outsourcing of core R&D work
3.4.2 Selectively choosing preferred service providers as their close R&D partners
3.5 New strategies of licensing drug candidates from small biotech companies
3.6 New marketing strategy: focusing more on emerging markets
3.7 In-depth analysis of impacts of strategies currently implemented by major pharma companies on future development of global pharma outsourcing industry
3.7.1 In-depth analysis of strategies currently implemented by major pharma companies
3.7.2 In-depth analysis of impacts of new strategies implemented by major pharma companies on global pharma outsourcing industry

Chapter Four - New Outsourcing Trends in Emerging Markets
Summary
4.1 Introduction
4.2 Attractions of emerging markets to global drug companies
4.3 New strategies of global major pharma companies in emerging markets
4.4 New pharma outsourcing trends in key emerging markets
4.4.1 New development trends of pharma outsourcing in China
1. Activities of global major pharma companies in China
2. Outsourcing activities of foreign small biotech companies in China
3. Activities of multinational CROs/CMOs in China
4. Current pharma outsourcing development trends in China
a. Outsourcing of genomics and proteomics research and target identification and validation
b. Outsourcing of drug discovery
c. Outsourcing of preclinical development
d. Outsourcing of clinical development
e. Contract manufacturing of small molecule drugs
f. Contract manufacturing of biologic drugs
4.4.2 New development trends of pharma outsourcing in India
1. Comparison of pharma outsourcing between China and India
2. Activities of global major pharma companies in India
3. Multinational CROs/CMOs in India
4.4.3 Major activities of major pharma companies in other emerging countries
1. In other Asian countries (than China and India)
2. In East Europe
3. In Latin America
4.4.4 Outlook of future development trends of pharma outsourcing in emerging markets

Appendix

Appendix I. Research Methodology

Appendix II. About JZMed, Inc.

List of Tables

Table 1. Blockbuster drugs losing patent protection
Table 2. FDA’s approval rates of new drugs in recent five years
Table 3. Factors contributing to high failure rates in drug development
Table 4. Statistic distribution of failure rates in each development stage of drug R&D
Table 5. Factors negatively affecting the sustainability of traditional pharmaceutical operation model
Table 6. Advantages of outsourcing
Table 7. Recent restructuring examples of global CROs/CMOs
Table 8. New outsourcing trends after financial crisis
Table 9. New outsourcing models
Table 10. Recent examples of partnership between major pharma companies and academic institutions
Table 11. Recent examples of partnership between small biotech companies and academic institutions
Table 12. Analysis of new trends evolving in global pharma outsourcing industry
Table 13. List of new trends shaping up in global pharma outsourcing industry
Table 14. Latest examples of privative equity (PE) firms acquiring global CROs
Table 15. Latest developments in global CRO industry
Table 16. Applications of biomarkers in drug development
Table 17. Driving factors for fast development of global diagnostic industry
Table 18. Examples of research collaborations between Abbott Lab and other major pharma companies on development of companion diagnostics
Table 19. Examples of major pharma companies collaborating with biotech companies to co-develop molecular biomarkers or companion diagnostics
Table 20. Roles CROs/CMOs playing in global pharmaceutical industry
Table 21. Global drug R&D spending in past five years
Table 22. Current R&D spending breakdown by research activities
Table 23. Analysis of current development situation of global preclinical outsourcing service industry
Table 24. New techniques and developments in clinical trial
Table 25. Comparisons of clinical trial cost around the world
Table 26. Current bottlenecks in global clinical trial
Table 27. Analysis of future development of global contract manufacturing of APIs for developmental drugs
Table 28. Examples of recent M&As of major biopharma companies
Table 29. Examples of recent licensing deals of biologic drugs
Table 30. Latest examples of bio-manufacturing deals
Table 31. Latest activities in global biosimilar field
Table 32. Examples of global CROs involved in biosimilar business
Table 33. Market growth trend of global pharma outsourcing industry in recent five years
Table 34. Past growth history of average outsourcing penetration in global major pharma companies
Table 35. Forecasted future outsourcing penetration in global major pharma companies
Table 36. Forecasted growth trend of global pharma outsourcing market
Table 37. Forecasted market growth of global drug discovery outsourcing
Table 38. Forecasted market growth of global preclinical development outsourcing
Table 39. Forecasted market growth of global clinical development outsourcing
Table 40. Forecasted market growth of global CMO industry
Table 41. Summary of current and forecasted market values (by 2015) of each service sector of global pharma outsourcing industry
Table 42. 2010 R&D spending of world top 5 biotech companies
Table 43. 2010 R&D spending of world top 5 major pharma companies
Table 44. New drug R&D models currently pursued by major pharma companies
Table 45. Examples of major pharma companies narrowing down their therapeutic focuses
Table 46. New development trends in global clinical trial
Table 47. Analysis of the strategies of major pharma companies on biologic drug manufacturing
Table 48. Criteria of major pharma companies choosing preferred service providers
Table 49. Long term partnerships recently forged between major pharma companies and major CROs
Table 50. General strategies currently implemented by major pharma companies
Table 51. Evolving of new outsourcing trends in world pharma outsourcing industry
Table 52. Comparisons between the old operation models and the new ones pursued by major pharma companies
Table 53. Drug R&D functions that have been mature and can be completely outsourced
Table 54. Areas in which major pharma still collaborating with small biotech companies
Table 55. Key advantages of emerging markets
Table 56. Benefits of entering emerging markets
Table 57. Common goals of major pharma companies in emerging countries
Table 58. Established presences of global CROs and CMOs in key emerging markets
Table 59. Key activities of global major pharma companies in Chinese market
Table 60. Analysis of licensing deals between foreign drug companies and their Chinese counterparts
Table 61. Multinational companies collaborating with Chinese biotech companies and/or research organizations on genomics and proteomics research and diagnostic product development
Table 62. Key growth drivers and resistors for future development of clinical trial outsourcing in China
Table 63. Other factors positively driving the growth of clinical trial outsourcing in China
Table 64. Analysis of future bio-CMO development (both in the globe and in China)
Table 65. Comparison of pharma outsourcing service capability between China and India
Table 66. List of major partnerships forged in the recent years between major pharma companies and Indian drug companies
Table 67. Latest activities of multinational CROs/CMOs in Indian market
Table 68. Examples of major pharma companies investing in other Asian countries
Table 69. Examples of latest investments made by major pharma companies in East European countries
Table 70. Examples of latest investments made by major pharma companies in Latin American countries

