How is Pharma R&D Outsourcing Industry Evolving?
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How is Pharma R&D Outsourcing Industry Evolving?

Stacey Smith, Pharma Tech Outlook | Thursday, January 07, 2021

Pharmaceutical companies have started to outsource their R&D activities, to remain competitive, flexible, and profitable, bypassing all odds.

FREMONT, CA: Looking from the innovation's point of view, there is a boom in life sciences, paving the way for the emergence of novel biological targets, therapeutic modalities, and whole new drug discovery areas by adding opportunities and complexity, and uncertainty to research programs. Technologically, there is a "digital revolution," bringing further complexity and investment cost on the table in artificial intelligence (AI), data mining, big data technologies, data-driven diagnostics, and digital health. Also, the rise of the personalized medicine paradigm compels companies to rethink their research pipelines and "one-size-fits-all" product development programs, and also reconsider their market strategies. 

Top 10 CRO - 2020Evolving the business models of R&D outsourcing 

A straightforward Fee-For-Service task-based model is used for separate services, such as screening a library of compounds against a known target or synthesizing a reference compound be carried out for a pre-agreed price when outsourcing R & D services,

Another option -- the Full-Time Equivalent (FTE) model, where a sponsor company hires a science project team at CRO premises and pays for all the materials and other project expenses. The FTE model is suitable for multifaceted, more complex projects, where flexible continuous discovery work is anticipated, as this model allows us to minimize contractual bureaucracy. 

However, business models of collaboration between companies and CROs are continuing to evolve to meet the growing pharma companies' focus on external innovation and strategic alliances. In newer models, initial innovation often comes from the CROs, who establish early chemistry and biology entry points into disease and then approach potentially interested pharma companies to collaborate as strategic drug discovery partners. Such projects can be structured differently, including milestone and royalty payments, FTE payments, and event potentially jointly owned intellectual property (IP) rights commercialized as joint ventures or spin-off companies. 

Some CROs or smaller service providers and biotech startups often have internal drug discovery activities and target licensing deals with big pharma.

See Also: Top Artificial Intelligence Solution Companies

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