Strong Demand versus Strained Capacity - Pharmaceutical Technology

Latest Issue

Latest Issue
PharmTech Europe

Strong Demand versus Strained Capacity
A booming market may be stressing the service-delivery system.

Pharmaceutical Technology

The 2007 edition of the PharmSource–Pharmaceutical Technology Outsourcing Survey indicates that the contract services industry is going through a period of almost unprecedented growth. Pharmaceutical company budgets for contract services are rising, and contractor revenues are growing at double-digit rates, but the volume may be close to outstripping contractors' ability to deliver.

Respondents profile
Among the pharmaceutical company respondents to this year's survey, 94% report an increase in spending on outsourced activity for the year (see Figure 1). That's a big jump from 2006, when only 84% reported a spending increase. The increase in spending is remarkably consistent across company size (see sidebar, "Respondents profile"), and rates of growth for spending on commercial and development services also are about the same.

How do you expect your contract services spending to change from 2006 to 2007? (Figure 1)
Survey results indicate that the growth in spending on outsourced activities reflects a fundamental move in favor of outsourcing rather than conducting activities in-house. Among biopharmaceutical and pharmaceutical company respondents, 27% reported that their spending on contract services is growing faster than their overall spending, up from just 18% of respondents in last year's survey (see Figure 2). More than 20% of respondents report that half or more of the spending in their particular area is outsourced, which is more than double the response from 2006 (see Figure 3). Here again, the results are consistent regardless of company size or activity (commercial versus development).

How is your outsourcing spend growing relative to overall spending in your area? (Figure 2)
Not surprisingly, the growth in spending is translating into a banner year for contract services providers. More than a quarter of service providers expect revenues to jump by 20% or more this year; in 2006, only 17% of contractor respondents expected such robust results (see Figure 4). Just as revealing is the fact that none of the service providers expect revenues to decrease in 2007; 10% of respondents to last year's survey had expected their revenues to decline. The growth is coming from all customer segments, with mid-size and generic biopharmaceutical and pharmaceutical companies showing particularly big jumps. Service providers report that new contract signings are rising a bit more slowly than revenues, but they are still growing at a robust rate.

New opportunities

What share of the total activity in your area is outsourced? (Figure 3)
The growth in spending has created a more fluid contract services market that offers more opportunities for service providers. In this year's survey, 57% of biopharmaceutical and pharmaceutical company respondents report that they are actively looking for new service providers, either to increase their vendor base or to replace current providers; that value is up from 37% in 2006 (see Figure 5). The number of respondents who are unwilling to look beyond their current provider base dropped by two-thirds: only 5% of respondents say they use only current vendors.


blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
| Weekly

FDASIA was signed into law two years ago. Where has the most progress been made in implementation?
Reducing drug shortages
Breakthrough designations
Protecting the supply chain
Expedited reviews of drug submissions
More stakeholder involvement
Reducing drug shortages
Breakthrough designations
Protecting the supply chain
Expedited reviews of drug submissions
More stakeholder involvement
View Results
Eric Langerr Outsourcing Outlook Eric LangerTargeting Different Off-Shore Destinations
Cynthia Challener, PhD Ingredients Insider Cynthia ChallenerAsymmetric Synthesis Continues to Advance
Jill Wechsler Regulatory Watch Jill Wechsler Data Integrity Key to GMP Compliance
Sean Milmo European Regulatory WatchSean MilmoExtending the Scope of Pharmacovigilance Comes at a Price
From Generics to Supergenerics
CMOs and the Track-and-Trace Race: Are You Engaged Yet?
Ebola Outbreak Raises Ethical Issues
Better Comms Means a Fitter Future for Pharma, Part 2: Realizing the Benefits of Unified Communications
Better Comms Means a Fitter Future for Pharma, Part 1: Challenges and Changes
Source: Pharmaceutical Technology,
Click here