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    Features

    Analytical Testing Outsourcing Trends Update

    Spurred by many factors, global analytical testing services market is experiencing rapid growth in the range of 11% per year

    Analytical Testing Outsourcing Trends Update
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    01.26.17
    Analytical testing is a critical part in every step of drug development and manufacturing. The qualitative and quantitative results generated from validated analytical testing provide first-hand information to control and ensure the quality and safety of raw materials, intermediates, and finished products. Like many other CMC (chemical, manufacturing and control) activities, analytical testing is also frequently outsourced. The global analytical testing services market is projected to grow at a CAGR (compound annual growth rate) of 11.3% in the next five years, reaching $4.13 billion by 2021.1

    Many factors are attributed to this rapid market growth, including continuous outsourcing from pharmaceutical companies, growing pipelines for biological candidates, and increasing demand for more analytical details on drugs and process development by regulatory agencies. In response to the changing market dynamics, service providers are striving to provide analytical testing with quality, accuracy, and robustness all within tight timelines. As the contract research organizations (CROs) have become more integrated, small analytical labs need to establish their niche to succeed.

    Analytical testing services market exhibits strong growth
    Outsourcing has been widely employed by the pharmaceutical and biotechnology industry as a business strategy to improve efficiency and reduce cost. The most commonly outsourced CMC activity is analytical testing.2 This market is growing at a fairly fast pace: the global healthcare analytical testing services market is projected to expand from $2.42 billion in 2016 to $4.13 billion by 2021 at a CAGR of 11.3%, according to a newly released market report by Markets and Markets. Among eight service types—stability testing, raw material testing, method validation, microbial testing, environmental monitoring, physical characterization, batch-release testing, and bioanalytical testing—bioanalytical testing accounted for the largest market share in 2015; while the batch-release testing segment is predicted to experience the highest growth in the next five years.1 Geographically, North America dominates the analytical testing service market though the Asia-Pacific region is expected to grow at the highest CAGR.1

    In addition to the market value, the 2016 Nice Insight CRO Outsourcing Survey looks into the market from a different angle—the service sponsors’ preference on a variety of analytical services. Among them, the most frequently acquired/planned to acquire analytical offerings are environment testing (55%), bioanalytical testing (53%), analytical testing (49%), chemistry and stability testing (48%), method development and validation (41%), and product characterization (40%). Other popularly outsourced analytical services include in vitro assays (42%), medical imaging (38%), in vivo pharmacology (29%), particle characterization (28%), bioequivalence (28%), and bioavailability (23%).3 

    Many factors attributed to market growth
    The rapid market growth is driven by many factors including continuous outsourcing from pharma companies, the growing pipeline for biological candidates, and increasing demand for more analytical details on drugs and process development by regulatory agencies.

    Within the pharmaceutical industry, a recent patent cliff, mainly for small molecules, has made a huge dent in pharma’s profits. In the next five years, many best-selling biologics are approaching the end of patent life including Humira (AbbVie), the best-selling branded drug in the world. Due to competition from generics and biosimilars, drug innovators are under mounting pressure to bring new products through the pipeline faster. To accelerate this process, on one side, pharma companies continue to reorganize internal resources around core competencies while downsizing non-core programs, such as analytical capacity. On the other side, they become more inclined to engage with analytical service providers earlier in the product development phases as well as outsourcing complex and challenging projects instead of traditional routine analytical testing (i.e. stability testing). In addition, the number of virtual pharma companies is increasing. These companies rely almost completely on CROs for a full-range of analytical testing services across all phases of product development.4

    An increased number of biologics in development has also driven the growth of analytical testing outsourcing. In the past three decades, biologics have taken the center stage in drug discovery and development. In general, they are large molecules. Their susceptibility to environmental changes makes them difficult to characterize physicochemically. Further, these group molecules have quite diverse modalities including protein-based, cell- and gene-based therapeutics.2

    Developing sophisticated analytical testing to evaluate and monitor the quality attributes of these macromolecules requires a broader set of expertise and equipment, which is usually beyond the internal capacity of any pharma company. To this end, the level of analytical testing outsourcing for biologics is expected to grow significantly in the next five years. The ability to define higher order biological structures as a service is currently in high demand. The need for better product characterization and comparability studies, particularly for biosimilars, is a main driving force of such demand. 

    Meeting regulatory expectations is another factor that drives pharma companies to outsource analytical testing. The primary regulatory guidance for developing and validating analytical methods is the International Conference on Harmonisation (ICH) guidance Q2(R1) Validation of Analytical Procedures: Text and Methodology.6 The most recent FDA Guidance (July 2015) on Analytical Procedures and Methods Validation for Drugs and Biologics serves as a complement to ICH Q2(R1).6 Other useful guidance documents include ICH Q3A – Q3D Impurities and ICH Q6A – Q6B Specifications.7 The FDA not only expects drug developers to follow the guidelines, but also to provide greater analytical details on drugs and process development as demonstrated in CMC data.4 Experienced analytical service providers with a track record of regulatory compliance can be of great aid to help drug developers prepare CMC documents with sufficient data for regulatory submissions.  

