Phase II and III research is expected to see the biggest upturn in terms of outsourcing from large and medium-sized pharma, according to a survey from the Life Sciences Strategy Group.
The survey of 100 biopharma employees in North America and Europe found that over the next two to three years 34% of Phase II research will be outsourced and in five to ten years that number will climb to 40% outsourcing for large pharma. Phase III research is expected to see a similar climb for large pharma.
For small and mid-sized pharma, which typically outsources more of its work, Phase II research will hit about 66% outsourced in five to ten years, and about 69% for Phase III research over the same time period.
The results seem on par with Covance CEO Joe Herring’s prediction from earlier this month that 70% of the trials industry could be outsourced in the coming years.
Jon Meyer, founder and principal of the Life Sciences Strategy Group, told us that the key takeaways are that large pharma are really starting to use more of the largest CROs and looking to strategic partnerships when they’re taking on these deals. Fee-for-service deals for larger CROs are expected to decline from 24% of trials today to 19% of trials over the next five to 10 years.
Meanwhile mid- and small-sized pharma companies are typically using mid-tier CROs as preferred or functional service providers, as opposed to strategic partnerships.
The trends come as mid-size CROs are “feeling the squeeze” from larger CROs capturing market share, respondents said.
Big pharma is also seen to be shifting more control of niche CROs and providers to the primary clinical, or large CRO, Meyer added. Electronic patient reported outcomes and the interactive voice response systems are expected to see the most growth for large CROs over the next two to three years, according to respondents.
“CROs will put in place better risk-management strategies. With the number of GMP warning letters up in the past several years, the need for CROs to have remediation services is critical. Patient safety and pharmacovigilance will continue to be a strong sector in the years ahead,” said an anonymous large pharma employee from the survey.
In addition the practice of offshoring, outsourcing work outside the US, is expected to see incremental gains in the coming years, with small and mid-size companies seeing the largest increase in late-stage offshoring.