As expected in the soft business environment, competition for new business has intensified. The clearest indicator of this
move is the big jump in the number of biopharmaceutical and pharmaceutical respondents claiming that contractors are willing
to cut prices to get business: 52% of biopharmaceutical and pharmaceutical respondents indicated that contractors are willing
to cut prices, versus 42% last year, and just 34% as recently as 2006 (see Figure 5).
Competition has been intensified by companies' ongoing efforts to consolidate the number of contractors they use. Respondents
indicating that they are reducing their vendor base increased slightly, from 27% in 2008 to 31% this year, while the number
of respondents with plans to expand their vendor base continued a two-year decline (see Figure 6).
There are still new opportunities, however, for contractors with biopharmaceutical and pharmaceutical companies: nearly half
of the survey respondents indicate that they continually identify and test new vendors, while most others are looking for
contractors to fill special needs or replace poor performers. Getting on the "short list" of bidders for a project, though,
is becoming more difficult according to our survey. Both the number of bidders per project and the share of bids accepted
from new vendors declined somewhat over past years.
One trend that seems to have slowed slightly is sourcing from India and China. The share of biopharmaceutical and pharmaceutical
respondents indicating that they have no plans to source from India and China rose from 45% last year to 51% in 2009 (see
Figure 7). This minor growth does not necessarily imply a lessening of interest in sourcing from Asia, but rather a lull reflecting
the overall uncertainty in companies' development programs.
Clients and contractors continue to view contractor performance differently. Contractor respondents are downright immodest
in judging their own performance: more than 90% rated their technical and operational performance as "excellent" or "good,"
and 88% gave themselves "excellent" or "good" ratings on customer service (see Figure 8).
Clients graded contractor performance on a much tougher curve. Only 57% of biopharmaceutical and pharmaceutical respondents
rated contractors' customer service as "excellent" or "good," and only 53% think contractors' project management skills are
"excellent" or "good." Contractors fare better on technical and operational performance with 67% of respondents considering
them to be "excellent" or "good." On the bright side, only 8–10% of biopharmaceutical and pharmaceutical respondents grade
contractors as "poor" or "fair" in these performance categories.