Magazine Article | February 3, 2014

As Biologics Development Rise At Pharma Companies — What Does It Mean For Outsourcing?

Source: Life Science Leader

Over the past two years, research results from Nice Insight’s annual Pharmaceutical and Biotechnology Outsourcing survey indicate a rise in the percentage of respondents who work at traditional pharmaceutical companies that are engaged in the development of biologic-based therapeutic drugs. Perhaps surprisingly, the largest increase comes from respondents who work for emerging pharmaceutical companies, up 14 percentage points over last year (34 percent, 2013 to 48 percent, 2014), followed by specialty pharmaceutical companies with a 13 percentage points increase (52 percent, 2013 to 65 percent, 2014), and Big Pharma with an increase of 6 percentage points (76 percent, 2013 to 82 percent, 2014).

These changes coincide with an increase in the percentage of one’s outsourcing budget spent on biologics as compared to small molecule therapeutics — up a substantial 11 percentage points among specialty pharma respondents, 6 percentage points in the emerging pharma group, and a modest 2 percentage points among Big Pharma respondents. This makes sense, considering biologics have traditionally been more expensive to develop than small molecule therapeutics, but as the patents for existing biologics continue to expire — an expected market value of $54 billion will go off patent in the next five years — the need for reducing costs in biologic development will become more crucial. So, while both outsourcing expenditure and the percentage of expenditure going toward biologics development have both risen over last year, it should not necessarily be interpreted as rising costs; rather, it is more likely a reallocation of internal versus external spend on biologics development.

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