With more and more drug discovery companies identifying 'outsourcing' as an integral part of their drug discovery programmes, there seem to be no doubt about the business prospects of 'outsourcing'. However, very few can showcase the tangible benefits of 'outsourcing' as this business proposition is a totally new phenomenon and is yet to yield results in a big way. The international exhibition attached to the recently concluded Pharmaceutical and Biotech Outsourcing, R&D Expo and Conference (PABORD '06) held at Excel, London, was significant in this regard as it attempted to identify the real-term-benefits that pharmaceutical and biotech drug discovery companies can expect from an outsourcing agreement.
The two-day PABORD conference featured an array of international speakers sharing their insights and experiences of outsourcing activities in areas including drug discovery, manufacturing, non-clinical development and clinical trials. The speakers at the conference underlined the importance of outsourcing by pointing out that successful outsourcing helps in reducing the time of drug discovery, increases clinical trial success rate and reduces the cost of drug development.
Dr Christopher Milne, Assistant Director, Tufts centre for the study of drug development, USA in his key note address pointed out that the cost savings could be as high as US $ 100 million if 20 per cent time reduction can be achieved during the drug discovery process. Similarly, 25 per cent extra success in clinical trials can help the drug discovery company reduce another US $ 100 million. "The drug targets were very few in the previous years. The drug discovery companies could therefore concentrate on those targets in-house. Today, we have more targets and if the companies need to pursue all these targets at one go, they need to outsource part of their drug development programme". Dr Milne explained. According to him, 'outsourcing' is not just a good business proposition, but also a compulsion at times.
Outsourcing a compulsion? The trends in drug discovery suggest so. As Dr Milne pointed out, the portfolio changes among drug majors need to be analysed closely if one has to understand this trend. It can be seen that the companies are focusing on more projects in less therapeutic areas. This means, it's a scramble for new drugs in potentially high-profit areas like cancer, cardiovascular diseases, hypertension etc. While more targets are identified in these therapeutic segments, less focus is on huge unmet needs in the areas of pain management, allergy, infectious diseases etc. Thus we have about 8,000 rare diseases and over 2,000 unmet medical needs on one side and a handful of blockbuster drugs that clock 1/3 of global pharma sales on the other. This has pressurized profit-oriented pharmaceutical companies to go all out for drug discovery in specific therapeutic areas. The trend has necessitated 'outsourcing' in clinical services as companies are looking for quicker results on more targets.
Quoting Tufts study, Dr Milne said that 642894 patients had undergone clinical trial investigations in all categories of clinical trials last year. Analysing the global clinical trial study activity managed by CROs, he pointed out that 152066 sites were managed by CROs during this period. The interesting aspect of the Tufts observation is that the private CROs constitute a much smaller segment when compared to the public CROs. Over 30 per cent of the global clinical research activities are taking place in public clinical research organizations with the top 10 public CROs contributing 15.7 per cent. Private CROs are having only 6.6 per cent share in global clinical trial business. The figures are indication of the growth prospects of private CROs.
The Tufts study also sought the major reasons for drug discovery companies opting for 'outsourcing' of trial services. If additional capital requirement was the reason for 'outsourcing' for 61 per cent, it was better expertise (42 per cent), lower cost (39 per cent), faster result (35 per cent) and higher quality (19 per cent) that were the other major reasons drug discovery companies gave for outsourcing clinical research services.
"Out sourcing is not the only way. It is one of the few major changes that is happening in the clinical trial arena in recent times. Use of new technology in clinical trials like PGX, biomarkers, microdosing, adaptive clinical trials, EDC etc are all changing the clinical trial landscape", Dr Milne explained.
The major drug discovery companies endorsed Tufts view that 'outsourcing' is not an option, but an active business model for majority of them. The companies however, downplayed the importance of 'low cost' as they felt that it is just one of the reasons for preferring 'outsourcing' but not a major reason. "Cheap services alone cannot attract us to a vendor. It is the quality of their services that is more important. We have performance parameters for our vendors", Duncan B. Judd, Head, Chemistry Services Outsourcing, GlaxoSmithKline R&D Limited, Essex, said.
Dr Judd felt that the high value, high productivity and low cost would have a cumulative effect on their choice of vendor. His piece of advice to the European clinical research organizations was to concentrate more on value propositions and forget worrying about the 'outsourcing opportunities' being snatched by the low cost destinations.
Dr Arvind Mathur, Drug Discovery Chemistry Pharmaceutical Research Institute, Bristol Myers Squibb Company felt that attractiveness in 'outsourcing' lies in the opportunity to utilize the services of the expertise that lie outside the company. According to him, companies normally outsource not-too-critical chemistry, as they would like to utilize in-house capacity for high value research programmes. "The quality we look for in our vendors is their track record. It's not just their drug discovery strengths, but also their strengths in process chemistry and ability to scale up the research, we have three clinical research agreements operational in India and look forward to more such involvement", Dr Mathur told pharmabiz. The track record of the management and scientific personal, regulatory compliance facility, capacity of instrumentation will all be ascertained before one signs and outsourcing agreement, he explained.
However, outsourcing is yet to become a perfect business option. There are difficulties like the distance factor as the emerging outsourcing destinations like India and China are far away from the drug discovery hubs in the USA. As Dr Judd would put it, "ninety five percent of our time goes on five percent of work that doesn't go well."
The PABORD '06 conference was an attempt to cover entire aspects of clinical research outsourcing, Dr Robert Williams, Head of Preclinical Development, Cancer Research UK and coordinator of PABORD '06 said. The event, which took place on September 13th and 14th, was showcased as a must attend programme for scientists and R&D executives faced with today's challenge of the rapid and cost-effective delivery of new medicines. The event saw the participation of speakers from around the world talking on issues related to manufacturing small molecules, clinical trials, outsourcing-strategic analysis and optimising and manufacturing biologicals.
The organizers felt that PABORD is becoming a must attend event for companies of all sizes engaged in the business of discovery and development of new drugs as the outsourcing market in pharmaceutical R&D continues to grow with estimates ranging from $20-60 billion per annum.