Although Japan is the world's second largest drug market, it represents only 15 per cent of the total global spend on clinical development, delegates heard during a presentation at the recent Drug Information Association (DIA) meeting in Atlanta. Japanese clinical trial sponsors spend only about 11 per cent of total development costs on outsourcing - compared with 24 per cent globally - said Chris Albani, a partner of consultancy firm Pharmaceutical Industry Lead Pittiglio, Rabin, Todd & McGrath (PRTM) Japan. The areas of strong growth potential in outsourcing include medical writing, the concept of which is just blossoming in Japan, while site preparation, monitoring, data management, site selection and biostatistics are also very underutilised compared to in the west, while only patient registry outsourcing has reached maturity. Meanwhile, the functions of development strategy, protocol development, new drug application (NDA) preparation, and regulatory affairs are yet to even make it onto the outsourcing radar. From a sponsor's point of view, this is because the pharma outsourcing market in Japan is still very young, only having kicked off six years ago, said Albani. "No many people in pharma companies in Japan have experience dealing with and managing contract research organisations (CROs). On the other hand, not many CROs in Japan have much experience yet either," he said. A spokesperson from Pfizer, who has been involved in outsourcing in Japan since 2002, said that the company has generally experienced "better luck" in dealing with domestic rather than international CROs, citing the example of on international CRO that cancelled a clinical project midway through, without warning. "Now in 2006 we have a preferred provider with a CRO but it was hard to negotiate this because clinical research associates (CRAs) are in high demand in the country and lots of international CROs didn't want to commit to such an arrangement because of this," said Patrick Floody director of the Study Management Group at Pfizer Japan. "Domestic CROs on the other hand were more interested in partaking in this and although it took nearly five months to negotiate, we formed such a relationship and had two projects up and running in the first month." Pfizer Japan has recently also just confirmed an agreement with a second domestic CRO for a preferred partner arrangement, Floody added. He said that Pfizer decided it needed to change to a more strategic approach with outsourcing in Japan because all the different contracts they were involved with were getting hard to manage, with too much internal oversight required. Meanwhile, a very few companies undertake outsourcing in Japan for strategic purposes. The vast majority is of outsourcing is transactional, i.e. each sponsor contracting one CRO at a time. According to data presented by Albani from a recent industry survey, only 22 per cent of pharma company respondents indicated that they have long-term, strategic relationships with CROs. The CROs that were interviewed said that demand almost always exceeds capacity and CROs are currently struggling to keep up with this demand: "We now decline two out of three orders" and "Some pharmaceutical companies are willing to wait until we have available resources," were two of the comments made. However, Albani raised the question as to how long this scenario will continue, because the excess demand versus globalisation makes the future supply [of staff and services] uncertain: "Global and pan-Asia trials might decrease number of patients in Japan," he said. Either way, due to the rapid globalisation of the pharma industry to include Japan, the country's R&D outsourcing industry is likely to "grow up fast," he said.