- Language: English
- 414 Pages
- Published: April 2012
- Region: Global
Pharmaceutical R&D Outsourcing Strategies: An Analysis of Market Drivers and Resistors to 2010
- Published: September 2002
- Region: Global
- Scripp Business Insights
Shareholder appetite for growth has not diminished, in stark contrast to the pharmaceutical industry's ability to generate return on capital employed while R&D and sales and marketing have traditionally been held sacred as core competencies, the time has to come to reassess this assumption and the alternative - outsourcing. The Pharmaceutical R&D Outsourcing Strategies report provides insights into effective outsourcing across the value chain, from drug discovery through to regulatory submission. Through a series of case studies it outlines outsourcing best practice and it examines the role of new technologies in increasing the effectiveness of R&D outsourcing. Based on an extensive programme of research, including interviews with senior pharmaceutical industry executives, this new report presents a route map for high-performance outsourcing.
- Of the 44 products generating blockbuster sales in 2000, 33 will lose patent protection in the US before 2007, exposing approximately $45.5bn of US ethical revenues to generic competition.
- Estimates of the proportion of clinical development (phase I-IV) out sourced vary between 20-40%, whilst many analysts estimate that less than 15% of pre-clinical evaluations are outsourced
- An effective outsourcing strategy will determine the optimal level of in-house versus outsourced R&D activity and maintain this, allowing for fluctuations in resource demands.
- Whilst the larger CROs have been adding additional services to their portfolios in an attempt to act as one-stop-shops, it is clear that many pharmaceutical sponsors are not yet comfortable with outsourcing entire portions of their R&D activities to single providers.
This report can help you to gain..
- A detailed understanding of the financial pressures on CROs and the likely impact on the industry's structure
- A broader perspective on the relationship between M&A, outsourcing and R&D efficiency
- Insights into the practical realities of developing a virtual pharmaceutical company
- Answers to your questions about web-enabling technologies, from e-detailing to in silico research
- Specific knowledge of 'facility-for-service' deals, including Quintiles/Aventis
- Access to the latest strategies on what makes outsourcing work.
Your outsourcing questions answered
- What is driving outsourcing forward - and what's holding it back?
- How are the world's biggest pharmaceuticals companiesapproaching R&D outsourcing?
- What are the key considerations when making the decision to outsource?
- How do we ensure maximum ROI in outsourcing?
- What are the risks in outsourcing and how can we minimise them?
- How are CROs evolving - what is the impact on our business?
Key features of the report
- Industry forecasts to 2010 - offering an insight into the future development and growth of pharmaceutical outsourcing
- Detailed market size data 1999-2001 - providing a snapshot of the outsourcing industry's recent performance
- CRO competitor profiles - outlining the major CROs, their competencies and service offerings
- Concise case studies - demonstrating different approaches and outsourcing best practice
- Executive survey - presenting consolidated evidence from senior decision makers of the industry's expectations from outsourcing
- Analysis of deal structures - focusing on the strengths and weaknesses of different fee systems
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The future of pharmaceutical outsourcing
CHAPTER 1: DRIVING FORCES
- Increased focus on shareholder value
- The productivity crisis in sales and marketing
- The productivity crisis in R&D
- Merger & Acquisition - the key to improving R&D productivity?
- Measuring scale and R&D productivity
CHAPTER 2: OUTSOURCING R&D
- What is outsourcing?
- Sizing the pharmaceutical R&D outsourcing market
The drivers and resistors for outsourcing R&D
- Drivers of outsourcing
- Rapid access to additional R&D capacity
- Access to therapeutic expertise
- Access to novel enabling technology
- Case study: Roche gains access to genomics research through agreement with deCode
- Case study: Other examples of genomics agreements
- Tighter focus on core competencies
- Speed of development
- Rapid access to patient populations for trial recruitment
- Risk management
- Is outsourcing cheaper?
- The resistors of outsourcing R&D
- Loss of in-house expertise
- Lack of contact with investigators and opinion leaders
- Loss of intellectual property/concerns over confidentiality
- Loss of project control
- Stability of CROs
The structure of the supplier base for outsourced R&D
- Do pharmaceutical sponsors value one-stop-shopping?
- Large versus small outsourcing vendors
- Case study: Ilex Oncology completes transformation from specialist CRO to pharmaceutical company
- Risk sharing agreements
- Risk sharing agreement case studies
- Case study: PharmaBio Development invests in
- Case study: PPD Discovery and Agouron enter risk-sharing agreement
- Facility-for-service/risk taking
- Facility-for-service case studies
Defining optimum outsourcing strategies
- Tactical versus strategic outsourcing
- Defining a strategic outsourcing framework
Case studies of strategic outsourcing
- Case study: Biogen outsources development and commercialization of Angiomax
- Case study: Aventis shifts capital off the balance sheet
- Forming best practice relationships with CROs
Case studies of strategic outsourcing
- Distant relationships can be beneficial if managed effectively
- Preferred supplier networks & strategic partnerships
- Case study: Inceutica marketplace seeks CRO selection efficiencies
- Case study: Kendle and Pharmacia
- Improving outsourcing relationships
The role of eTechnology in outsourcing
- Case study: Covance's StudyTracker
- Clinical trial patient recruitment on the Internet
- Outsourcing online clinical trial recruitment
- Case study: Acurian provides novel outsourced recruitment business model
- Outsourcing eDC
- Case study: Eli Lilly invests in online trial venture with 1747 Inc.
