R&D outsourcing set to climb

By Emilie Reymond

- Last updated on GMT

Related tags: Research, Contract research organization, Clinical trial, Outsourcing

Outsourced pharmaceutical R&D spending is set to increase
at twice the expected rate of general R&D expenditure
for the next five years, according to new research published this
week.

The report, released by Irish research company Arrowhead Publishers, suggests that the reason behind this rise - forecast at 15 per cent annually - is that drug makers are finding that strategically outsourcing can enable them to reap dividends by getting better products to market faster. In particular, outsourcing clinical trials is seen by many pharma executives as a means to make the process cheaper and more efficient, according to the report. "Another attraction of outsourcing clinical development is that it can be implemented relatively quickly,"​ said the study. The research pinpoints the main drivers of the growing appeal of outsourcing for pharma companies, which include the reduction of financial risk by limiting in-house investment, the chance to save significant time and money while improving quality and speed, and the opportunity to get approval in several countries at the same time by using an international contract research organisation (CRO). Indeed, it said, offshoring clinical trials to emerging markets around the world is increasingly seen as a very attractive alternative. As a result, CROs have received the lion's share of outsourced clinical research revenue and are now extending their offering to international levels. "The multi-national availability of CRO services is increasing in the wake of two concurrent trends - the globalisation of outsourcing services in general, following the lead of the IT sector, and the internationalisation of the pharma sector,"​ said the report, called 'Outsourcing Clinial Trials: A Global Analytical Guide and Comparative Analysis of International Destinations'. Meanwhile, new data from another report, released last week by Research and Markets, suggest that the Indian contract research sector will benefit even more from this trend, at least over the next three years. According to the research conducted in collaboration with KnowGenix, a Mumbai-based research firm, the country's CRO market, currently worth $75m (€55m), is expected to grow at 24 per cent per year, reaching $175m by 2010. India has become one of the preferred destinations for outsourcing research services due to its low cost manufacturing, lower cost of R&D staff, and lower operational costs while providing quality infrastructure of international standards, the report said. "The rapidly evolving skill-set of Indian vendors in basic research and development have narrowed the skill-gap required for new chemical entity (NCE) research. This trend is one of the key attractors for western companies to outsource value added research services from India,"​ said Dr Raj Rajagopal, COO of KnowGenix.

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