Outsourcing R&D in Asia: A Case Study of Pfizer

Gonghua Pan, associate director and head of the parallel medicinal chemistry sourcing operations at Pfizer, explains the evolution of the company's approach to outsourcing research and development from a line-or function-centric approach to an integrated sourcing model. This analysis includes the role that contract research organizations in Asia play in the company's outsourcing actvities.
Aug 01, 2008
Volume 2008 Supplement, Issue 3

Outsourcing manufacturing and clinical-trial materials is an important part of pharmaceutical companies' strategy for drug development and commercialization. The outsourcing model, however, may be applied earlier in the drug-development continuum to include research and development (R&D). Gonghua Pan, associate director and head of the parallel medicinal chemistry (PMC) sourcing operations at Pfizer (New York), explains the company's approach to outsourcing R&D, including the role of offshore contract services providers.

Drivers for increased outsourcing

On an industry-level, Pan outlines the drivers for increasing R&D outsourcing. These include:

  • Access to additional R&D capacity
  • Access to expertise
  • Access to novel enabling technologies
  • To focus internal resources on core competencies
  • To accelerate speed of development
  • To obtain operational flexibility
  • To reduce fixed costs.

Origins of research sourcing at Pfizer

Pfizer first began outsourcing certain R&D functions in the late 1990s. At that time, Pfizer had a strategic goal to increase the size of its compound collection generated by PMC techniques. PMC refers to using combinatorial chemistry and high-throughput screening to generate large libraries of compounds for testing for biological activity against a disease screen.

"PMC technology at this time was viewed as a specialized technology that was platform-centric, capital-intensive, and IT-intensive, which required a specialized skill set," explains Pan. "The company used strategic alliances to gain access to this technology."

In 1999, Pfizer signed multiyear collaborations to access PMC technology with four service providers: the UK business of Tripos (St. Louis, MO), Discovery Partners International (DPI, San Diego, CA), Arqule (Woburn, MA), and ChemBridge (San Diego, CA). Pfizer ended its drug-library agreements with three firms (Arqule, DPI, and Tripos) in 2005.

During the early 2000s, the business environment for contract drug-discovery services evolved, and several of Pfizer's early collaborators exited the market. Arqule, one of the largest contract research organizations (CROs) in the US, exited the contract-chemistry services business in 2005 to focus on developing its own oncology drug portfolio. DPI sold its drug-discovery service operations to Galapagos (Mechelen, Belgium) in 2006. Tripos sold its drug-discovery informatics division to Vector Capital in 2007, which created a separate and new privately held company Tripos Discovery Informatics (St. Louis, MO).

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