Will Outsourcing Cool Off? A Recent Poll Finds…
1 CommentBy Ed Silverman // May 5th, 2008 // 1:32 pm
Some may view this as a bit of surprise - 52 percent of companies plan to boost their outsourcing spend by 6 percent or more, compared with 62 percent last year, according to Contract Pharma, which surveyed more than 175 R&D, quality control, regulatory affairs and clinical research heads, among others.
Last year, 22 percent of total respondents believed that they’d spend the same or less on outsourcing in the coming year; this year, that number dropped to 16 percent. Last year, 30 percent of respondents reported they’d increase outsourcing spending by 10 percent or more in the coming year; that number dropped to 23 percent this time around.
However, the percentage of respondents who believe that their outsourcing expenditure will increase from 1 percent to 5 percent from the previous year nearly doubled, from 17 percent in the previous survey to 32 percent this time around. The portion who will increase outsourcing spending from 6 percent to 10 percent in the coming year was nearly steady, dropping from 32 percent to 29 percent.
Look here and follow the quick instructions to glimpse the survey. Meanwhile, here’s a breakdown of respondents by company type:
Small/Mid-Tier Pharma - 25.7 percent;
Big Pharma - 23.6 percent;
Virtual Pharma - 12.1 percent;
Generic Pharma - 12.1 percent;
Emerging Biopharma - 10 percent;
Specialty Pharma - 5.7 percent;
Big Bio - 3.6 percent;
Other - 7.1 percent.
Chris
At first glance I’d surmise that the smaller companies can’t afford to outsource and/or are regionally focused. It seems that they would be the ones looking to save on services but I think other considerations preclude that.
Next, the larger ones that can afford to outsource appear to have done so already. This year follows their bumper outsourcing year: early adopters and all that. So the next tier of adopters (if we still can use that term) are outsourcing but as a percentage their activities represent a drop.
Just an opinion: don’t think it’s over by any means, just shifting down the curve.
And for what it’s worth, Ed’s post last week and other insights point to significantly greater use of outside services, especially in clinical trials. Look at the recent FT articles relating to how much work from EU is ending up in China, Russia, India and Argentina. (And if NICE in UK keeps hacking prices there will be more too.)
It’s not over, it’s just different.