SOURCE: Booz & Company

Booz & Company

March 07, 2012 08:00 ET

Biotechnology Companies Will Increase R&D Outsourcing and Shift It Overseas, Finds Booz & Company Study

SAN FRANCISCO, CA--(Marketwire - Mar 7, 2012) - As biopharmaceutical companies look to cut costs and improve speed-to-market, more of them plan to outsource R&D and clinical trials and shift this work overseas to places such as China and India, finds a survey released today by global consulting firm Booz & Company.

This study confirms that outsourcing will become an increasingly important part of the competitive landscape and provides key insights into why and how the outsourcing process will radically evolve in the next two to three years. For example, many biopharmaceutical companies will begin outsourcing formerly core activities such as clinical trial monitoring and protocol development to contract research organizations (CROs). This shift will be driven by new service offerings in real-time data processing and virtual platforms that allow people around the world to securely access clinical data in real time. Outsourcing more of these critical activities along the entire R&D spectrum will transform the nature of outsourcing relationships.

"There is a sea change happening in the biopharmaceutical industry," says Matthew Le Merle, a partner at Booz & Company. "Companies first started to outsource to CROs to get R&D done faster and cheaper. However, this study clearly signals that biotech executives are now looking for more -- more value, more expertise, and more innovation. This means we will see outsourcing relationships evolve from transactional to strategic, which will require new capabilities on both sides."

In mid-2011, Booz & Company partnered with BayBio to conduct a survey and interviews with 32 executives in biopharmaceutical companies. BayBio is Northern California's bioscience association, representing more than 450 companies.

Key findings of the study, called Outsourcing in Life Sciences: A Survey of BayBio Members, include:

  • Most survey respondents (67 percent) predict strong growth in R&D outsourcing.
  • Currently, most outsourcing occurs in the United States (64 percent) and western Europe (15 percent), but respondents predict many clinical trials will shift overseas to China and India in the next two to three years.
  • Companies send trials overseas for three main reasons: as part of a regulatory approval strategy (36 percent), to cut costs (23 percent), and to gain access to patient samples (23 percent).
  • Companies are outsourcing for three main reasons: They lack certain internal capabilities (53 percent), they lack internal capacity (38 percent), and they need to cut costs (44 percent).
  • Growth in overseas outsourcing drives demand for such technology solutions as real-time data collaboration and globally accessible data storage.
  • When selecting an outsourcing vendor, the majority of respondents (61 percent) will seek a long-term strategic relationship rather than a looser transactional, fee-for-service arrangement.

"The survey results clearly show that outsourcing is here to stay," says Charley Beever, a partner at Booz & Company. "The key question that biopharma companies must address is which capabilities to outsource and which to maintain in-house. Making strategic, coherent decisions about what work is outsourced and why, and how CRO relationships are structured and managed, will help companies build a winning business model that adds value, innovation, and competitive advantage."

To see a full copy of the study, visit: http://www.booz.com/media/uploads/BoozCo-BayBio-Outsourcing-Life-Sciences.pdf

About Booz & Company
Booz & Company is a leading global consulting firm, helping the world's top businesses, governments, and organizations. With more than 3,300 people in 60 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. Visit booz.com to learn more.

About BayBio
BayBio is Northern California's life science association (www.baybio.org). We support the regional bioscience community through advocacy, enterprise support, and enhancement of research collaboration. We maintain Northern California's leadership in life science innovation by supporting entrepreneurship, science education, and life science career development through the BayBio Institute. Our members include organizations engaged in, or supportive of, research, development, and commercialization of life science technologies. With the support of more than 450 member organizations, BayBio brings the world's greatest life science community to your fingertips.

Contact Information

  • Contact:
    Margaret Kashmir
    Booz & Company
    Office 212-551-6086
    Mobile 973-879-7213
    Email Contact