Emerging Business Models in the Pharmaceutical Industries ...

Outsourcing
The network approach allows pharma companies to focus
on their core capabilities. The pharma industry follows a
combination of models by outsourcing part of the research,
the entire development and manufacturing supply chain, or
clinical data management.
While many players in the mid-cap segment are gearing up
for the expected rise in outsourcing and contract-research
and manufacturing services (CRAMS), it is expected that
the entire process outsourcing model will soon replace the
outsourcing of individual tasks.
Companies in the West are considering moving part of their
R&D activities to countries like India, which offer research
services at less than one-fifth of the cost.
Main Players Opting for Outsourcing
India is a favoured outsourcing location for companies like
Novartis, Pfizer, Sanofi and Eli Lilly. Pfizer recently doubled
its clinical research investment in India to US $13 million.
GSK is planning to increase global offshore clinical trials
from 10% to 30 % by 2005. In a recent interview with
Business Week, GSK CEO Jean-Pierre Garnier said, “We
do about 60,000 patients in total trials each year – so the
saving per person if you switch, say 20,000 of those
patients to India, is in excess of US $10,000 per patient.
That’s a saving of US $200 million right here.”
The Network Model
According to Bruce Schneider, executive vice-president and
chief of operations for Wyeth Research, “Recent successes in
discovery have produced an explosion of data coming into
Clinical Development systems. It’s critical that we transform
our clinical development operation to handle that volume.
This arrangement is a logical next step in the evolution of
pharmaceutical outsourcing.”
Strategic Analysis of the Pharma Market, Future Revenue Models and Key Players 30