“You can automate certain activities like finance and accounting and HR, more than you necessarily can with R&D,” Stan Lepeak, director, global research, KPMG Management Consulting, told GEN. Lepeak and Vicki Phelan, pharmaceutical industry practice lead with KPMG’s Shared Services and Outsourcing Advisory practice, both noted that R&D has historically been viewed as a crown jewel of operations, and thus companies have traditionally been reluctant to engage third parties. As a result, many companies have yet to reach the full potential of outsourcing in terms of maximum savings.
However, R&D outsourcing is increasingly taking place, and for reasons that go beyond cost, Phelan told GEN: “Organizations now, both within SG&A as well as in R&D, have taken this best of breed approach. When you go to a best of breed approach, it is more costly. But you get a higher quality product. That’s where R&D leaves a lot of money on the table,” Phelan said.
A Booz & Co. survey of BayBio members also found growing interest in outsourcing more R&D activity to CROs. The survey found two reasons for this beyond cost-cutting: to comply with increasingly complex regulatory requirements and to access new patient samples in large enough numbers needed for diseases thinly spread across a population.
U.S. companies are increasingly being directed by overseas regulators to include local populations during their clinical trials, Matthew Le Merle, a partner based in Booz’s San Francisco office, told GEN. “We do expect that for major populations—China, India, and other very large population bases—you will need to be doing more local trial activity. And that, in turn, does imply that if you don’t have the ability to do trials in those countries, that you need to find a partner that can.”
Beyond clinical development, Le Merle added, “most approvals require some dialogue and some back-and-forth, and it’s very hard for a U.S.-based English speaking company to make sure they’re really on top of all of the questions as they surface.”