The pharmaceutical industry is evolving and the outsourcing landscape is changing with it. For larger pharmaceutical companies there is a trend towards scaling back their internal capabilities and turning to outsourced partners more often.
In addition to this, many smaller, often virtual companies are becoming more popular and they are developing ideas for new drug products. They rarely have the capabilities needed to develop and manufacture the active pharmaceutical ingredients (APIs) or indeed the drug products. This means they are also relying on the expertise and capabilities of outsourced partners, including contract research, development and manufacturing organisations.
But what are the main reasons driving companies to outsource?
Gene therapy and small molecule development
Many companies have moved away from small molecule development to more sophisticated and often personalised medicines, such as gene therapy. This kind of work is extremely complex and many companies choose to keep it in house. This also means that, when companies are deciding on what they should outsource, they usually choose small molecule work. The result is an increase in the amount of small molecule outsourcing over recent years.
Keeping costs down
Although pharmaceutical companies choose to outsource for different reasons, most businesses work with CROs, CMOs and CDMOs because it can reduce the overall cost and risk of their project.
Many companies outsource their development projects during the very early stages and if the project looks promising, big pharma companies will bring the project back in house, or it can be scaled up within the contract partner’s facilities. However, if the project seems high-risk or is unsuccessful, during early development, the company does not waste money or resources on developing something that may not work.
Around 15 years ago, CROs provided employment for approximately 30,000 people. Whereas 100,000 people are estimated to be working at CROs in 2019. *
The future: Could the majority of API development be outsourced?
It’s never easy to predict what the future holds, but it is possible that most API work will be outsourced going forward. Gone are the days where large pharmaceutical companies’ only option is to develop APIs in-house. Virtual pharmaceutical companies are also on the rise and have few employees or facilities. This means that they are largely reliant on outsourced companies when it comes to developing their APIs.
Even important aspects of the development process, such as safety assessments and toxicology work, are now conducted externally. Overall, this shows a shift towards outsourcing different elements to niche specialists, who can deliver high quality work.
There are plenty of thoughts and opinions on what the future holds for pharmaceutical outsourcing. For example, one commentator believes that the pharmaceutical outsourcing market is likely to grow to $45bn by 2024.** This is a significant leap, considering the market was valued at $5.59 billion in 2018.*** Another predicts that, in drug discovery alone, outsourcing could become a $43.7 billion business by 2026.****
The outsourcing industry has clearly grown rapidly over recent years and that trend is likely to continue.
Do you need specialist outsourced help to develop your next API? Get in touch with our team today, and we will answer any questions you may have.