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Evolution of Outsourcing to Best-Sourcing in the Clinical Trial Process

Increased cost of launching prescription drugs directly impacts the cost of the final product. Rising healthcare costs in the USA have been a big concern for many years and cost of drugs is one of the key contributors to this rise. A typical drug receives a patent for 20 years, which includes the time for clinical trials. The longer the clinical trial period, the less the time for a pharmaceutical company to market the drug and recover its costs, directly impacting the launch price of the product. Pharmaceutical companies have therefore been seeking solutions to reduce the timelines for clinical trials in addition to reducing costs as both these are critical to reducing the overall price of the end product.

Most pharmaceutical companies test multiple products at the same time. This requires managing a huge infrastructure of people, processes, and technologies. As different products are at different stages of trial at any point of time, managing capacity of trial infrastructure at optimum levels becomes a challenge. When a key product is undergoing trials, there is a requirement to grow the infrastructure and when the trial for that product is completed, capacity is underutilized, until the next big product comes into the trial pipeline. The waxing and waning of trial infrastructure puts additional stress on the costs of trials.

To manage the above issues, pharmaceutical companies were forced to seek innovative solutions including outsourcing and offshoring. Outsourcing initially began with specialized companies that are referred to as Clinical Research Organizations (CROs) in the industry. The companies realized that outsourcing will help them in multiple ways:

  • 1. Reduce the need to build and manage huge infrastructure.
  • 2. Manage peaks and troughs.
  • 3. Manage projects involving multiple trials.
  • 4. Manage global trials (many products required trials to be conducted across the globe).
  • 5. Distribute trials by phase and product type to specialists in that area (over a period of time, CROs became specialists in handling trials for certain disease types or geographic regions).

Traditionally, CROs were all US based and managed trials from the USA. However, as trials became complex and the need to crunch timelines became more and more critical, pharmaceutical companies realized that they needed to infuse technology and advanced data analytics models into the process. There was also a requirement for a lower cost workforce with a background in medicine and life sciences to monitor and process the enormous amount of data that was generated during a trial. This resulted in the second wave of outsourced partners, global Information Technology (IT) and Business Process Management (BPM) companies.

Today, clinical trials are a highly outsourced process with multiple partners spread across various geographies, with each partner handling a certain aspect of the trial process. The basis for division of work or “de-cou- plability” is based on the skills required, technology, proximity to clinical sites, and so on. An exploratory multiple case study from the pharmaceutical supply chain provides guidelines on how to best select and evaluate partners (Zhang, Pawar, Shah, & Mehta 2013). Outsourcing partners need to demonstrate their dynamic capabilities (e.g., project deliverables

Multiple best-sourced partners for clinical trials

Fig. 7.5 Multiple best-sourced partners for clinical trials

and accuracy of costs), positions (e.g., financial assets and number of scientists), and paths (past experiences). A sample best-sourcing process for clinical trials is shown in Fig. 7.5.

The immediate benefits of a best-sourcing model are to leverage the skills and strengths of each of the partners. For example:




Manage onsite trial process Project management Data collection

IT Partner

Technology and tools

Workflow management

Advance database management tools

Business Process


Management (BPM)

Data management


Provide lower cost workforce qualified in medicine/ biology/life sciences/chemistry, etc. to analyze and report clinical data

The best-sourcing model has not only reduced the timelines for the trial process but has led to an overall reduction of costs to the extent of 10-15

%. However, across the board, there is a recognition that larger benefit of this distributed model is that it is allowing innovation to enter an industry that has been averse to change due to perceived risk. From a centrally controlled R&D function, pharmaceutical companies are moving to a best- sourced model with each partner in the eco-system bringing best practices and innovation in their specific areas of expertise. Some examples include:

  • • Optimized use of clinical data: Clinical trial data collection is a highly regulated process. Traditionally, pharmaceutical companies used the data only in the context of a single trial. With the advanced data management capabilities that IT and BPM partners bring to the ecosystem, pharmaceutical companies now have the ability to look at these data across multiple trials, thus increasing the quality of decision making while reducing costs due to the reuse of data.
  • • Incorporation of wearable devices into the trial process: Data collection in the clinical trial process has always required a patient to walk into a hospital or doctors’ office. With the incorporation of wearable devices, activity trackers, and mobile devices, the data collection process has the ability to rapidly evolve. For the first time, companies such as Google and Apple are becoming part of the clinical trial eco-system.
  • • Data Management: Best-sourcing partners are bringing advanced analytics to identify potential patient safety and operational performance issues in a pre-emptive manner, further mitigating risk during clinical trials.
  • • Pharmaceutical companies are now in the process of extending this model to the biology and chemistry side of drug discovery process, the phase that precedes trials and accounts for the remaining 40 % of the drug development process.

Pereira and Malik (2015) in their book, Human Capital in the Indian IT/ BPO Industry, note that while there is a stream of literature that points to cost reduction as a driver of offshoring, recent and more nuanced analyses point to a host of other drivers and outcomes. “The Process and product innovation of emerging businesses is often based on their ability to integrate, develop and reconfigure their internal capabilities and external com?petencies in order to address the changing environmental conditions and needs of their customers (Musteen & Ahsan, 2013, p. 426).” As described in the above case studies, many of the outcomes (i.e., STM disaggregation and distribution, data use for multiple trials, moving upstream to chemistry and biology, wearable devices tracking patient data) would not have come to fruition at such a rapid rate, nor would they have penetrated such markets without leveraging the benefits of best-sourcing (Pereira & Malik, 2015). Undoubtedly, speed to market and the offshoring of ancillary activities free up a firm’s core resources leading to greater flexibility and innovation for the focal firm. However, here we also witness how partner firms leverage skills and resources in innovative ways to address the client needs, which in turn revolutionizes the whole industry.

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