Investment in KPO infrastructure will be higher compared to traditional BPO infrastructure investment. Companies evaluating
offshoring opportunities typically consider the following broad parameters: infrastructure, processes and technology, human
resources, credibility, front-end interfaces, and actual performance.2 Good infrastructure is essential, not only from the outsourcing partner, but also in the city or country where the KPO work
will be undertaken. Assurance that macro-level infrastructure limitations will not, in any way, hamper operations is important.
The partner under consideration should have appropriate delivery systems, in terms of quality standards, to support the processes
and the technology. A high degree of expertise in specific areas, along with personnel for support functions, must be available.
Credibility is a major issue when evaluating a potential partner; indeed, data integrity and employee credibility rate very
high on the acceptance evaluation scale. Direct interface among partners is typically not an issue unless interactions involve
a third-party KPO, in which case building trust, demonstrating credibility and domain expertise, working out the delivery
model, and defining performance criteria play a critical role.
POTENTIAL KPO PROJECTS IN THE PHARMACEUTICAL INDUSTRY
Pharmaceutical companies can reap considerable benefits from KPO. The drug pipeline is not as prodigious as it was during
its heyday in 1996, when 53 new molecular entities (NME) were approved; indeed, there has been a so-called "approval drought"
in the last decade.3 The year 2006 saw the approval of only 18 NMEs (the same number as in 2005), and of only four biologic license applications
(BLAs). Interestingly, the approval recipients were not the big biotech companies; they were either smaller, newer US biopharmaceutical
or biotech companies, or large international pharmaceutical companies that were, in some cases, foreign-based.4
The typical cost of drug development has been conservatively estimated to be $802 million (in 2000 dollars).5 In addition, the fact that 50% of new blockbuster drugs are next-in-class compounds does not provide highly differentiated
therapeutic value to the industry. Today only one of six new drug prospects will likely deliver returns above its cost of
capital. Drug-candidate screening and evaluation is extremely expensive, and even with the application of recent molecular
and informatics tools, performance has not been stellar.
Drug discovery and development KPO, taking into account specific skills afforded by a particular location, can significantly
improve ROI. For example, India traditionally has been known for its experience in reverse engineering of pharmaceuticals.
Indian scientists have established a stronghold in the computer industry, and collaboration between the computer and pharmaceutical
industries can stimulate drug discovery and development programs.
Another area for KPO is data mining. The amount of information that pharmaceutical companies generate and collect during drug
development doubles every five years; unfortunately, only 10% of that information is ever leveraged to improve overall competitiveness
and compliance. Reportedly, most drug development organizations—regardless of size—are working with ad hoc or silo processes
in which data are not captured consistently.6 Data transparency and traceability are imperative in the pharma industry; however, the tendency toward "tribal data capture"—storing
data on individual desktops or servers—continues. It is time to do away with the old technology-enabled data management model
and replace it with technology-enabled knowledge management. KPO can facilitate this transition. This change will enable "drill-down"
capability-data access based on specific requirements such as date, project type, or phase—as well as "drill-across" capability,
to develop relationships among processes, materials, and operating modes (good manufacturing processes versus not-so-good
manufacturing processes, for example). Knowledge management will allow pharmaceutical companies to revisit NMEs not considered
as first-tier candidates (and therefore not brought forward for further development) to determine if their potential should
be further explored. Indeed, some pharmaceutical companies have licensed these "back burner" candidates to contract service
organizations (CSOs) for further investigation and development.
Table 1 provides examples of KPO services in the pharmaceutical industry.
Table 1. Examples of knowledge process outsourcing