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Ten years ago, large biopharmaceutical companies viewed outsourcing as a short-term cure for what ailed them. They contacted outside vendors to obtain temporary workers with specialized skills to quickly support a unique product launch or to handle an unforeseen surge in business. How times have changed. These days, many companies rely on outsourcing as an essential, long-term business strategy and enlist a huge cross-section of external partners across commercial, clinical and manufacturing. It’s not uncommon for a Fortune 500 biopharma company to use up to 10,000 external suppliers to meet its business objectives.

Small to midsize organizations are also following this trend – if not driving it. Some of these agile biotechs are, in fact, building their organizations around a new business model that puts outsourcing at the center. According to Contract Pharma’s 2015 Annual Outsourcing Survey, mid-sized life sciences companies continue to lead the pack in terms of seeking service providers (50 percent), followed closely behind by small pharma (38 percent).

The reason for this change can be summed up in one word: pressure. Today’s life sciences companies face relentless pressure to raise productivity and boost sales while also achieving agile and cost-effective processes for product development and commercialization. Companies face the additional challenges of complying with increasingly complex regulatory mandates and satisfying knowledgeable, demanding customers around the world. Outsourcing is more than just a way to cut costs – it’s an essential strategy in the unending battle to accomplish all of these goals.

The Contract Pharma survey also shows that 80 percent of companies surveyed said there is an increasing need to outsource, with 41 percent of firms stating they outsource specific tasks so they can focus on core competencies instead of activities they don’t want to do or don’t have the in-house capability to do. The survey also reported that 60 percent of companies take a long-term, strategic approach to outsourcing rather than using it on a project-by-project basis – further evidence that outsourcing is no longer just a quick-fix but instead serves a much more pivotal role in overall business operations.

As a strategy, outsourcing can deliver a varied assortment of organizational, operational and cultural benefits, including the following:

  • Flexibility − When a pharmaceutical company develops a new therapy, projections for product demand and staffing are only best-guess estimates. Market conditions can prompt companies to swiftly change to larger or smaller project teams, add sales teams in certain geographical regions or employ specialists with specific skill sets. Outsourcing can give an organization the advantage of “variable resourcing.” The variable costs of working with an outsourcing partner – and easily adding or reducing workers as conditions dictate − are a competitive advantage when compared to the fixed costs of suddenly hiring or laying off staff members. This flexibility also serves as risk mitigation against unexpected pipeline changes, governmental regulatory actions and competitive threats. 

  • Less sales training time − Outsourcing firms have deep benches of qualified salespeople and they can quickly select and train the right ones to fulfill a biopharmaceutical firm’s needs. Using outsourcing, companies may get their sales activities up and running quickly, which can help to get a drug to market faster and earn revenue from it sooner. A shorter training process can play an important role in a company’s push to bring a much-needed drug to patients who urgently need it.  

  • Less need for downsizing − If a medicine doesn’t deliver the desired level of success, staff changes may be necessary. For project teams composed entirely of full-time staff, this could mean layoffs, but if a significant amount of work is outsourced, manpower reductions can come from outside vendors, leaving full-time employees on staff. Research shows that some full-time employees fear outsourcing will endanger their jobs, but the reality is that only 14 percent of companies that outsource also lay off employees.   

  • In-depth expertise – Many large outsourcing firms have helped biopharmaceutical companies bring hundreds of products to market. Outsourcing firms can share their expertise in areas such as compliance, which can present hurdles for the launch of a new drug; realistic sales strategies for companies entering a crowded market; and field sales team development, determining whether a product launch requires high-priced, experienced salespeople or a younger, cost-effective sales team.  

  • Less risk and waste − As a strategic element of a complete commercialization plan, outsourcing can eliminate much of the risk and waste inherent in bringing a drug to market. By working with partners whose workforces are agile and capable − and who understand the need for regulatory compliance and risk mitigation – drug makers can focus on their core endeavors without anxiety about compliance or risk. In addition, some reputable partners bring more to the relationship than just people – they offer strategies for commercial optimization and help customers to optimize their channel mix, engage earlier with key stakeholders and develop an integrated market access plan.  

  • Improved employee morale – This important benefit is often overlooked. Establishing a productive outsourcing relationship can improve employee morale by enabling workers to focus on tasks for which they’re skilled and qualified. Often, employees’ lack of expertise or training for non-core tasks results in poor attitudes and poor performance as they toil at work they aren’t good at or interested in. 

According to “The Future of Outsourcing” by Datamonitor, companies can achieve added value by using salesforce outsourcing strategically. But success can’t be achieved without a strong understanding of an organization's internal capabilities and future direction. Decisions about outsourcing vital business and research functions are among the most strategic that can be made because they define which type of expertise to cultivate internally and which to purchase. To that end, outsourcing decisions shouldn’t be made solely on the basis of cost as that can cause companies to miss valuable opportunities to leverage the specialized skills of outside partners that might speed and improve the development of life-saving products. To achieve maximum benefits from outsourcing, life sciences companies must accept it as a business strategy and not merely short-term muscle for a product launch. Further, they must adopt a systematic approach, setting specific targets and milestones as part of a three- to five-year plan, with continuous measurement of progress – the same way you would treat any long-term, strategic investment in business.