For the pharmaceutical industry, outsourcing anything more than basic business operations might seem like an intimidating and complicated task – particularly in regards to scientific research. Intellectual property rights are a major factor keeping drug companies from outsourcing their own research initiatives these days. However, such decisions often come at the price of decreased competitiveness in an industry dependent on continuous innovation.
According to a report from the Global Pharmaceuticals and Life Sciences Industry Group at PwC, outsourcing research and development is actually becoming a major trend in the drug industry. Whereas many companies have initially focused on outsourcing non-core functions such as IT to BPO companies, many more have shifted their mindsets in recent years to eventually outsource core operations such as research and manufacturing.
Why are companies finally starting to see the benefit of pharmaceutical companies outsourcing research initiatives? Here are some of the key reasons:
These days, many pharmaceutical companies are reluctant to spend as much as they need to on research and development. Much of the aversion has to do with high risk associated with new research. But when a business delegates its research operations to an outsourcing company, it spreads the risk so that in the event that research ultimately fails, the costs would still be significantly smaller than usual. By spreading the risk, companies can start being more competitive by investing more in the research of new drugs.
Access to new knowledge
According to The Wall Street Journal, pharmaceutical companies can benefit from seeking outside research services when they are in need of access to new knowledge. For example, if current scientific trends lean toward new and unfamiliar technologies, businesses can save money and time by hiring an outsourcing company with more advanced knowledge rather than waiting for their own employees to familiarize themselves and understand how to incorporate the technology into new products.
Regulations from the U.S. Food and Drug Administration are notoriously cumbersome. As a result, many pharmaceutical companies wait years, or even decades, between the research and development phase and the point when the drug finally arrives on the market. Expanding research initiatives globally to an outsourcing company can substantially reduce the amount of time for a drug to arrive at the market.
Future business alliances
Businesses can benefit from outsourcing research and development by establishing long-term business partnerships that can continue through future drug developments, especially at times when intellectual property is loosely protected in the pharmaceutical industry.