Outsourcing is a crucial element of the drug development model today. The question has become less- ‘Should we outsource? ‘ but rather ‘ How do we outsource?’ with large and small pharma alike taking their own view on the best approaches to take. Across all verticals, organisations outsource for a variety of reasons including cost-efficiency and operational benefits. However, there are also obvious risks for sponsors when entrusting their deliverables to another party. Companies rise or fall on the success of their products, so stakes are high. In addition, with stringent regulatory requirements to fulfil, sponsors need to make sure they have proper oversight and governance over the projects that their CRO is running. One of the central risks faced by sponsors is ‘adverse vendor selection’. This is the, all too real, possibility that the vendor you select doesn’t deliver what they promised, leaving you high and dry with poor quality deliverables, rework, or in extreme cases a project that needs to be rescued by another CRO. Thankfully, there are steps that sponsors can take to guard against these risks.
In this blog, I will recap outsourcing models, trends, and motivations and then take a look at how sponsors can make better vendor selection decisions to improve outcomes.
Outsourcing trends in modern drug development- why do companies outsource today?
“Do what you do best, and outsource the rest.” Peter Drucker
Sponsor companies of all sizes are becoming leaner and increasingly rely on the support of vendors to deliver work across the product lifecycle.
Within small biotech companies, running trials with virtual teams, I have noticed a strong preference for outsourcing using a full-service model (where all clinical services are contracted to the same CRO), to centralise activity and minimise the oversight requirements. However, even within this model, biotechs often need to further bolster the competencies of the full-service CRO by bringing in specialist expertise. Statistical consultancy for trial planning and trial design is an excellent example of this approach.
For large pharma, it’s a different picture in the sense that they do have internal resources, but want to strengthen and enhance their position by outsourcing. Outsourcing partnerships help them to access talent, reduce operational costs, and increase flexibility. While some companies still use project-based outsourcing models, in our experience this seems to be becoming less common. On the other hand, Functional Service Partnerships (FSP), ranging from simple staff augmentation to full FSP, are becoming comparatively more widespread, especially for data services like statistics and programming.
The model that you ultimately choose depends on many factors. When making a decision, sponsors can think about the level of in-house oversight available, the expertise and resource already available in-house, the core competencies that the project needs, and the complexities of the project. For the latter, in situations where there is a lack of clarity over the scope of exactly what is needed, I’ve seen simple staff augmentation models working exceptionally well. On the other hand, when there is a more defined idea of the project requirements, a fully evolved FSP model in which the CRO oversees the projects and the team can be more efficient and cost-effective for the sponsor. This kind of arrangement helps sponsors to reduce their internal management burden and overall costs.