Half of large pharma firms plan to offshore more discovery and early-stage work in the next two to five years, a survey found.
Responses gathered by financial services firm William Blair suggest the biggest biopharma companies are poised to accelerate offshoring of discovery and toxicology work. In doing so these firms will also share out their early-stage business between a larger pool of CROs (contract research organisations).
“Large pharma respondents…expect to increase the number of offshore CROs for early-stage development. This is an interesting departure from large pharma’s broader strategy to reduce the number of CRO partners with which it works”, John Kreger, equity analyst at William Blair, wrote.
While the vendor expansion trend was most pronounced in early-stage, more than one-third of large sponsors also plan to add offshore discovery CROs. In contrast, no respondents expect to trim their network of offshore discovery and early-stage CROs in the next two to five years.
Mind the gap
Increased interest in offshoring preclinical development comes at a time when the price difference between China, the market most often targeted by large pharma firms, and the West is narrowing.
Almost three-fifths of surveyed large pharma companies said offshoring prices have increased in the past year, which is in keeping with comments WuXi PharmaTech has made about labour costs. At the same time overcapacity has driven down GLP (good laboratory practice) toxicology costs in the West.
Despite this trend interest in offshoring toxicology appears to be accelerating, with the survey results coming a month after WuXi said it expects rising revenues to push its GLP unit into profit this year.
WuXi trailed Covance as the CRO best positioned to win offshore early stage business though. WuXi leads in discovery, with PPD’s BioDuro and ShangPharma the other popular CROs for large pharma companies.