Over the past 10 years, the ratio of R&D spend has increased 7% per treatment approval annually.
Improving costs while fuelling innovation remains a key strategic priority for businesses across the Pharma sector. The right decisions across external resourcing can unlock Pharma R&D potential and help bolster organisational success.
In this article, I provide the guidance you need to make a strategic choice between bringing on-site scientific services and fully outsourcing activities.
Expect to discover:
- Why companies use external providers
- The key differences between on-site scientific services and full outsourcing
- Why external sourcing is crucial to innovation
- How to choose the right model for your workforce
Why do pharmaceutical companies use external providers?
External providers enable pharmaceutical companies to meet strategic objectives, strengthen their workforce and overall achieve business success.
External sourcing providers can:
- Mend capacity shortfall
- Improve technical capability and expertise
- Fill labour gaps
- Enable clients to focus on core expertise
- Improve resource flexibility
- Boost cost control
- Widen market access
- Expand market intelligence
The difference between on-site scientific services and full outsourcing
While both options involve working with an external provider to improve R&D, both services achieve efficiency in different ways.
On-site Scientific Service Provider (SSP)
On-site SSP teams work directly on-site with a client, meaning that communication and problem-solving occurs in real-time, without time-zone considerations. These teams often have access to the IT infrastructure, which makes accessing databases and finding information simple.
As the team is on-site, cycle times are instantaneous with little shipping needed. Additionally, the client maintains all intellectual property control.
On-site SSP’s are valuable for companies who prioritise agility and resource strength. They enable businesses who have manufacturing capability but a lack of staff to thrive through key projects and achieve their goals.
Fully outsourced teams work at their own CRO/CDMO facility and communicate via site visits, video calls, and tele-conferences. Given the global network of the pharmacological industry, there are often time-zone considerations with outsourcing providers.
The intellectual property control of research is negotiated and agreed before the project begins. Cycle times must also consider shipping, time-zone and custom regulations.
Full outsourcing is particularly useful for companies who require specialised manufacturing processes and want to fund innovative methods without the additional expansion costs or resourcing hurdles.
Choose a model that suits your workforce priorities and strategy
Staying strategic doesn’t have to be complicated. In this section, I’ve broken down strategic decision-making into 5 key steps.
Step One - Outline motivations
Outline the key reasons behind your need for external support. These reasons should be aligned with your organisational goals and strategic objectives, such as resource/skill acquisition, value creation or simply cost reduction.
Step 2 - Create an attribute specification
An attribute specification is a list of key qualities and characteristics your target external service would provide. This list should cover the key aspects needed to fulfil your strategy, as well as secondary ‘nice to haves’.
Your preferred partner should have strong examples of their ability to measure success across these attributes, and any associated metrics should be part of the service agreement.
Step 3 - Identify and contextualise risks
To maximise your relationship with any external service, understanding the risks before you commit is key.
Key risks to consider are:
- Geopolitical risks
- Human capital and employment risks
- Economic risks
- Legal risks
- Infrastructure risks
At this stage, it’s worth applying a consequence/probability matrix for risk assessment.
Step 4 – Consider the costs and market opportunity
It’s important to consider costs, and market opportunity alongside each other to ensure that you’re capturing the full context of the situation.
Cost considerations should include:
- Compensation and wages
- Infrastructure costs
- Tax and regulatory costs
Market opportunity considerations should include:
- Current and future therapeutic need
- Current pharmaceutical market size
- Market growth rate
Are on-site scientific services the future of outsourcing in Pharma R&D?
When Sanofi’s CEO Paul Hudson joined the company in 2019, he laid out a plan to achieve “operational excellence in manufacturing” and drove a focus on newly developed best-in-class drugs.
A key part of this process meant prioritising on-site scientific services, after what he describes as “years of over-reliance” on outsourced support. Hudson’s aimed to streamline costs across the business to reach a goal of 2 billion euros in savings.
By 2021, Sanofi had already recouped 1.7 billion and the target savings amount has expanded to 2.5 billion.
Jean-Baptiste Chasseloup de Chatillon, Sanofi’s Chief Finance Officer reports that the cost-savings are creating more space for science, saying, “each time we make enough room, we go on to add science and value to our pipeline.”
Sanofi aren’t alone in this; leading pharmaceutical organisations like BPL and GSK are also investing in their internal capacity, activating the creation of bigger and better research facilities across the world.
Want to learn more about on-site scientific services?
At Synergy, we equip laboratories across the world with expert talent who catalyse laboratory success, from within.
We help all kinds of laboratories and scientific industries, including Pharma R&D labs, achieve agility with flexible teams that we source, manage and develop ourselves.
About the author: Becky Upton is Director of our STEM Services and has over twenty years of experience working in the Life Science sector. Connect with Becky on Linkedin here.