Outsourcing Pharma

It seems that there has been a flurry of articles talking about the state of outsourcing in the pharmaceutical industry this week. Lilly gained a mention in the Wall Street Journal on the matter. A more general look came from Fierce Pharma and also this post from Nick Taylor.

So to summarize, outsourcing will continue to grow as a route big pharma takes to develop new products. The bad news is (for us employed in the area in the west at least) that most of that outsourcing will go to Asia and, increasingly, Central and South America, though there are indications that we will see a modest increase within the US as well. This is all, of course, driven by cost.

I noticed that a lot of these were talking about development rather than the initial discovery of drug candidates. As the latter is my particular interest, I wondered a little about what will happen to preclinical discovery. A comment by Merck CEO Dick Clark made the point that the announced closure of several Pfizer/Wyeth sites made last year: big pharma is looking to shed some more weight in research. That is pretty common, I think, in mergers and acquisitions, especially in lean times. Research is easy to cut back as it gives no immediate prospect of gain. The company trims up, gets back on a steady course, more efficient and more profitable.

The long term survival of pharmaceutical companies is based on research though, so it seems very likely that heavy cuts now will result in a need down the line when the remaining resources become over-committed. So as I see it we may not see an immediate turn around in work for drug discovery scientists, but there will likely be a need for more once they realize they still need research to succeed.

The remaining question is will this be outsourced as well? And if so, where? I think the answer will be similar to the answers above. An increasing amount of initial research will be outsourced, with a goal of keeping down costs. As for where, well, some of the new companies in Shanghai, for example, are getting increasingly proficient and (importantly) trusted at doing medicinal chemistry and so there will be companies that make use of their talents and lower prices. On the other hand, there is a large talent pool of scientists in the U.S. now that are going to be making their way independently of their former employers, but still that is where they have contacts and they will do what they can to leverage those into contracts. They will be more-or-less forced to work for less than they are used to, but I can see a number of outsourcing discovery chemistry companies springing into existence, adding to those that already are in existence. It will be challenging for them too, as they will have to react to pretenders at home and abroad, while the new kids on the block look to establish their reputation and their companies in a challenging and changing world.

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2 comments on “Outsourcing Pharma

  1. Me says:

    Good points, I think I will definitely subscribe! I’ll go and read some more! What do you see the future of this being?

  2. Cartesian says:

    Hello, there is something about a petition which could interest you in the top right-hand corner at the following address: http://eternal-cartesian.blogspot.com/ . Cordially

    P.-S. : It is true that some are trying to work more independently in the world of chemistry, because this is what I decided to do.

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