Taking the Pulse of Strategic Outsourcing Relationships

Abstract

PurposeArticles in peer-reviewed journals and the trade press presuppose that strategic outsourcing relationships have been formed to replace preexisting collaborative approaches with contract research organizations. They do not consider that large, fragmented pharmaceutical and biotechnology companies may be supporting competing and conflicting relationship models simultaneously. A recent Tufts Center for the Study of Drug Development study quantifies actual strategic outsourcing practices among drug development companies and sheds new light on why these relationships may be failing. MethodsTufts Center for the Study of Drug Development conducted an in-depth assessment of 43 Phase II and III clinical studies completed since 2012 to examine the outsourcing relationships used by 9 major pharmaceutical and biotechnology companies to support key functional areas. Descriptive statistics were assessed and t tests were performed to characterize outsourcing practices by function and to determine differences in study performance between transactional and strategic outsourcing relationships. FindingsThe results indicate that sponsor companies are using a variety of outsourcing relationship models to support their studies, mixing and matching the use of internal staff, and using traditional transactional and strategic outsourcing relationships simultaneously. Specifically, despite the fact that each sponsor company had entered into several strategic outsourcing relationships, in no instance did a single contract research organization manage all functional areas supporting an individual Phase II or III study. In addition, sponsor companies vary the types of outsourcing relationship models that they use on a study-by-study basis. ImplicationsThe inability of pharmaceutical and biotechnology companies to consistently embrace and coordinate sourcing strategies is creating internal friction and inefficiency. As a result, the expected impact of strategic outsourcing relationships on drug development performance, quality, and cost remains elusive.