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Service Sectors > Validation services

A world of outsourcing awaits - Part IV other contract services

By Kirsty Barnes , 26-Oct-2006

Pharmaceutical companies are beginning to catch up with other industry sectors that take an increasingly realistic view of what they consider a core competency and outsourcing what is left - Outsourcing-Pharma takes a snapshot of the scene.

The industry is flushed with quality IT services, with eight companies that have a specialist life science/pharmaceutical focus being featured in the top 20 of the first-ever listing of the world's top outsourcing service providers, recently complied by The International Association of Outsourcing Professionals (IAOP).

IT services on offer span throughout drug company's operations, from basic "back-office" function such as payroll and procurement; to "front office" services, including help desk, call centre, business process outsourcing (BPO) and data management; through to more highly-skilled "functional" processes involving testing, validation and regulatory compliance as well as assistance in R&D, clinical trials, manufacturing, logistics and sales and marketing.

No company likes to hire and fire unnecessarily, however, staff outsourcing is enabling pharma firms to keep a balance of fixed and variable staffing, rapidly shift the right resources to the right place at the right time and plug gaps in expertise.

The practice is offering particular benefits to mid-sized and emerging biopharma companies with limited in-house capacity.

The use of contract pharmaceutical and specialty sales forces and nurse teams is gaining in popularity, particularly in the UK where around 30 per cent of field-based drug representative jobs are now outsourced. In the US, this figure is around 9 per cent, but climbing.

Contract sales teams allow a company to keep staffing overheads to a minimum whilst allowing the flexibility to bring in extra capacity and expertise when needed - usually during a new product launch when during the first 6-12 months a speedy and intensive market penetration is required.

In addition, pharma companies are increasingly gaining the confidence to hire agencies under contract to handle other functions that have traditionally been managed strictly in-house, such as marketing, advertising, public relations, market research, medical education, events and even specialist staff training - as and when the need arises.

For example, a recent survey indicated that half of US pharma companies and 33 per cent of other international pharma firms are planning to outsourcing at least parts of their sales training this year.

As drug companies strive to create a more flexible and cost efficient distribution infrastructure, third party logistics (3PL) - involving the management of a drug's movements from the factory through the supply chain to the retailer - is an area tipped for dramatic growth over the next four years, particularly in Europe where the practice is still in its infancy.

AS a result, many traditional pharmaceutical wholesalers have been slowly diversifying their business models and other specialist companies are popping up in order to cater for this new market evolution.

Specific 3PL services include product transport and distribution, expiration date control and product recall, temperature and humidity controlled storage, import/export and quarantine service, updating literature and repackaging, labeling and samples management, inventory management and pre-wholesaling.

Looking forward, as drug companies continue to implement cost-containment measures, an endless number of support and facilities management functions such as catering, site security, maintenance, cleaning and communications support, as well as professional services such as legal, consultancy and accountancy will become outsourcing targets.

When it comes to pharmaceutical outsourcing, the sky really is the limit.

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