Service sectors with a consistent forecast market size also faced a decrease in outsourcing from Big Pharma, with the exception
of stability, storage and testing, and product characterization. Allocation for each of these services remained consistent.
Not surprisingly, allotted funds from Big Pharma also decreased among the service sectors that had an overall drop in spending.
The services with the largest drop in Big Pharma funding were high-potency compounds (–17% from the second to the third quarter)
and process optimization (–12%). Budget cuts and the goal of maintaining profitability have influenced where Big Pharma allocates
its funds. It will pay off to prepare for this constriction by expanding partnerships to include alternative customer bases.
Specialty pharmaceutical companies exhibited similarities to Big Pharma, with respect to where this customer base expects
to spend its outsourcing funds. As with Big Pharma, projected spending dropped for se-veral services that had an overall increase
in forecast market size, such as pharmaceutical analysis, bioanalysis, and logistics and distribution. Unlike Big Pharma,
however, specialty pharmaceutical companies showed an increase in planned spending for high-potency compounds, while drug
delivery and clinical research received consistent fund allocation during the three quarters analyzed. In the service sectors
where the forecast market size remained consistent, specialty pharmaceutical respondents indicated that spending on cytotoxic
projects would rise. The increase in outsourcing spending for high-potency compounds and cytotoxic projects indicates specialty
pharmaceutical companies' current focus on oncology. Decreases in other sectors reflect the same budget cuts currently affecting
Respondents who classified their company as an emerging, niche, or startup pharmaceutical business showed the greatest potential
for increasing their spending on specific services. As the year progressed, respondents indicated an increased need to outsource
logistics and distribution, regulatory support, consulting, manufacturing, process optimization, and packaging. Other services
covered in the survey received consistent allocation of funds from this respondent group, with the one exception being a diminishing
need to outsource cytotoxic projects. The businesses that make up this customer base depend heavily on investment dollars
to keep their company operating, yet they are also the best target for small-molecule CROs and CMOs looking to maintain or
replenish their project pipeline.
While the three pharmaceutical customer bases' outsourcing funds have been constrained during the past year, it has been an
exciting time for biotechnology companies, as pharmaceutical companies have turned to biopartnering to rejuvenate their prospective
pipelines. Accordingly, respondents who work for biotech companies indicated an increase in outsourcing spending for pharmaceutical
analytical testing, bioanalytical testing, clinical research, high-potency compounds, chemical synthesis, custom manufacturing,
regulatory support, cytotoxic projects, stability, storage, testing, sterile compound research and development, product characterization,
process optimization and formulation, and preformulation. Spending for drug-delivery systems, logistics and distribution,
consulting, fill–finish, toxicology, and packaging remained consistent during the first three quarters of 2011. The only service
sector for which the biotech customer base's projected spending decreased was lyophilization, which dropped modestly from
the first quarter to the third after peaking in the second.
Emerging biotech showed much of the same outsourcing behavior as Big Biotech, with an increase in outsourcing bioanalytical
testing, custom manufacturing, chemical synthesis, sterile compounds, product characterization, lyophilization, and cytotoxic
projects. This customer base represents a small segment of the market, yet its consistent and increasing need for outsourcing
partners makes it a good customer base to target for new projects. This conclusion is particularly true given that survey
respondents from emerging biotech businesses indicated that their companies would outsource an average of five services in
2011 (see Figure 8).
Figure 8: The average number of services outsourced in 2011 by company type.
Kate Hammeke is a research manager at Nice Insight, 6 W. 20th St., Second floor, New York, NY 10011, tel. 212.366.4455, fax 212.366.4419,