On Friday, September 19, The Maeil Business Newspaper, South Korea’s leading daily financial and business publication, published a “View and Outlook” interview with Quintiles CEO Tom Pike about outsourcing as a business strategy and Quintiles’ capabilities to help biopharma companies improve their probability of success.
"A business can focus on its core competence while maintaining its competitiveness in other secondary areas by employing an outsourcing strategy. Outsourcing contracts with firms equipped with advanced technology and credibility generates great synergistic effect on the overall business," said Tom Pike, CEO of Quintiles, in the interview with Maeil Business Review MBA team.
Below is the Q&A with Mr. Pike. Click on the download button above to view the original article in Korean.
The main business of Quintiles is biopharmaceutical development and commercialization services. Why do biopharmaceutical companies outsource their core business?
Outsourcing is a strategic plan from a point of “Selection and Focus”. It is more effective for companies to focus on their core competencies and outsource non-core functions to world-class providers like Quintiles. Pharmaceutical businesses are burdened with huge vertically integrated infrastructures through the takeover of other enterprises.
According to Dr. Lawrence Capron, a professor of INSEAD, ”Build”, ”Borrow”, ”Buy” are the three pillars of companies’ growth strategy. Among these elements, do you think a strategy like alliance or outsourcing is effective?
Yes. Of course, it differs from time to time. Outsourcing can be a better way to save time and money spent by obtaining resources from outside, rather than increasing internal capabilities or pursuing a merger and acquisition. It is better for firms to concentrate on their core capabilities even if they choose the strategy of building internal capabilities. For instance, pharmaceutical companies do not need to manage participants of clinical trials with their precious manpower and resources. Merger and acquisitions also bear risks in terms of successful closing or the integration process afterwards.
But outsourcing has some problems too. Pharmaceutical companies involved in new drug development and particularly concerned about data security can feel uncomfortable with outsourcing services.
Earning trust from customers is a vital issue in outsourcing business. We are fully dedicated to protect customers’ intellectual property and information. We continually work with our customers to assure them that we remain focused on protections of these matters.
Customer’s trust not only comes from security management. We, for example, carry out clinical trials on behalf of our customers and report the results back to them.
We also adhere to good clinical practice and other globally harmonized standards so that our customers do not have to worry about these issues.
Quintiles’ business ranges from clinical trials to new product marketing. Actually Quintiles is doing what other pharmaceutical companies do. Why doesn’t Quintiles launch its own pharmaceutical company?
The biopharmaceutical industry is evolving, and we have capabilities. However, our business goal is to help our customers be more successful. We choose to complement, not compete. Our role is to make our customers more competitive and successful by reducing costs, maintaining or increasing quality, and increasing speed. Only an outsourcing service provider can do this.
From the profit side, remaining as an outsourcing service firm is a good option. In 2013 Quintiles reported the revenue of over 100 million USD sales from each of 10 pharmaceutical companies. Also, we achieved $4.9 billion in net new business, a 13% increase from last year, proving that the biopharma services field is promising.
Quintiles has constructed relationships with around 500 customers and all the products ranking world’s top 100 have used your company’s services. What is the key for Quintiles to perform better than competitors?
I believe our strength derives from the great work force across the globe and our technology. We have around 30,000 devoted employees in about 100 countries around the world. We know that each market has its own unique characteristics and regulations, requiring consulting services for market analysis, product development customized for each region. We have formed a worldwide network between the employees, sharing information from many regions.
Pharmaceutical industry requires a massive cost and several years to develop a new product, so the clients’ trust is very critical for business success. We have 950 medical doctors, 900 PhDs, and 600 statistical programmers, and that is the reason our clients trust our brain power.
Quintiles is a partner in a joint venture with Samsung, called `Samsung Biologics’.
It’s one example of how we’re creative in helping customers execute their strategies. We’ll provide our technology, accumulated experience and network to Samsung with less experience in the biopharmaceutical field.