Outsourcing-Pharma.com conducted the inaugural state of the industry survey of its readership of pharmaceutical industry professionals, including sponsor companies and contract research, development, and manufacturing organizations.
Respondents included representatives from Baxter, Hospira, BASF, PPD, and QuintilesIMS, among others.
The survey’s objective was to gauge the current state of the global pharmaceutical outsourcing market and the evolving relationships of those involved. Outsourcing-Pharma.com collected responses from 363 readers on topics such as market conditions and investments, as well as partnering trends and challenges.
While the last year has presented several challenges for the industry, overall, survey respondents felt more positive this year than previously. This sentiment prevailed despite 80% agreeing that the current political environment is creating challenges for the industry. Additionally, many agreed that an increasing amount of negative news focused on the industry has also caused difficulties.
With waning consumer confidence, the industry has launched several initiatives over the past year to focus on the patient – and while more than half of respondents agree that such initiatives will lead to greater transparency and boost consumer confidence, 16% strongly disagree.
Investment and employment
Discussions surrounding the so-called “war on talent” have circulated for some time now; however, the issue doesn’t seem to be dissipating, with the majority of respondents agreeing that they have had difficulties filling key roles at their company during the last year.
In spite of this, when asked if their company will take on more staff this year than last year, 16% strongly agreed and 42% agreed. More than half also agreed their company is planning more capital investment this year than last and expect company profit margins to improve as well.
Additionally, 41% noted that their company made key acquisitions in the past year. As per future purchases, less than half (38%) agreed that their company would likely make an acquisition within the next year – though 24% were unsure.
Growth drivers and industry demand
Emerging markets as a category of growth drivers was cited most often among survey respondents.
However, North America and Western Europe dominated as the two most important markets for both pharmaceutical companies and suppliers. Japan came in third, with 31%, followed closely by China, India, and South East Asia.
The extent to which pharmaceutical companies plan to continue outsourcing is often up for debate – with reports of both a growing outsourcing market and pharma’s investment in its own manufacturing capabilities.
When asked if their company is planning to outsource more business this year than last, 44% of respondents representing pharmaceutical manufacturers answered yes; 37% said they will outsourcing the same amount as last year.
From the service supplier’s point of view, 66% said they expect to see more companies planning to outsource business this year than last; 23% expect the same amount of business.
Conversely, 11% from pharmaceutical manufacturers said their company will bring more business back in-house this year.
The same percentage of suppliers agreed that more manufacturers are bringing business back in-house.
Partnering trends and industry needs
Analysts have speculated that preferred provider relationships could struggle under pharmaceutical company consolidation – with only one of the merged-company’s providers retaining its preferred status. Though they note potential disruption would be short-lived.
Nevertheless, nearly three-fourths of survey respondents disagreed that working with a preferred provider is less important to their company than it was a year ago and less than half agreed that M&A activity has affected its preferred provider choices.
M&A activity among service providers largely has been driven by the need to expand capacity and capabilities – the specialization of which was among the top three qualities pharmaceutical companies look for in a contract services provider, preceding competitive price and following an ability to meet short deadlines.
However, survey respondents widely agreed that they rely on service from both large CROs, as well as smaller, niche CROs.