Unpacking CRO Outsourcing

There is perhaps no industry more greatly challenged by today's volatile and fast-paced economic environment than that of the Pharmaceutical industry. Money is tighter, government regulation is expanding, profits are diminishing. And yet, pharmaceutical companies are expected to produce breakthrough medicines on faster timelines than ever before.There was a time when the Pharmaceutical industry experienced relative ease of big profits. A 2001 Corporate Watch article claimed some...
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There is perhaps no industry more greatly challenged by today's volatile and fast-paced economic environment than that of the Pharmaceutical industry. Money is tighter, government regulation is expanding, profits are diminishing. And yet, pharmaceutical companies are expected to produce breakthrough medicines on faster timelines than ever before.There was a time when the Pharmaceutical industry experienced relative ease of big profits. A 2001 Corporate Watch article claimed some Pharmaceutical companies enjoyed profit margins of 70 - 80%. Reasons included lack of price elasticity (if only one drug can help, a patient will buy that drug no matter the price), and limited competition (because of patent control.) In 2006, over 90% of Pharmaceutical revenues came from medicines that had been on the market for more than five years. But fast forward. Today the environment is much different. Pharmaceutical companies are facing the patent cliff with key patents of many important medicines drawing to their end. As the expirations occur, large pockets of revenue do as well. Competing Pharmaceutical companies can legally create generics and the monopolies cease to exist. Industry experts proclaim, "The good times with more or less guaranteed high margins are over." Pharmaceutical companies are fighting these pressures in various ways. This white paper - sponsored by Roche - provides a deep dive into CRO outsourcing key strategies. Pharmaceutical organizations have increasingly turned to outsourcing as a way to increase speed to market and reduce costs of drug development. The goal of this white paper is to study the applicability of using a Vested Sourcing Business Model for CRO. The Vested® model - developed by University of Tennessee research - provides a methodology for organizations to create highly collaborative win-win relational contracts purposely built to drive innovation and outcome-based results.