Outsourcing Clinical-Trial Materials Heats Up

The outsourcing of clinical-trial materials grows as pharmaceutical companies adapt to a changing market.
Jan 02, 2008
Volume 32, Issue 1

Outsourcing clinical-trial materials (CTM) is strong and growing. Because of significant cost pressures and the globalization of clinical research activities, pharmaceutical companies are hiring contract manufacturing organzations (CMOs) to provide many services, including CTM production. In response to the growing demand, CMOs are expanding their capacity both domestically and internationally.

Early-stage pipeline growth spurs demand for CTM services

Demand for CTM services stems from robust drug pipelines. The number of Phase I candidates has grown by 60% in the past five years, and the number of Phase II candidates by 30% (1). Approximately 75% of these candidates originated at small and mid-sized pharmaceutical companies (2). The Pharmaceutical Research and Manufacturers of America reports 1264 drugs were in Phase I development, and 1171 drugs were in Phase II development as of December 11, 2007.

Large companies pursue outsourcing

As early-stage pipelines increase, pharmaceutical companies are increasing their outsourcing of CTM supplies. The largest shift in demand for clinical supplies is occurring within the mid-sized to large pharmaceutical companies, observes Scott Houlton, chief operating officer of Aptuit (Greenwich, CT), a contract drug-development services company. Large and mid-sized companies historically outsourced only a small portion of their work, he remarks, but they are changing their approach. This segment of the market is beginning to strategically hire two or three key partners for certain projects.

Others confirm the trend toward multiple-vendor outsourcing. "Some sponsor companies may hire more than one contractor to develop the same drug product for the same phase," says Maureen Spataro, founder and president of the North Carolina-based consulting firm Spataro and Associates. "This way, they benefit from having two sets of scientists working on their CTM." Hiring several CMOs for the same project increases the chances that it will be completed successfully, she adds.

Another approach, according to Spataro, is to hire several contractors to develop different dosage forms or different release profiles for one product. "The ultimate goal is to save time," she says. "By contracting to multiple vendors, development efforts can be achieved on a parallel path. If one company's prototype fails along the way, there is a possibility that the other may succeed."

Aptuit's clinical packaging and logistics facility in Bathgate, United Kingdom. (IMAGE IS COURTESY OF APTUIT)
Phil Meeks, chief executive officer of the CMO Azopharma (Miramar, FL) agrees that meager late-stage pipelines are spurring increased outsourcing. Pharmaceutical companies are now trying to get more candidates into clinical trials, he says. "If companies have capital," he adds, "they'll outsource to achieve more at once."

Nailesh Bhatt, managing director of the New Jersey-based consulting and advisory firm Proximare, says, "Outsourcing has definitely increased by the large companies." Big pharmaceutical companies are deciding to focus on their core competencies. These companies are now more likely to ask CMOs to perform services for which they themselves have less expertise or ability. Spataro concurs, commenting that large pharmaceutical companies are now looking to contractors for CTM because they have made a strategic decision to outsource and focus on their core competencies. Manufacturing CTM "is not something that everybody's capable of handling," says Bhatt.

Cost pressures and Big Pharma's recent restructuring activities are creating the conditions for increased outsourcing. A reorganization plan that Pfizer (New York) announced in January 2007 reflects this trend. The company said it would cut 10,000 jobs and close several plants to save approximately $2 billion by the end of 2008. Among the plants to be closed are Pfizer's facilities in Ann Arbor, Michigan, where the company prepares clinical supplies. Pfizer said it would increase outsourcing to reduce expenses.

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