- In silico research
- Outsourcing in silico research
- Case study: Pharsight and Millenium
CHAPTER 3: THE FUTURE OF PHARMACEUTICAL
The outsourcing market to 2010
Forecast supplier base structure
Alternative long-term scenario
The virtual pharmaceutical model
The business model
Potential benefits of the virtual pharmaceutical model
Case study: Fulcrum (Protodigm)
Is the virtual business model realistic?
Virtual development providers - a new type of future
List of Figures
Figure 1.1: The pharmaceutical industry outlook – investor concerns 16
Figure 1.2: Pharmaceutical R&D expenditure by US based companies, 1985–2001 20
Figure 1.3: Lengthening drug development timelines, 1960s–1990s 23
Figure 1.4: The commercial value of late stage R&D pipelines is directly proportional to R&D expenditure 27
Figure 1.5: Opportunities to externalize activities throughout the pharmaceutical value chain 30
Figure 1.6: Global outsourcing expenditures, 1997–2000 32
Figure 2.7: The global pharmaceutical R&D outsourcing market, 1997–2001 39
Figure 2.8: Global pharmaceutical R&D outsourcing by stage, 2001 41
Figure 2.9: Drivers and resistors for outsourcing R&D 42
Figure 2.10: Ranking of drivers for outsourcing R&D 43
Figure 2.11: Outsourcing can add-value when resource needs fluctuate 44
Figure 2.12: Speed of development – in-house versus outsourced 50
Figure 2.13: Delays in clinical trial programs due to recruitment lags 51
Figure 2.14: Ranking of resistors to outsourcing R&D 55
Figure 2.15: Market share of the top 10 CROs, 2001 61
Figure 2.16: Indexed share performance of the top 5 CROs, January 1997–July 2002 65
Figure 2.17: The leading CROs’ service portfolios 68
Figure 2.18: The outsourcing R&D reality gap 71
Figure 2.19: The pros and cons of using large and small outsourcing vendors 73
Figure 2.20: Selecting the optimum agreement with CROs 77
Figure 2.21: Tactical versus strategic outsourcing 87
Figure 2.22: Building an effective strategic framework for outsourcing 91
Figure 2.23: Establishing best practice relationships with outsourcing providers 100
Figure 2.24: Multi-level relationship management with outsourcing providers 102
Figure 2.25: Drivers and resistors of outsourcing eClinical trial recruitment 109
Figure 2.26: The advantages of using eDC in clinical trials 112
Figure 3.27: The global pharmaceutical R&D outsourcing market, 2001–2010 124
Figure 3.28: The virtual pharmaceutical company transformation 128
Figure 3.29: Cost savings through adopting a virtual development approach 131
List of Tables
Table 1.1: The declining productivity of R&D 21
Table 1.2: Pipeline productivity versus R&D spend 26
Table 2.3: The global pharmaceutical R&D outsourcing market, 1997– 2001 38
Table 2.4: Financial performance of the leading CROs, 2000–2001 62
Table 3.5: The global pharmaceutical R&D outsourcing market, 2001–2010 123
Table 4.6: Criteria and points used in generating pipeline productivity index 139
The Outsourcing Market to 2010
The most important factor influencing the outsourcing sector over the next ten years will obviously be the evolution of the pharmaceutical industry as a whole. As discussed in Chapter 1, industry-wide factors such as the declining productivity of R&D, increasing importance of generic competition, regulatory constraints,
proliferation of R&D enabling technologies and continued consolidation will all play a major part in determining the outsourcing sector's future. Table 3.27 (provided in full report) shows the forecast pharmaceutical R&D outsourcing market to 2010. The market is predicted to grow from $9.3bn in 2001 to $36.0bn by 2010, representing an average annual growth rate of 16.3% (compared an average growth in global R&D expenditure of 9.6% during the same period). In many respects, this forecast growth in the pharmaceutical R&D outsourcing market relates to a gradual evolution of the current environment e.g. 'business as usual', rather than a fundamental shift in industry dynamics.
CHAPTER 4: THE FUTURE OF PHARMACEUTICAL OUTSOURCING
Whilst pharmaceutical companies will outsource a greater proportion of R&D during the next decade, the cultural shift regarding industry sponsor's attitudes towards vendors such as CROs will be gradual. Sponsors will become more experienced and sophisticated at managing a portfolio of outsourcing contracts, ranging from one-off agreements with R&D enabling technology providers through to global strategic partnerships with CROs. The ongoing roll-out of Internet based technologies will also assist companies in improving the relationships and effectiveness associated with outsourcing R&D. Companies will begin to outsource more strategically, rather than in the 'ad hoc' unplanned fashion that has shaped industry's use of outsourcing to-date. The greatest exponents of seeking outsourcing opportunities during the next five years will be the smaller pharmaceutical and biotechnology companies. Niche companies will identify therapy areas in which they will focus their development and sales and marketing capabilities. Their portfolios will be built from in-licensing agreements with a wide network of 'feeder' organizations that specialize in research but do not have the resources to conduct clinical trials or take their products to market.