Pharma outsourcing could be $5B remedy to costly drug discovery process

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The global drug discovery outsourcing market reached $5.4 billion in 2007 and should continue to grow 16 percent annually through 2013, according to a new report from Kalorama Information, a market research firm.

Enhancing the productivity of the drug discovery process, while also reducing costs, is imperative if the pharmaceutical industry is to resolve the dilemma of rising research and development (R &D) expenses and slowing pipelines, Kalorama said. Toward that end, companies are turning to outsourcing to access new technologies and expertise.

The report said that the pharmaceutical industry has a long history of outsourcing non-core functions and has outsourced a number of core functions, such as clinical trial management and manufacturing, for the past two decades.

More recently, outsourcing has expanded into the drug discovery process, following advances in molecular biology and the emergence of new generation biological therapies, according to Kalorama. These advances, plus the emergence of new technologies used to accelerate the discovery of new drugs through enhanced data reliability and analysis, have made it unsustainable for companies to undertake all drug discovery functions in-house, as most do not have the expertise or programs to utilize these novel technologies, the report said.

“Outsourcing isn’t a new idea, but in recent years it’s become essential in widening the bottlenecks in the drug discovery process,” said Bruce Carlson, publisher of Kalorama. “Double-digit growth will be seen in a wide range of advanced processes—including genomics, proteomics and integrated crystallographic data collection and computation techniques.”

However, issues over loss of control, intellectual property and confidentiality remain a concern for some companies, according to the report. Added to this are worries about regulatory compliance, political stability and contractor’s reliability when dealing with offshore CROs. Nonetheless, the benefits outweigh concerns, and since 2001, growth in spending on contract drug discovery has outpaced that of global R &D spending, Kalorama said.