Pressure to drive improved performance in the pharmaceutical industry has never been greater – 50% of the top 100 drugs come off patent this year, R&D productivity is in decline and regulatory pressure is mounting through the implementation of increasingly precautionary policy.
Pharmaceutical companies are responding to this pressure by finding new ways to partner and collaborate in order to improve their product pipeline, share the risk, improve flexibility, provide enhanced capacity and, perhaps most importantly, drive out cost. Throughout 'Big Pharma' there is unprecedented demand for cost reduction. Core support activities such as IT and HR are being outsourced to lower-cost third parties both near and far shore, and the outsourcing of activities such as medicinal chemistry, high throughput screening and lead validation is becoming increasingly commonplace.
In addition, organisations are looking more comprehensively at their global reach and realising savings through simple labour arbitrage by ensuring that, where work is done in-house, it is done at the lowest cost location where that capability exists or can be developed. None of this is in itself new as many procurement groups have been leading this charge – what is new is how fundamental the successful implementation of strategic resourcing solutions such as these are to the survival of the business as a whole.
As pharmaceutical organisations look to make sourcing decisions, many now understand and use a broad ‘core versus context’ analysis to support outsourcing decision making. But in PA's experience many do not always properly leverage the wide variety of sourcing options available to them. This may result in sourcing savings being sub-optimal both in the short and long term. The sourcing debate is not one that should be defined by the question – ‘Should we outsource this or that?’ – but is rather one that is best addressed in the context of a decision model that answers the question on how particular work should be resourced.
For further information please e-mail: healthcare@paconsulting.com
