Monday, August 6, 2012

Why Drug Discovery Is Being Outsourced

Drug development is a high-cost and risky business, since only a fraction of the therapeutic targets selected for study will actually yield products that obtain regulatory approval from the FDA. The average drug can take ten or more years to progress from the discovery phase to the clinic, with only one compound out of 10,000 evolving into a viable product.  Typically a majority of compounds do not proceed further than the pre-clinical stage, with only five in five-thousand advancing, before moving onto clinical (human) testing, which includes multiple phases, a plethora of regulations imposed by the FDA and the need for large batches of volunteers.
Advances in molecular biology and the emergence of new-generation biological therapies has led to an increasing complex drug discovery since the 1990s. These advances, along with the emergence of new technologies, have made it unsustainable for companies to undertake all drug discovery functions in-house. Therefore, the industry has chosen to outsource core drug discovery functions more frequently.

Specifically, the need for clinical outsourcing is being driven by declining R&D budgets; overall expenditures on discovering and developing new drugs by PhRMA members increased nearly 10% in 2010 to reach $50.7 billion; the 2010 rise was short-lived as PhRMA estimates R&D spending dropped just over 2% to $49.5 billion in 2011.  In order to accommodate shrinking budgets and the demand for new market drugs, companies have turned to outsourcing to manage their core functions, which has  resulted in time and cost savings as well as financial and operational flexibility. 

For outsourced nations and pharmaceutical companies, it's a win-win for drug discovery, which requires technical expertise in the areas of molecular biology, ultra-high throughput screening, molecular and behavioral pharmacology, and combinatorial, medicinal, and analytical chemistry.  University and higher education programs throughout BRIC nations have focused heavily on developing a skilled workers in these and many other relative fields.  In addition, crossover and new advancements in chemistry, molecular biology, pharmacology, microbiology, and biochemistry has resulted in the evolution of new methodologies and their application in drug discovery. These new technologies come with the promise of generating greater numbers of more effective drugs, while maintaining or reducing current costs.

Fears of intellectual property protection have been outweighed by advantageous, low-cost of outsourcing drug discovery, in addition to allowing pharmaceutical companies the ability to leverage new technologies and scientific expertise.

Kalorama's report on Drug Discovery Outsourcing can be found at: