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Contract Services: Outlook 2007



With productivity and efficiencies on the climb, the outlook for contract services is most definitely rosy



By Joanna Cosgrove



Published January 10, 2007

Contract Services: Outlook 2007



With productivity and efficiencies on the climb, the outlook for contract services is most definitely rosy.



By Joanna Cosgrove




According to Outlook 2007, a study conducted by Tufts Center for the Study of Drug Development (CSDD), Boston, MA, outsourcing providers have a good reason to be happy. The volume of new drugs entering the clinical trial pipeline is up, as are the usage occasions for contract services. What’s more, technology is keeping pace, making it easier to keep a handle on risk management.

Since the beginning of 2000, the number of new drugs entering clinical testing by the top 10 firms has increased 52%, and according to Kenneth Getz, MBA, senior research fellow, Tufts CSDD, that volume is creating a variety of unique opportunities for contract service providers. “Companies are making more sophisticated decisions about what types of outsourced activities are needed for a specific project, by therapeutic area and by phase,” he said. “They’re starting to get a better handle on what their in-house capabilities are and where they need to compliment those capabilities.”

And big drug companies aren’t the only ones turning to contract service providers. The biotech and small/mid-tier pharma sector has “emerged as a formidable contributor” to pharmaceutical innovation. “Without exception, every company that was interviewed for this project expressed interest in increasing their level of outsourcing, even companies like Merck that have typically been low users of outsourcing services,” Mr. Getz said, adding that the reason behind this trend is multi-faceted. “We’re finding it’s a combination of things. Most companies are operating under even tighter resource constraints and they’re really eager to utilize contract resources that are offering them high levels of performance, as well as quality.”

Pharmaceutical and biotech contractors with a global presence are forecast to become even more attractive partners, because according to the study, within two to three years, as much as 65% of FDA-regulated clinical trials for top pharmaceutical companies will be conducted abroad. Mr. Getz says the motivation is less motivated by bottom line cost savings and more because there’s an increased need for drug studies to be imbued with a global focus -- a quality that’s simply more easily obtained abroad.

But that’s not to say cost doesn't remain a driving factor. In fact, the study asserts that, among other things, the high cost and low success rates of human studies will lead small/mid-tier pharma companies to adopt outsourcing and other clinical practices that big pharma increasingly uses to control costs and manage risk.

Risk management -- both on the part of drug developers and contract service providers -- is also being fine tuned through for greater efficiency. “Companies are utilizing a wide variety of technologies such as project management technologies solutions, improved communication solutions, electronic data capture and electronic data management technologies,” commented Mr. Getz. “Many of them are utilizing improved ways of more flexibly managing their projects so they can adjust a project in real time.”

Mr. Getz explained that the Outlook 2007  wasn’t designed to represent the “old world view” of outsourcing, which was defined by which companies are being used, rather the study defined a “high outsourcer” as an organization that applies a large proportion of its budget to outsourcing. High user status could reflect a company utilizing one full-service CRO or numerous niche CROs. “We’re not looking to single out an individual organization; we set out to capture outsourcing behavior,” he said. “This study captures what happens when a company utilizes a high level of outsourcing typical of the way companies are doing today, and if it’s managed well, they really feel the effects of successful management through improvements in speed and in sustained quality.”

For more information about the Outlook 2007 study, contact Tufts CSDD at 617-636-2170, or log onto http://csdd.tufts.edu


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