CRO Offshoring Trend Migrates to R&D

1 May

By Danielle Silva, Director of Research, LSN

In the life sciences space, the idea of outsourcing R&D is certainly not novel. However, a new trend has emerged amongst companies in the biotech space over the last several years that is gaining more and more steam – companies are now not only outsourcing their R&D activities to other companies on a regional basis, but are also outsourcing these activities to on a global basis. What may come as a surprise to many, however, is that these companies are offshoring their R&D activities to CROs in these countries for reasons besides just their lower costs.

Two of the most popular locations for offshoring have been India and China – but now many companies are outsourcing to CROs based in other countries within Asia, and even to firms in Latin America and Eastern Europe. In the past, companies were mainly outsourcing activities such as data management, clinical development, and preclinical toxicology activities to CROs based in emerging markets. Now however, life sciences firms based in more developed companies are outsourcing more complicated projects to emerging markets-based CROs, such as target identification and assay development. This paradigm shift is largely due to the emergence of an educated workforce in these regions, allowing companies there to offer more value-added services.

Another major factor is that many emerging market countries offer large patient populations for indications less common in developed countries (particularly in the infectious disease space). Issues surrounding the recruitment (and retention) of clinical trial are the biggest causes of delays in clinical trials for companies based in developed countries. This makes clinical trial CRO’s based in emerging market countries compelling partners for trial management.

On the other side of the equation, many emerging markets CROs are getting wise about this trend as well, and have begun hiring western staff, and aligning themselves to western business culture. This makes it even easier for emerging biotech companies in developed countries to easily offshore projects without fear of cultural barrier.

Due to these trends, life science companies will have even more reasons to outsource and offshore their R&D activities. Emerging countries offer Western companies a larger patient population to conduct clinical trials – which will, in turn, reduce the time to bring the product to market.

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