Why Do Pharmaceutical Companies Outsource Analytical Services?

Pharma Tech Outlook: Pharma Tech Magazine

Why Do Pharmaceutical Companies Outsource Analytical Services?

Stacey Smith, Pharma Tech Outlook | Monday, February 07, 2022

A good contract lab can promote optimization of resources in times of falling budgets, helping to avoid having an excess of in-house analytical capability.

FREMONT, CA: The advantages of outsourcing analytical services in the present day's business climate are many. Most apparent is tapping into a high level of resident expertise from an outsourcing supplier, without having to create and fund the knowledge internally. The external supplier can also help them mitigate risk by avoiding significant investment in analytical equipment and workforce when development efforts are in early stages and still have a reasonably high potential for failure.

With respect to finances, outsourcing analytical services permit a higher degree of freedom in early-stage projects by allowing analytical costs to be expensed versus the need to capitalize on the purchase of equipment if the analysis were done in-house. Outsourcing makes sure that a higher level of resource flexibility in developmental plans can be particularly valuable before the final technology, synthesis, or manufacturing methods have been determined. Top 10 eClinical Trial Management Consulting/Service Companies - 2020

Even in large companies with proper utilization of their internal resources, the analytical departments typically operate on just one shift, as opposed to production operations, which often continue on a second or third shift to maximize the use of equipment and overhead. In the current business environment, it can be challenging to justify the total cost of ownership when considering the capital investment and specialized personnel required to operate analytical equipment that's only in use for approximately 33% of the time.

Outsourcing analytical services can often be demonstrated as the lower-cost approach, particularly for analyses that have low usage, demand a high degree of specialization, or require expensive equipment. Using contract analytical resources helps a manufacturer avoid the need to continually upgrade equipment and provide ongoing training in the latest analytical techniques. A multi-million dollar investment can become outdated in just a few years as the state of analytical science advances. It forces investment, which may not offer a good return over time.

In contrast, by pre-negotiating rates or contracting for a set amount of testing, manufacturers can have a precise estimate of the portion of their development costs, which will be spent on analytical services, while taking advantage of the most current laboratory technology.

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