Process optimization is a key service for the drug development industry that supports innovation and efficiency in the development, manufacturing and quality assurance of products. Cutting-edge scientific and engineering knowledge are primary attributes that are essential for contract research and manufacturers who are providing this service. In fact, in Q1, 2012 Nice Insight replaced accessibility with innovation as a driver for outsourcing partnership decisions in its Pharmaceutical and Biotechnology Outsourcing Survey.
According to Nice Insight’s survey data, 13% of drug development respondents currently outsource process optimization. Of all of the process optimization projects outsourced, Biotechnology/Biologics companies are the most likely to engage a partner for this service (29%), followed closely by Big Pharma (28%), Specialty Pharma (17%), Emerging/Niche/Start-up Pharmaceutical companies (14%) and Emerging Biotechnology/Biologics at 14%.
Respondents outsourcing process optimization were most likely to engage partners during Phase I (72%) of the drug development cycle. This is followed closely by Pre-clinical (69%), Phase II (55%), Discovery (57%), Phase III (55%) and lastly Phase IV/Post-launch services (45%). Respondents also tended to prefer businesses in established markets for this type of project. Results from the Q4, 2011 survey indicated that 55% of respondents prefer to outsource process optimization projects to providers in established markets (USA, Western Europe, Japan), 21% went to providers in emerging markets (Argentina, Brazil, China, Indian, Korea, Thailand). Twenty-three percent of respondents stated market wasn’t a factor in their selection of an outsourcing partner for process optimization. This preference towards established markets is likely influenced and supported by the substantiated regulatory guidelines and intellectual property laws that exist in established markets.
Survey respondents who outsource process optimization have various therapeutic areas of focus; the most common was cardiovascular disease at 54%. Oncology diseases are the area of focus for 50% of companies, followed closely by infectious diseases (49%), metabolic disorders (46%), endocrine diseases (40%) and CNS disorders and respiratory diseases, tied at 39%.
When it comes to the drivers that influence outsourcing decisions, survey respondents who outsource process optimization ranked quality as the most important attribute. Reliability ranked second in importance, followed by productivity and regulatory track record. This ranking mirrored the results of the overall survey sample. However, when comparing the overall ranking to how process optimization outsourcers ranked the drivers, the two groups differed in how they rated the importance of innovation - or a business’ ability to improve the sponsor’s in-house capabilities by developing customized solutions. Interestingly, innovation was ranked fifth among respondents who outsource process optimization, but sixth among the overall respondent group who placed affordability before innovation. This is understandable given that innovation can be integral to the success of this service.
When looking at the innovation scores among companies that perform process optimization Norwich Pharmaceuticals and UPM Pharmaceuticals received the highest scores, each with 81%. Interestingly, Norwich received a higher overall customer perception (CP) score than UPM (77% vs. 75%), yet UPM was allocated a greater market share (2.17% vs. 1.24%). This likely speaks to how customer awareness correlates to market share.
In fact, of the seven companies (Piramal Healthcare, Pharmaceutical Manufacturing Research Services, Pfizer Center Source, GlaxoSmithKline Biopharmaceuticals, CMC Biologics, AAI Pharma Services and Norwich) that tied with a CP score of 77%, those with the largest allocated market share had greater customer awareness than the businesses with the same CP scores. The companies that scored below the benchmark (1.64%) for market share — Norwich, PMRS, Piramal and CMC Biologics — tended to have average/below-average customer awareness scores.
It’s not surprising that the leading companies scored above the process optimization benchmark scores for innovation (73%), quality (72%) and productivity (74%). Especially considering the fact that strong quality and productivity scores further contribute to long-term growth strategies based on innovation. Additionally, it lends credence to the idea that innovation plays a tangible role in the success of companies that provide process optimization services.
Survey Methodology: The Nice Insight Pharmaceutical and Biotechnology Survey is deployed to outsourcing-facing pharmaceutical and biotechnology executives on a quarterly basis/four times per year [Q1 2012 sample size 3523]. The survey is comprised of 750+ questions and randomly presents ~30 questions to each respondent in order to collect baseline information with respect to customer awareness and customer perceptions on 300 companies that service the drug development cycle. Over 1200 marketing communications, including branding, websites, print advertisements, corporate literature and trade show booths are reviewed by our panel of respondents. Five levels of awareness from “I’ve never heard of them” to “I’ve worked with them” factor into the overall customer awareness score. The customer perception score is based on six drivers in outsourcing: Quality, Innovation, Regulatory Track Record, Affordability, Productivity and Reliability; which are ranked by our respondents to determine the weighting applied to the overall score.