Optimizing The Partner Selection Process For Drug Developers

By Kate Hammeke, research manager, Nice Insight

By the close of 2011, two prescription drug stories had picked up so much momentum that even people outside the pharmaceutical industry had heard about them in the news. One of these topics was the end of the patent life for a blockbuster drug and how the availability of generic versions means savings for drug consumers but comes at a cost for the drug developer. The second story, however, is good news for both consumers and the drug development industry. In 2011, the FDA approved 35 new drugs, which represents the second highest approval number in the past decade, following 37 approvals in 2009. This high number may be a sign that some of the efforts the FDA has made to expedite new drug approvals, like establishing the priority review, accelerated approval, and fast track approaches, are becoming more effective.

Speeding up the process of bringing new medicines to market remains a key goal for the pharmaceutical and biotechnology industries. Engaging external partners with resources and expertise that complement internal capabilities has been effective in accelerating drug development, yet the process of selecting external partners can be time-consuming and costly. Finding ways to streamline this time-intensive process and to reduce the expense and time commitment involved in partner selection will further progress toward the goal of bringing drugs to market more quickly. Accordingly, Nice Insight developed a quarterly survey to track how sponsors pick partners and to gather feedback on specific performance measures in order to facilitate subcontractor selection and improve collaborations in the drug development industry.

By sharing highlights from the reported behaviors among outsourcing peers in the life sciences industry, Nice Insight aims to offer guidance on how to optimize the partner selection process. Some of the key findings from 2011 involve data on how companies choose partners and which markets they look to for different services. For example, businesses that outsource drug development tend to use a combination of three different methods to select a partner. Survey respondents indicated they are most likely to seek advice from consultants (68%), followed by referrals (53%), and visiting trade shows/industry events (41%) when they need to subcontract a project to a new partner.

Outsourcing budgets among respondents stayed consistent throughout 2011 and are anticipated to remain steady for 2012. Efforts to reduce spending may not take shape in the expected ways, as respondents indicated a strong preference for outsourcing to businesses in established markets. When it comes to specific services, for each of the sixteen listed in the table, the majority (51%+) of respondents indicated they would look for a business in an established market to fulfill the need. Overall, CROs or CMOs in the United States and Canada were awarded the largest percentage of projects outsourced amongst the respondent group, at 36%, while Western Europe received a share of 11%.

Sixty-nine percent of respondents chose a CRO in an established market for analytical testing projects, which likely reiterates the importance of subcontracting this service locally. Two-thirds of respondents said they outsource within the established markets for product characterization, bioanalytical testing, consultants, and regulatory support. Only one in ten respondents indicated they would consider an emerging market first for their analytical testing projects. Similarly, regulatory support (13%) and consulting services (14%) were seldom sought from emerging providers.

What Is Being Outsourced To Emerging Markets
However, respondents indicated that chemical synthesis was the service most often outsourced to emerging markets, at 27%. Additionally, approximately one in five blending, custom manufacturing, and packaging projects is typically outsourced to an emerging market. When CROs and CMOs from emerging markets are engaged, China is the most popular market, receiving 17% of projects, followed by India with an 11% share. Argentina and Brazil combined carried a share of 9%, and Eastern Europe acquired 7% of outsourcing projects.

Reviewing how and where outsourcing dollars are spent helps to establish baseline measures for whether the process and procedures of sponsors are working efficiently and effectively. Evaluating existing practices, including everything from where and how new partnerships are formed, to whether a local or international business makes the most sense for the project under consideration, will help identify the type of contract organization that will make the best long-term partner. In 2012, Nice Insight will continue to share information on the best practices and further assist drug developers in avoiding pitfalls in partner selection to help facilitate the process of bringing new medicines to the patients who need them.

If you want to learn more about the report or how to participate, please contact Victor Coker, director of business
intelligence, at Nice Insight by sending an email to niceinsight.survey@thatsnice.com.