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4 Pharmaceutical Technology Europe BIO/PHARMA OUTSOURCING INNOVATION eBOOK 2022 P h a r mTe c h . c o m Outsourcing Services A trend that began 40 years ago is now entering a new or second wave as pharmaceutical com- panies shift their focus from cost savings to knowledge wealth. Outsourcing is integral to pharmaceutical operations, as companies have sought to reduce costs and enhance f lexibility. Over time, sponsor companies gain access to specialized domain expertise in key geographic regions and local knowledge in countries where they often don't have presence. The first phase of pharmaceutical outsourcing was largely in response to the ballooning costs of drug development as well as the complexities that came with large-scale mergers and acquisitions (M&As). In the interim, companies have outsourced more and more business processes, often to offshore organizations in an effort to manage the cost con- straints of keeping products on global markets. However, with increasingly complex and varied regula- tory requirements and trends, there is a need for a more nuanced approach to outsourcing, where expertise and regulatory intelligence are combined with efficiency and cost containment. At the same time, pharmaceutical compa- nies have needed to find innovative ways to strengthen their pipelines and develop more efficient methods to support the product lifecycle, while remaining compliant. This has led to the next frontier in outsourcing: the management of estab- lished, marketed products, supported by a tailored, blended model of in-country, near-shore, and offshore resources with proven expertise and a commitment to innovation. From the 1980s to the 2020s While contract research organizations (CROs) have been in existence for 80 years, the CRO movement really began in earnest in the 1980s with the formation of what today are some of the largest companies in the industry (1). The rapidly rising cost of R&D—with estimates that the industry spent US$83 billion (€73.7 billion) on R&D in 2019 (2)—together with an increasing patent cliff and heightened competition has led companies to seek help with resources and processes. But with the need to modernize Stephan Hütter is associate director, Global Program Management at PharmaLex. ANDRII YAL ANSKYI - STOCK.ADOBE.COM The Next Frontier in Pharmaceutical Outsourcing Stephan Hütter While companies today outsource numerous processes, from early development through to manufacturing, there are still many opportunities to realize the full potential of outsourcing services.