    Developing long-term outsourcing partnership
    As more complex and diverse drug candidates enter the pipeline, developing reliable, accurate, and robust analytical methods to ensure quality and safety has become increasingly important. In parallel with product development, analytical development is a continuous refining process, in which product and process knowledge gained at each development phase can be utilized to optimize analytical methods. This continuous improvement approach is supported by regulatory requirements: analytical methods need to be qualified, but not validated until Phase II.5 Once the analytical methods are validated, the FDA expects them to be followed through the life cycle of the product.6 

    In this respect, analytical testing service is a long-term project. On the service sponsor’s side, they are leaning more towards treating CROs as a strategic partner rather than short-term service provider. They are in favor of CROs that can provide integrated services, which allow them to reduce the number of vendors, streamline the process, and improve efficiency. Additionally, there are increasing requests for CROs with capabilities to perform analytical testing along with formulation development and/or manufacturing.8

    Despite the changing preference of service sponsors, quality remains the top priority to achieve in any outsourcing relationship. According to Nice Insight 2016 CRO Outsourcing Survey, the desire to “improve quality” is the number one strategic reason behind outsourcing. Quality is also the most important decision driver in CRO selections.3 In addition, the ability to deliver quality results under tight timelines is another frequently sought attribute by service sponsors, due to the pressure they are facing to expedite the drug development process.

    Last year, the FDA released a draft guidance, “Request for Quality Metrics,” which described the FDA’s intent to require 10 types of quality data from the industry—for both drug owners and their contractors—so that four quality metrics—Lot Acceptance Rate, Product Quality Complaint Rate, Invalidated Out-of-Specification (OOS) Rate and Annual Product Review (APR) or Product Quality Review (PQR) on Time Rate—can be calculated.9 The guidance also listed three optional metrics related to quality culture and process capability/performance to support manufacturing robustness and a commitment to quality. Although the primary use of the quality metrics is to help FDA develop risk-based drug inspection scheduling and address potential drug shortages, it provides the baseline guidance for analytical service providers and sponsor companies to develop appropriate analytical testing that measures important quality metrics with accurate and reliable data. Currently, FDA is reviewing the comments from the industry, with a new revised version on the way.

    Finding the niche
    The analytical testing service market is dominated by a number of well-established players such as Charles River Laboratories (U.S.), WuXi PharmaTech (Cayman) (China) and Eurofins Scientific SE (Luxembourg).1 In order to  maintain their competitive edge, these incumbents need not only to maintain a broad range of scientific and technical expertise, but also to expand the scope of their capabilities and keep up with advanced analytical technologies and instruments. As a result, large CROs tend to acquire smaller analytical labs to fully integrate their service offerings as they continue to grow larger. 

    For small CROs to succeed in this environment, they have to find their niche or specialty. One such niche area is biological characterization and comparative testing for biosimilars, which require specialized expertise and equipment. As more biologics are entering the pipeline and biosimilars are increasing the pace of their growth, strong demand is expected in this area.10 Increased service need is also expected in the area of dissolution testing for compounds with poor solubility, extractable/leachable testing, and in vitro release test (IVRT).11 Small CROs may be able to differentiate themselves from the competitive market by tapping into these areas. 

    References
    1. Markets and Markets: Healthcare Analytical Testing Services Market by Type (Stability, Raw Materials, Method Validation, Microbial, Environmental Monitoring, Bioanalytical Services), by End User (Pharmaceutical Companies, Medical Device Companies) - Global Forecast to 2021. May 2016. http://www.marketsandmarkets.com/Market-Reports/healthcare-analytical-testing-services-market-108923833.html.
    2. SPECIAL FEATURE- Analytical Testing of Biologics & Biosimilars. Drug Development and Delivery. Mar. 5, 2014. http://www.drug-dev.com/Main/Back-Issues/SPECIAL-FEATURE-Analytical-Testing-of-Biologics-Bi-660.aspx.
    3. 2016 Nice Insight CRO Outsourcing Survey.
    4. SPECIAL FEATURE - Analytical Testing: Using More Sophisticated Tools to Support Small & Large Molecule Projects. Drug Development and Delivery. Jan. 8, 2016. http://www.drug-dev.com/Main/Back-Issues/SPECIAL-FEATURE-Analytical-Testing-Using-More-Soph-1050.aspx.
    5. SPECIAL FEATURE - Analytical Testing: A Critical Element in Drug Development. Drug Development and Delivery. Jan. 8, 2015. http://www.drug-dev.com/Main/Back-Issues/SPECIAL-FEATURE-Analytical-Testing-A-Critical-Elem-832.aspx.
    6. FDA Guidance for Industry. Analytical Procedures and Methods Validation for Drugs and Biologics. Pharmaceutical Quality/CMC. July 2015. http://www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm386366.pdf.
    7. ICH. Quality Guidelines. http://www.ich.org/products/guidelines/quality/article/quality-guidelines.html.
    8. Dubin C. Outsourcing Analytical Testing. Contract Pharma. Sep. 6, 2007. http://www.contractpharma.com/issues/2007-09/view_features/outsourcing-analytical-testing.
    9. FDA Guidance for Industry. Request for Quality Metrics. July 2015. http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM455957.pdf.
    10. Macdonald G. US demand for biosimilarity testing growing says specialist CRO. Outsourcing Pharma. Sep. 30, 2013. http://www.outsourcing-pharma.com/Commercial-Services/US-demand-for-biosimilarity-testing-growing-says-specialist-CRO.
    11. Pharmaceutical Technology Editors. Analytical Labs Strive to Deliver More Information, Faster. Aug. 1, 2014. Pharmaceutical Technology Volume 2014 Supplement, Issue 2. http://www.pharmtech.com/analytical-labs-strive-deliver-more-information-faster.
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