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Outsourcing Model Of Drugs Development In The Pharmaceutical Industry

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Qusestion:

Describe the outsourcing model of drugs development in the pharmaceutical industry?

 

Answer:

Introduction

In the field of pharmaceuticals, outsourcing can be defined as, the contracting or making a partnership model with a third party for related studies and services. The concept of outsourcing was not new, as it came from the general venture of business firms. In the present context of competitive marker and globalization of services and products, the objectives are linked with long-term goals (Higgins, Rodriguez, 2006, pp.351). In this context, focusing on third party for the services implies two peculiar advantages, viz. (i) do not require any critical strategies; (ii) do not need any special competency or capabilities. Talking particularly about the drug development, the outsourcing can be more or less linked with R&D outsourcing and clinical development (jones, 2000, pp.341). Furthermore, before discussing the core concepts of outsourcing the drug development, it is also important to discuss that the term is subjected to be more competitive and challenging, similar to other subjects, such as resource planning, insourcing and marketing.

 

Important considerations

The key considerations with respect to outsourcing models of drug development in pharmaceutical industries can be made rebuttal with following points (Govender, 2007):

• When to make the outsourcing

• Vendor selection and criteria assumption according to the requirements

• Not to conflict with the in-house expertise and resources

• Deciding a cost-effective strategy for making outsourcing

• Recruitment of patient for making the control and variable studies

• Matching to the guidelines and policies of local, national and international regulatory and ethical classes

 

Cost-effective strategies for outsourcing of drug models by pharmaceutical companies

Some of the key considerations, which are pre-requisite for making the settings and assumptions of outsourcing, are discussed in this context. It is more for the companies to identify the cost-effective strategies as they can help in making the model studies fruitful, both according to organizational objective and cost-effective strategies of organization (Gupta, 2009, pp.219).

• Cross-checking whether the in-house resources and expertise are sufficient for execution of drug candidate studies and clinical services.

• To check the resources, with respect to requirement and availability.

• Identification and assessment with respect to the resource. It is necessary to analyze whether the resources are sufficient and optimal for the execution of the studies.

• Another important consideration is to analyze and cross check whether the in-house project for the same will be cost-effective.

• Time is also one of the crucial factors. Hence, the time-effectiveness of the work should also be analyzed.

 

Current outsourcing relationships in pharmaceutical industries

It is noteworthy to mention that the present report do not contains the figures of investment and reference of specific pharmaceutical firms. The reason being is the cost and the nature of projects (pilot-scale and major projects) differs according to the stages of drug developments (Kaplan & Laing, 2005). The current practices of pharmaceutical firms are:

• Objective to adopt measurable goals and objectives

• Ensure the service and cost is beneficial for both the parties

• Mutual respect and partnership model where both parties can learn from each other

• Appropriate management system and documentation

• Tract and measure the performance at every stage of drug development or clinical study phases

• Involvement of both positive and negative feedback from both the ends

• Progress review, audit and monitoring of the each and every steps

• Definite communication skills and utilization of conflict resolution strategies

• Loyalty, confidentiality and appropriate authorization of the information

 

Conclusive note

The financial, scientific and appropriate protocol are the key considerations in the process of outsourcing for the drug development procedure in the pharmaceutical firms. Key benefits associated with the outsourcing process are (Lim, K. 2004, pp.287):

• Increased value of the stakeholders

• Competitive advantage

• Accurate resource management and time effective process

• Improved and organized focus on the core process

• Cost reduction

• Technical and scientific ad-hoc support is available to all quality and type of drug designing process.  

• Increase in the regional and global capabilities

Source:  Goldman Sachs, PhRMA, EFPIA and author’s estimates and analyses

A general figure of the outsourcing revenue related information spanning from year 1999 to 2007 can be found from figure 1. It can be noted that the revenue being invested in the outsourcing is being increased in the year wise comparison of the global scenario. The outsourcing services can be linked with computation models (docking, high thoughput screening), cell line studies (various cancer cell line), genetic studies (preparing heat map, knock-out gene), animal model studies (mouse, monkey and other), human trials (volunteers individual and diseased individual) and various other techniques, models and experimental tools needed for the course of drug designing.

 

References:

GOVENDER, I. 2007. An analysis of the key drivers, decision making and strategic issues with respect to outsourcing in the SA pharmaceutical manufacturing industry.

GUPTA, S., WOODSIDE, A., DUBELAAR, C., & BRADMORE, D. 2009. Diffusing knowledge-based core competencies for leveraging innovation strategies: Modelling outsourcing to knowledge process organizations (KPOs) in pharmaceutical networks. Industrial Marketing Management, 38(2), 219-227.

HIGGINS, M. J., & RODRIGUEZ, D. 2006. The outsourcing of R&D through acquisitions in the pharmaceutical industry. Journal of Financial Economics, 80(2), 351-383.

JONES, O. 2000. Innovation Management as a Post‐Modern Phenomenon: The Outsourcing of Pharmaceutical R&D. British Journal of Management, 11(4), 341-356.

Kaplan, W., & Laing, R. (2005). Local production of pharmaceuticals: industrial policy and access to medicines. World Bank HNP discussion paper.

LIM, K. 2004. The relationship between research and innovation in the semiconductor and pharmaceutical industries (1981–1997). Research policy, 33(2), 287-321.

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