Friday, Nov 01, 2015: Outsourcing is not new in the life sciences sector. Clinical research outsourcing, contract sales forces and contract manufacturing have been a way of doing business since the 1980s. However, functional outsourcing in R&D, where individual processes or functions are outsourced, came later than in other industries.
This conservative approach was driven by concerns around intellectual property protection as well as regulatory accountability. The sector is increasingly embracing the functional outsource model as confidence grows in its ability to deliver benefits in cost, capacity, and capability.
Cost, as in other industries, is one driver of outsourcing. The increase in regulatory requirements as well as the increasing complexity of R&D programmes mean R&D functions are faced with an increasing workload to be managed within the same or lower budgets. In Navitas’ experience working with life sciences companies, most with R&D centres based in high-cost geographies generate, at most, 5-10 per cent of cost savings from outsourcing to service providers based in similar locations. The key change to the model was “offshore outsourcing” or outsourcing processes to low-cost geographies, namely India, which delivers cost savings of more than 25 per cent – mainly due to the lower cost of personnel. Cost savings remain an important, but not the only, reason for outsourcing.
A number of Navitas’ clients have looked to outsourcing as a solution for the increasing requirement of flexibility in resource capacity. Many functions within R&D – clinical development, pharmacovigilance, regulatory affairs and medical affairs – are staffed with highly skilled, high-cost scientific personnel. Workloads in these functions fluctuate and are also difficult to forecast with certainty. Outsourcing provides a way of managing such resource requirements, with the service providers ramping the team up and down dynamically across multiple clients. In many such arrangements, the service provider has a core team which becomes an extension of the client’s internal team and fluctuations are managed through a floating pool.
In recent years, as workload requirements in R&D functions have increased, specific functions have faced a shortage of skilled scientific personnel. In the three functions that Navitas provides services in – clinical, regulatory and safety – there are specific processes where there is a continuing shortage of experienced personnel, such as biostatisticians, statistical programmers, regulatory writers, labelling specialists, pharmacovigilance specialists, and so on. In the absence of experienced personnel, companies are increasingly outsourcing these functions to service providers. The service providers in effect operate training academies in these functions, bringing in people with the right educational qualifications, training them and providing them with relevant experience under the guidance of more senior people.
Functional outsourcing is now an established way of doing business for most life sciences companies. As outsourcing service providers have gained experience in partnership with sponsor companies, many are looking for innovations within the delivery models. Navitas is among a small group of life sciences-focused service providers who combine capabilities in outsourcing, technology and consulting to cross-fertilise innovation. Specifically, this has resulted in “process outsourcing enhanced by technology”, where process outsourcing is combined with technology innovations within the process to enhance the efficiencies delivered to the sponsor.
Global Head of Services,