Supplier consolidation is a major threat
Another potential risk of less concern to service providers is supplier consolidation. Only 3% of CRO and CMO respondents
in 2010 said that "supplier consolidation by Big Pharma" was a major concern, and at no time in our survey has the number
reached 10%.
Figure 8: Please indicate how your company has tried to consolidate its supplier base
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However, bio/pharmaceutical company survey respondents did signal that service providers are overlooking a major industry
trend (see Figure 8). For 2010, 45% of bio/pharmaceutical company respondents indicated that they have reduced the number
of service providers they work with, or plan to do so in the near future. That's the highest share ever in our survey indicating
that supplier consolidation is ongoing. More dramatically, the share of respondents indicating that they plan to increase
the number of suppliers they work with dropped to just 18% in the 2010. In the 2007 survey, 44% indicated their intention
to increase their number of suppliers.
QbD impact minimal so far
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One factor driving supplier consolidation is vendor performance: There is a conviction, generally confirmed by actual industry
experience, that working more closely with fewer service providers leads to improved vendor performance and better project
outcomes. Our 2010 PharmSource-Pharmaceutical Technology Outsourcing Survey indicates that there continues to be plenty of room for improvement in vendor performance.
Figure 9: Client and contractor views on contractor performance
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As has been the case every year in the four years we have asked the question, CROs and CMOs rate their performance more highly
than do their clients (see Figure 9). The biggest gap continues to be in project management, where 80% of service-provider
respondents rate their performance as "excellent" or "good" but only 51% of clients rate them that way.
One area where the perception gap has closed over the past few years has been in customer service, where client perceptions
have improved while service provider self-assessments have become more modest (see also, "Performance Metrics, A CMO Roundtable".)
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