Strategies in Outsourcing: Insourcing Emerges as an Alternative Model - Pharmaceutical Technology

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Strategies in Outsourcing: Insourcing Emerges as an Alternative Model
AMRI, a contract research and manufacturing organization, discusses its adaption of an insourcing model with Eli Lilly. This article is part of a special issue on outsourcing.


Pharmaceutical Technology
Volume 36, Issue 8, pp. s40-s44

Future of new outsourcing models

PharmTech: Traditional outsourcing models still dominate external development and manufacturing activities, but do you think insourcing models will become more common in the industry? Why factors may influence greater adoption of this model?


Public policy perspectives: the lexicon of insourcing versus outsourcing
Conway (AMRI): Pharmaceutical companies are adapting new strategies and reorganizing their programs, facilities, and resources, with many companies beginning to contemplate a greater reliance on outsourcing. With substantial layoffs within Big Pharma in the United States and Europe, many experienced discovery and development scientists are taking positions in the CRO industry. As a result, over time, the balance of expertise is beginning to shift from customers to suppliers.

The ability of providers to adapt and respond to industry changes is going to play a vital role in improving the success rate and outcomes at all stages of the drug-discovery and development pipeline. The ultimate factors in the adoption of this model are going to be driven by: the needs of customers within the industry, which includes the services being delivered on time and to budget; the need for collaborative advice; the need to ease the burdens of project management; and the need for more flexibility, adaptability, and quality. In addition, insourcing can offer significant cost savings compared with hiring permanent employees. As insourced scientists are AMRI employees, the administrative and benefit costs and obligations accrue to it. At the highest level, insourcing allows a customer to ramp up insourced full-time equivalents (FTEs) at a rate competitive with global external outsourced FTE costs and to use available laboratory space that would otherwise sit idle while demonstrating improved productivity that can be measured in pipeline candidates.

PharmTech: The company is involved in another outsourcing model through its SMARTSOURCING program. Can you explain the program and how it fits into an insourcing/outsourcing model?

Conway (AMRI): AMRI SMARTSOURCING is a new initiative to address the evolving needs of the industry, which includes insourcing and outsourcing. AMRI has examined the needs of pharmaceutical and biopharmaceutical companies and itself and has found that customers are looking for more supplier accountability and more trust as well as a better balance of risk and greater flexibility. AMRI's SMARTSOURCING approach is a versatile and strategic way of partnering that is a means of insourcing or outsourcing, or a hybrid model of both. It encompasses the broad range of technologies, capabilities, and global integration that AMRI can bring to a relationship, allowing our customers to customize an approach unique to its needs and budget. The company has used the rollout of its SMARTSOURCING initiative to showcase its improved performance and the customer experience that results from the close integration of global capabilities across the spectrum of drug discovery and development.


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