Interest in outsourcing is growing, particularly in tough times
Global pharmaceutical outsourcing is a growth industry that was worth $57.2 billion in 2007, according to a report for Cygnus Business Consulting and Research. That figure is expected to grow by 10% annually, reaching $76 billion by 2010. A lot of that outsourcing is on the formulation and quality side—but who is outsourcing what? Who is making the decisions, and what services are they outsourcing most often?
To get a sense of the uptake in outsourcing and general trends, Pharmaceutical Formulation & Quality recently conducted a reader survey assessing outsourcing practices. Over 80% of our respondents told us they were involved in selecting outsourcing providers for their companies, the vast majority either for pharmaceutical (71.4%) or biopharmaceutical (14.8%) companies.
When it comes to outsourcing, the decision-making role seems to be somewhat evenly distributed. Although the lion’s share of the ability to choose outsourcing vendors falls to individuals whose job title includes some form of quality control or quality assurance (31%), many other job areas have a hand in these decisions, including formulators, mid-level managers, senior managers, and research and development staff.
Perhaps most interesting is just what is being outsourced. Half of the respondents said that manufacturing is being outsourced, while nearly as many are outsourcing analytical lab services (44.3%), development (40.7%), and formulation (39.9%). About one-third are outsourcing stability studies (32%), microbial testing (30.7%), research (30%), testing services other than microbial (29.6%), and validation (27.2%).
According to our survey, the use of outsourcing appears to be growing. One respondent, a technical head of analytical development at a major pharma-ceutical company, reported that his organization is attempting to cut back on outsourcing in order to maintain greater control of timelines and minimize regulatory risk factors. Most respondents, however, said their companies are stepping up, rather than decreasing, outsourcing—especially in the areas of validation and clinical studies.
The reasons for the ramp up are manifold, respondents said, but topping the list for all is the need for cost containment, a challenge that will only increase in the global economic crisis. Other factors include the growing number and complexity of projects and the need for specialization.
Respondents agreed there are many advantages to pharmaceutical outsourcing. "The in-house resources of our own company can then be used for some specific and very important projects," said the pharmaceutical technical head of analytical development at one company.
A chief of quality at a European academic lab offered a host of reasons to pursue outsourcing: "Access to innovative and specialized sources, increased availability of services, major flexibility in sizes of lots and timelines, and management of regulatory fulfillment."
Flexibility in project organization is a chief outsourcing advantage, as are increased capacity and access to a complementary and expanded knowledge base, said Christian Gausepohl, PhD, of Rottendorf Pharma GmbH in Ennigerloh, Germany.
Outsourcing can be particularly advantageous for a company pursuing a one-time test that would be highly prohibitive to pursue on its own. "Conducting a one-time test through outsourcing reduces both your equipment and training costs," said Anas Al-Shishani, stability supervisor for Chanelle Lab-Jordan in Amman, which does stability and validation analysis for Chanelle Pharmaceuticals in Ireland.
But with all of these advantages come a host of drawbacks, warnings, and cautionary tales. Entrusting important projects to external companies can put everything from deadlines and quality to project completion itself in question. "It’s always risky for project deadlines when we do outsourcing to the CRAMS [contract research and manufacturing services]," said the technical analytical head for the major pharmaceutical company. "You cannot rest assured of delivery 100% until you’ve built confidence through several project completions, and you need continuous review of project timelines and technical data in order to meet business requirements."
For example, he described a past project in which his company outsourced a formulation development and completion project. Although the outsourcing company declared the formulation ready, it was soon clear that it was not. "When we reviewed and checked their documentation, along with the analytical aspects, we found that the impurity profile had not been studied the way it needed to be, and the entire method development and formulation had to be redone—which cost us time rather than saved it."
Dr. Gausepohl of Rottendorf Pharma described a similar outcome with an outsourcing vendor used by his company. "The results and documents were obtained on the basis of insufficient analytical method validation, and the data could not be used," he said.
Sometimes the error may originate with the sponsoring company—but because the outsourcing company isn’t as familiar with the work, it may pursue a study using faulty information, while an in-house lab would likely have caught the error. "In a case of method validation in an outsourcing lab, the method sent from our company contained a writing mistake in the LOQ [limit of quantitation], but the contract lab continued the validation," said Al-Shishani. "After the validation failed, we were forced to repeat it at extra cost."
For the quality control chief at the European academic lab, loss of project control and the potential loss of intellectual property are two big outsourcing concerns. Other disadvantages he cited include short-term increased expenses and a lack of investment in and commitment to the project’s quality.
Interestingly, although our readers largely agreed regarding the advantages and disadvantages of outsourcing, they disagreed as to which projects were most and least suited for outsourcing. Many said formulation and stability studies were better suited for outsourcing, while development was less suited. Others said stability was not well suited to outsourcing, while development and clinical research studies would be outsourced successfully.
If there was one point everyone agreed on, it was the urgency of selectivity and follow-up when working with outsourcing organizations. "Make sure of their experience and profile," Al-Shishani cautioned.
The pharmaceutical head of technical analytical development offered this advice: "Keep watch on timelines and cost, as well as the quality of work. Ensure complete confidentiality, and make sure that all technical documentation is reviewed by your experts."
He and other respondents recommended taking particular care to ensure that outsourcing companies are committed to fulfilling regulatory requirements. He advised frequent site visits to keep work on track. "This emphasizes the importance of the project. At minimum, have a phone call to make the point that you are waiting for the delivery."
Shaw is a freelance writer based in Montclair, N.J. Reach her at ginashaw@vagabondmedia.com.
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