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Everest: Pharma Firmsí Global Sourcing Spending Likely to Increase

by: Karen Cayamanda

Friday, October 7, 2011 |

"Outsourcing and Offshoring Trends in Pharmaceuticals" report highlights

In the "Outsourcing and Offshoring Trends in Pharmaceuticals" report from global services research and advisory firm Everest Group, it is seen that outsourcing spending of pharmaceutical companies will continue to grow as the highest spike of outsourcing deals was posted in 2010 (10-year high). This was an 81-percent increase compared to contract signings in 2009.

The pharmaceutical industry spends US$490-670 billion per year or 3-5 percent outsourcing levels. According to the report, this can become 10-15 percent levels. Amneet Singh, Global Sourcing Vice President, said the growth of outsourcing deals posted in 2010 was driven by the increase in demand during the economic crisis. Other factors such as cost issues, changes in the pharmaceutical landscape, and emerging markets are also considered growth drivers. It is predicted that outsourcing activity will increase in drug development and research, supply chain management, data management, as well as analytics processes.

These are the other highlights of the report:

  • There was an increase in outsourcing demand from pharmaceutical companies in Europe for the last three years.
  • More and more companies adopted business process outsourcing (BPO), to outsource not only drug development functions but also processes in finance and accounting, HR, and procurement.
  • Pharmaceutical firms are starting to set up captives in Asia and Central and Eastern Europe to gain presence in emerging markets.

Also discussed in the report were the changes in the service offerings of providers. Global Sourcing Vice President H. Karthik said the evolving pharmaceutical industry leads to changes in the service provider landscape. From offering traditional services, providers are expanding their offerings which now include specific functions. They are likewise improving their services and capabilities to enable them to offer other pharma-related processes.

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