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Cut in-house R&D and increase outsourcing, says GBI

By Natalie Morrison , 03-Jul-2012
Last updated on 03-Jul-2012 at 17:01 GMT2012-07-03T17:01:27Z

In-house pharma R&D out, outsourcing in: GBI

Cutting in-house R&D staff to outsource more activities cuts will drive the industry forward, according to a new report.

Conducted by GBI Research and PharmaVision, the study noted that industry has been offloading more workers in a bid to reduce costs, and improve efficiency and productivity. It said more than 60,000 jobs gone in the US in 2009 alone.

However, it said has led to the closure of R&D (research and development) facilities, offices and manufacturing plants and hence less capacity for pharma firms.

The analysis, titled ‘Workforce Reductions in Pharmaceuticals – Outsourcing, External Innovation and Collaboration Will Drive the Industry Forward’, said that increasing outsourced activities in drug discovery and development is the best way to side step the problems.

Speaking to, Cheryl  Barton – a researcher on the paper, and director of PharmaVision Consultancy – said: “The cut backs across whole organizations are driving the increased use of outsourcing in preclinical research as service providers take up the slack in the system.”

In the report, co-analyst and PharmaVision senior associate Sara Sleigh also said: “Parexel, Covance, PPD and ICON are among the large CROs to have benefited most from these moves, indicating the increasing use of a small number of large providers to meet a single company’s needs.”

Emerging markets

Barton also told us that a large part of the money saved from downsizing workforces should be spent on R&D outsourcing in emerging markets.

“Various aspects of pharma R&D have been outsourced to developing countries for some time,” the report said. “These include clinical trials, which can be faster and cheaper to conduct outside the US or Western Europe, alongside substantial proportions of medicinal chemistry.”

The report touts Asian markets in particular as those with the most promise,  with China’s Government launching a new five year plan which pledged over $300 billion on the expansion of life sciences within the country, India’s plans for more than 20 biotech parks, and Singapore’s Biopolis; a custom-built biomedical research and development hub. 

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