Figure 4 What is the trend in your company regarding outsourcing in your service area?
The overall strength in the services market appears to be due to growth in total spending more so than to growth in the level
of outsourcing. Among bio/pharma respondents to the survey, 39% said that spending on contract services is growing at the
same pace as all spending, while 27% indicated that outsourced spend is growing faster than total spending (see Figure 4). However, that 27% is down from 37% in the 2011 survey and more in line with the years previous to 2011. An even higher
share, 34%, indicated that spending on contract services is actually growing more slowly than total R&D and manufacturing
Figure 5 What is vendor competition like for your business?
Despite the improved market conditions, most CROs and CMOs aren't taking anything for granted and remain aggressive in seeking
new business. Over half of bio/pharma company respondents reported that service providers are willing to cut price, the same
as in the past 3 years (see Figure 5). However, 33% indicated that service providers were insisting on firmer pricing, which is up slightly from last year. We
would expect to see firmer pricing in a strong market.
Figure 6 How have you managed the number of contractors you work with?
We did not see any major changes in the way that bio/pharma companies are managing their portfolios of service providers.
Among bio/pharma company respondents, one-quarter indicated they have reduced the number of vendors they work with, while
the same number indicated that they plan to work with even more vendors (see Figure 6). One-third (33%) plan no changes in the number of vendors, and only a small percentage are making plans for further supplier
Figure 7 Plans for sourcing in India and China
One area where bio/pharma companies continue to look for new supplier options is in emerging markets, especially India and
China. Among bio/pharma company respondents, 46% indicated they are either actively sourcing services from India or China,
or are actively looking for vendors from those countries (see Figure 7). That is up only slightly from 2011, but it continues a slow-but-steady trend toward getting Asian companies into their
vendor mix. Only one-third of respondents indicated that they have no plans to source from emerging market vendors, but that
is down from 50% just three years ago.
Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, a monthly newsletter covering the contract drug development industry. A trial subscription can be obtained by calling 703.383.4903, by faxing 703.383.4905, by e-mailing firstname.lastname@example.org, or on the Web at www.pharmsource.com.
Articles by Jim Miller
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