As the life sciences industry becomes
increasingly competitive while being pressured by regulatory mandates, business
process outsourcing (BPO) is being considered as an effective way to improve
The market for life sciences BPO is
comprised of two distinct entities offering their services to biotech and
pharmaceutical companies—Contract Research Organizations and Contract
But what are the factors that have
given rise to a demand for life science BPO services? The pharma industry is
constantly grappling with patent expirations, a pressure to develop low-cost
drugs, and the growing uncertainty in economic conditions. Companies in this
domain thus need to approach their core operations with singular focus. This is
where life science BPO enterprises come into the picture with their support
services. Pharma companies outsource various functions and non-core operations
to third parties with a view to streamlining their value chain and cutting
These partnerships are usually forged
in the form of long-term contracts and partnerships with CMOs and CROs. Through
these partnerships, pharma companies share costs right from drug discovery and
development to licensing to approvals with the CMOs and/or CROs.
Pharma companies are also experiencing
effective outcomes via life science BPOs; the latter leverage their experience,
trained professionals, and latest technology to the advantage of the former.
On the other hand, life-science BPOs
too have been driven by the pressure to compete and achieve profitability. They
try to accomplish this by introducing novel strategies to offer their clients a
competitive advantage. According to a market research report published by
U.S.-based market research firm Transparency Market Research, the global life
sciences BPO market is projected to record a compounded annual growth rate
(CAGR) of 21.5% between 2013 and 2019.
Experts predict a healthy growth rate
thanks to factors such as increased R&D investments by pharmaceutical companies,
a spike in the demand for generic drugs, as well as a myriad of block buster
drugs nearing the end of their patents. Other factors that have created a
favorable environment for life science BPO include stringent regulatory
mandates and government pressure to develop affordable drugs.
Contract Manufacturing Organizations Market
According to the market research report
published by Transparency Market Research, the CMO life science services
outsourcing currently holds the largest share in the Life Sciences BPO market.
The growth in healthcare costs has subsequently caused an increased generic
drug demand, which has in turn led to a spike in the demand for the services of
pharmaceutical outsourcing enterprises. Moreover, most CMOs have full-fledged R&D
centers that employ novel technologies to give their clients an edge.
The market for active pharmaceutical
ingredients (API) is the largest within the CMO segment. With mounting
regulatory compliance and stringent approval parameters, the outsourcing of
manufacturing activities to CMOs has received a boost.
At a time when manufacturers are
striving to stay abreast of the latest regulatory mandates and industry
breakthroughs, continually investing in facility upgrades might not be
possible. This is another factor that can be attributed to the surge in demand
for outsourcing partners as manufacturers do not possesses every required
technology or expertise in-house. In such scenarios, outsourcing not only gives
them access to the latest manufacturing technologies, but also proves to be a
cost effective strategy.
Contract Research Organizations (CRO) Market
Over the past decade, there has been
considerable growth in the outsourcing services offered by CROs. Many
pharmaceutical companies have been struggling to find a balance between
mounting research costs and profitability. This has led many of these firms to
turn towards CROs as a feasible option. The vendors operating in the market
currently offer a combination of various services such as research, regulatory
co-ordination services, data management, website management, medical writing,
protocol development and others.
In 2012, the largest segment within
this market was drug discovery. A report by Transparency Market Research
however projects that between 2013 and 2019, the highest growth will be seen in
the clinical data management BPO services at the rate of 17.3%.
It is estimated that the Life
Sciences BPO Market will be worth USD 596 billion worldwide by 2019,
according to the Transparency Market Research report. And, while North America
held the largest share in this market in 2012 with a worth of USD 28.4 billion,
future growth is expected to be the highest in the Asia Pacific region with an
approximate growth rate of 21.2% driven by various factors such as low cost of
labor, availability of a talent pool, a large patient population, and
comparatively favorable regulatory policies.