This year we had 375 industry professionals respond to Contract Pharma’s Eleventh Annual Outsourcing Survey, which was up from 252 last year. Forty-five percent of respondents were from pharmaceutical sponsor companies, and the remaining 55% represented service providers. Survey demographics are broken down further (see sidebar 1 below).

When asked if there is an increasing demand for outsourcing this year, 80% of respondents answered yes. The number one reason for this, according to 41% of respondents, is to focus on core competencies (Figure 1). Pharmaceutical company sponsors say they are also outsourcing more because they are virtual (30%), while a significant number say they lack the capabilities in-house (14%).

Figure 2 highlights the top focus areas for sponsor companies’ outsourcing efforts. We’ve also compared this to last year’s results to highlight where the focus of outsourcing has shifted. (see sidebar 2 below)

Where is your company focusing its outsourcing efforts?

2015
1. Analytical and testing services (37%)
2. Clinical trials, Phases I-IV (34%)
3. API manufacturing (31%)
4. Solid Dosage manufacturing (28%)
5. Formulation Development (20%)
6. Clinical Trials Materials (15%)

2014
1. Analytical and testing services (cited by about 35%)
2. Clinical trials, Phases I-IV (roughly 25%)
3. Formulation Development (about 16%)
4. Solid Dosage form manufacturing (14%)
5. Injectable manufacturing (approximately 10%)
6. R&D services (about 10%)

Sponsors say they are also using contract service providers as secondary suppliers, with 43% saying they are using them for APIs, 36% for clinical materials and 28% for commercial supply. Thirty-nine percent say they are not using providers for any secondary supplies (Figure 13).

Mirroring last year’s results, sponsor companies are continuing to take a more strategic (60%), rather than tactical (40%), or case-by-case, project-to-project approach to outsourcing (Figure 3). Change is not likely in the wind as most (82%) are planning to continue this approach (Figure 4). In addition, roughly 80% of sponsor company respondents this year say that they view contract relationships as partnerships (Figure 5). Preferred vendor lists have become less important for respondents this year; roughly 38% of sponsor company respondents say that more than half of their outsourcing budget currently goes to preferred vendors, which is down from 45% last year (Figure 14).

Mid-sized pharma companies continue to lead the pack in terms of seeking service providers (50%) followed by small pharma (38%); big pharma (31%); small biopharma (31%); and big biopharma (21%).

Despite growth in outsourcing, both sponsors and service providers point out ongoing challenges in outsourcing relationships. The top issue continues to be communication and culture (Figure 6). One respondent from the sponsor side said, “Be clear on what your process can support—lead times, documentation, communications, OTD, etc. Do not make promises that you know cannot be met.”

Forty-six percent of respondents this year cited this as the top challenge of the sponsor-contract services relationship, which was down from 55% last year. Hopefully this a sign the communication paths are clearing a bit. Quality assistance was the next top challenge cited (40%) followed by vendor qualification and selection (37%), documentation (36%), and analytical method development (26%).

From the service providers’ perspective the top challenges cited when working with pharmaceutical companies (see sidebar 1) are insufficient information (63%), unrealistic deadlines (62%) and infrequent communication (40%). One respondent said it is important “to treat us as a part of their team and share their entire strategy so that we can truly add value.”