Clinical Trial Outsourcing is a Balancing Act for Pharmaceutical Companies

The number of clinical trials being outsourced is increasing and the industry is working together to develop ground-breaking partnerships that focus on creative contracting and effective oversight.
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According to a recent Pharma IQ survey, 43 per cent of Pharma professionals do not think the oversight of their clinical trial vendors is effective and 100 per cent claimed that the increasing levels of regulatory scrutiny are adding unnecessary pressure. This is particularly worrying given recent findings about the pervasiveness of clinical trial outsourcing.

Why is outsourcing on the increase?

The report by Kalorama Information found that more than a third of clinical trials conducted by pharmaceutical firms are now outsourced to vendors. Titled Outsourcing in Drug Development: The Contract Research (Clinical Trial) Market, it explains that clinical trial outsourcing has moved from being a "should" to a "must" for drug developers and manufactures, Pharma Times reported. This is no doubt because outsourcing is a much more cost effective process than undertaking work first hand.

It commented: "The cost and time of developing and bringing a drug to market is over $1.3 billion (£830 million) and often takes as long as 15 years, if not longer. Because of this, major pharmaceutical marketers continue to outsource stages of development, and over the years Kalorama Information has observed this process."
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Expenditure on clinical trial outsourcing has also increased in the last two years, the source reported, with the amount of global research and development expenditure allotted to outsourced drug developers reaching $36.6 billion this year. This is an increase of over six per cent on the $31.8 billion spent in 2009. Figures of in-house drug development expenditure seemed to back up this shift towards outsourcing. Since 2010, the proportion of clinical trial costs spent internally decreased from 74 per cent to 62 per cent, a dramatic fall.

"The demand for new drugs remains unabated, but the cost and need to bring those drugs to market is ever-increasing and intensifying," the report noted, explaining that a key cost of drug development is late-stage attrition during clinical trials. These cost pressures, particularly in the current climate, have led to more and more firms adopting outsourcing, which allows for a faster development process, as a way to increase profits.

The risk to innovation

However, some experts believe that while this move to outsourcing is not surprising, it will stifle innovation. Mark Lowman, Andreas Hoecht and Paul Trott, from the University of Portsmouth Business School, warned that to shift could have long-term implications on originality, as it reduces the ability for pharmaceutical firms to benefit from the knowledge and learning opportunities that arise from undertaking the process themselves.

"The move away from the integrated in-house model may have been a rational reposnse to the pressures of the industry but is problematic from the innovation perspective," the researchers explained. They claimed that activities that can seem irrelevant and mundane at the time can actually be crucial later down the line, due to the opportunities they create. To illustrate this point, the team cited the example of Viagra, which was only identified because of the statistical data from the outcome of clinical trials by Pfizer.

Clearly there are pros and cons to both in-house development and the move towards outsourcing. However, pharmaceutical firms are commercially led and will seek to cut costs and increase margins, striking the balance between this and encouraging innovation is vital.