Using 2013 Trends by Buyer Group to Plan Your Outsourcing Initiatives

Outsourcing has proven to be valuable to biopharmaceutical companies of all sizes. And different types of drug makers, from virtual biotechs to Big Pharma, have implemented outsourcing programs for a plethora of reasons. There are commonalities in both outsourcing motivations and practices across the different buyer groups, as well as differences.  Knowing which services are outsourced by your peers, as well as which factors are most relevant to their outsourcing strategy, may add value to your organization’s 2014 planning and future outsourcing initiatives.  For CMOs and CROs pitching their services to drug innovators, understanding which services are outsourced and why sponsor companies engage outsourcing partners can help your business refine its sales approach and present it as the right type of partner for the project. According to the results of Nice Insight’s 2012-2013 biopharmaceutical outsourcing study, the top three services outsourced for each buyer group included the same three services—analytical testing, bioanalytical testing and clinical research—yet in slightly different order and with varied frequencies.  For both Biologics companies and Emerging Pharma companies, analytical testing was the service most likely to be outsourced, at 43% and 27% respectively. Big Pharma and Specialty Pharma respondents reported outsourcing clinical research in the greatest numbers, with 36% and 34% respectively.  The most likely service outsourced among Emerging Biotechs was bioanalytical testing, at 34%. After looking beyond the top three services outsourced, the data starts to show how different types of drug developers rely on contract manufacturing and contract research organizations for different needs.  For example, biologics companies are more likely to outsource custom synthesis than pharmaceutical companies.  Custom synthesis was the fourth most outsourced service among both established and emerging biotechs (26% and 27% respectively); whereas custom synthesis was not in the top five for Big Pharma (6th, at 22%) or emerging pharma (9th, at 13%).  Among specialty pharma respondents, custom synthesis tied with data management in popularity for outsourcing, each at 18% —the fifth most popular service outsourced by the buyer group.  This information can be particularly useful for CMOs pitching their custom synthesis offering—one in four respondents from biologics companies are outsourcing this service as compared to approximately one in ten respondents from emerging pharma companies. While the data shows that biotechs are more likely to lean on CMOs for chemical synthesis, it also shows that traditional pharmaceutical companies seek out regulatory support from contract organizations in greater percentages.  This bodes well for companies that offer regulatory support—approximately 70% of the CMOs and 72% of the CROs included in Nice Insight’s annual research. Regulatory support was the fourth most frequently outsourced service among the specialty pharma respondent group (21%) and fifth among Big Pharma (22%) and emerging pharma (18%).  With roughly one in five respondents from traditional pharmaceutical companies seeking this service from their outsourcing partner, it makes sense for contract service providers to reference this service offering each time they pitch a project. In addition to similarities across the top services outsourced, there was a common motivation for outsourcing that rose to the top three reasons across each of the five buyer groups—improving quality. In fact, improving quality was the number one reason for engaging a CMO or CRO as reported by emerging biotechs (45%), specialty pharma (58%) and emerging pharma (67%).  Among established biotech respondents, it placed third (47%), behind gaining a competitive advantage (53%) and gaining access to scientific capabilities (50%).  It placed second among Big Pharma respondents (55%), after gaining access to technologies (65%). Big Pharma happened to be the only group that included access to technologies in the top three reasons for engaging outsourcing partners. Whether you are new to outsourcing or the company you work for has well-established processes, knowing which services are outsourced by similar businesses as well as their outsourcing goals may be helpful in planning your outsourcing initiatives for the coming year. By Kate Hammeke, Director of Marketing Intelligence at That’s Nice
Survey Methodology: The Nice Insight Pharmaceutical and Biotechnology Survey is deployed to outsourcing-facing pharmaceutical and biotechnology executives. The 2012-2013 report includes responses from 10,036 participants. The survey is comprised of 500+ questions and randomly presents ~30 questions to each respondent in order to collect baseline information with respect to customer awareness and customer perceptions on the top 100+ CMOs and top 50+ CROs servicing the drug development cycle. Over 900 marketing communications, including branding, websites, print advertisements, corporate literature and trade show booths are reviewed by our panel of respondents.  Five levels of awareness from “I’ve never heard of them” to “I’ve worked with them” factor into the overall customer awareness score.  The customer perception score is based on six drivers in outsourcing: Quality, Innovation, Regulatory Track Record, Affordability, Productivity and Reliability.