Contract Development: Accessing External Innovation

By Janice Cacace, Ph.D., Director, Formulation Development, CoreRx, Inc.

All service providers free pharma companies from the need to invest in in-house infrastructure and staff, outlays that could prove to be a complete waste if the project fails. However, surveys, such as a poll of 61 biopharma R&D decision makers by analysts at Jefferies & Co, typically find price is just one of three important factors. In the Jefferies poll, results from which were published in May, price was the second most important factor in outsourcing decisions, behind expertise and just ahead of breadth. Companies want good value, as opposed to cheap, service providers that can benefit their business through more than just cost savings.

Industry interest in the breadth and depth of service provider expertise has increased in recent years as even the biggest pharma companies have recognized the need to look outside their walls for innovation. The dream of building fully integrated pharmaceutical companies has faded, with all of the big firms now working with a network of third parties to discover and develop drugs. An acceptance that the scientific skillset needed for 21st century drug development is beyond any single company is a motivating factor for the shift. Having made the move to a more networked model of innovation, companies must learn how to get the most out of their service providers.

In this paper we analyze three recent client relationships at CoreRx and their lessons for the broader outsourcing sector. Each shows how firms can tap external expertise to benefit drug development, the best practices that enable these relationships, and the pitfalls that can undermine the process.