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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY TRANSACTIONS, OUTSOURCING, AND COMMERCIAL CONTRACTS NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

For good observations on outsourcing developments and expectations for the biopharmaceutical industry, check out the recently released results of the 2014–2015 Pharmaceutical and Biotechnology Survey from the appropriately named Nice Insight.

The survey results show that the average number of services outsourced per company and total outsourcing expenditures in the biopharma industry continued to increase in 2014. A primary driver of the increased spending was found to be a decreased emphasis on affordability as a factor when companies select a provider. Nice Insight interprets these results as consistent with a new pattern in biopharma outsourcing: rather than focusing on the bottom line, companies are aiming to obtain scientific expertise not possessed in-house in more of a true partnership model of outsourcing.

Nice Insight also notes some significant biopharma industry merger and acquisition activity that occurred during 2014 and questions whether the resulting larger “one-stop-shop” providers are truly beneficial to those companies that desire a strategic partner as their outsourcer. The survey found that the level of interest in forming long-term, strategic partnerships with outsourcing providers varies by company type within the industry, with emerging biotech companies most likely to show interest in forming strategic partnerships, followed by biotech companies, and pharma companies showing less interest in this type of partnership. Further, Nice Insight explains that providers are increasingly likely to describe themselves as contract development and manufacturing organizations to emphasize their capabilities in drug manufacturing as well as development in response to this strategic partnership movement.

Other trends noted for the industry include increased emphasis on innovation, specifically safety, efficiency, and security innovation, and productivity, specifically use of cloud-based data management services, robotics labs, and mobile technology, as drivers for selection of outsourcing providers.

The survey, which is developed from the input of “outsourcing facing pharmaceutical and biotechnology executives,” is conducted annually by Nice Insight to collect information on customer awareness and perception of providers and “general outsourcing practices and preferences as well as barriers to strategic partnerships among buyers of outsourced services.”