List of Figures

Figure 1. Revenue loss of global pharmaceutical industry due to patent expiry
Figure 2. Growth trend of the proportion of the combined service revenue of top seven CROs in the global clinical trial CRO market
Figure 3. New technology development trends in preclinical and toxicology research
Figure 4. Description of the value chain of drug discovery and development
Figure 5. Analysis on the existing issues and new development trends in global biopharma industry
Figure 6. Analysis of current global demands for biopharma outsourcing service
Figure 7. Past growth trend of global pharma outsourcing market
Figure 8. Past growth trend of outsourcing proportion in major pharma companies’ operation
Figure 9. Forecasted future growth trend of outsourcing penetration in global major pharma companies’ operation
Figure 10. Forecasted growth trend of global pharma outsourcing market between 2011 and 2015
Figure 11. Forecasted market growth trend of global drug discovery outsourcing service
Figure 12. Forecasted market growth trend of global preclinical and toxicology outsourcing service
Figure 13. Forecasted market growth trend of global clinical development outsourcing service
Figure 14. Forecasted growth trend of global CMO market
Figure 15. Market distributions of each service sector in global pharma outsourcing industry
Figure 16. Growth trend of Pfizer’s manufacturing outsourcing
Figure 17. Evolving of new operation models within global pharmaceutical industry

List of Case Studies

Case Study 1. A typical example of huge impact of patent expiry on a major pharma company’s sales revenue
Case Study 2. Drug R&D would not be that costly if failure rate could be reduced
Case Study 3. Impacts of government’s action on drug companies’ revenue growth
Case Study 4. Slower revenue growth of entire pharmaceutical industry in past decade and next five years
Case Study 5. More R&D-focused biotech companies adopting virtual operation model
Case Study 6. Pfizer’s virtual R&D strategy
Case Study 7. Examples of major pharma companies increasingly utilizing external resources
Case Study 8. Increasing applications of biomarkers in pharmaceutical industry
Case Study 9. Biomarkers have become a hot outsourcing area in toxicology research
Case Study 10. Molecular imaging also becoming an important tool in preclinical as well as toxicology research
Case Study 11. Growing importance of epigenomics in assessment of drug safety and drug-induced toxicity
Case Study 12. Pharma company’s virtual drug discovery strategy
Case Study 13. Biologic drug pipeline of GSK
Case Study 14. Examples of reduction of R&D budget by major pharma companies
Case Study 15. New strategies Pfizer currently implementing
Case Study 16. New strategies implemented by GSK
Case Study 17. New Strategies implemented by Roche
Case Study 18. Major pharma companies shrinking the size of their R&D organization and pursuing for more integrated virtual operation model
Case Study 19. Pfizer increasing outsourcing proportion of its manufacturing business
Case Study 20. Global pharmaceutical outsourcing: An outlook of its future development
Case Study 21. Pfizer choosing ICON and Parexel as preferred service providers
Case Study 22. Example of major pharma/biopharma companies successfully reducing their R&D budget by outsourcing to low cost regions
Case Study 23. Market share and performance of major pharma companies in emerging markets
Case Study 24. Major pharma companies collaborating with specialty biotech companies
Case Study 25. Major pharma companies showing greater interests in partnering with Asian organizations
Case Study 26. Pfizer in China
Case Study 27. Astra-Zeneca in China
Case Study 28. Eli Lilly in China
Case Study 29. Example of major pharma companies licensing drug candidates to Chinese drug companies for co-development in China
Case Study 30. Outsourcing activities of global small biotech companies in China
Case Study 31. Multinational CROs/CMOs entering or expanding their presence in Chinese market

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