1. What, in your opinion, is currently the single largest trend with respect to outsourcing analytical testing?
DN: In my experience, the single most significant trend in pharmaceutical outsourcing in general, and analytical testing in particular, is the emergence of so-called “preferred vendors”. In the early 1990s there were only a few contract research organizations (CROs) dedicated to serving the pharmaceutical industry. However, there were many CROs dedicated to other applications, particularly environmental testing. Many of these laboratories started either during or just after the environmental “boom” of the 1970s and, as a result of reductions in government funding of environmental monitoring during the Reagan years, were looking for new potential markets and customers. The decline in the environmental market corresponded with the rapid expansion of the pharmaceutical industry in the late 1980s and early 1990s. It was natural for environmental and other CROs to look to the expanding pharmaceutical outsourcing market, and many did so while maintaining their diversification. In the early to mid-1990s more CROs began to emerge which specialized in pharmaceutical analytical testing, particularly for clinical and other biological samples with the rapidly expanding LC/MS technology. These laboratories have increased in number and some have expanded to sizes which rival their innovator pharmaceutical industry customers, with multiple and multinational sites. There are also a number of so-called “boutique” laboratories with specialties such as extractables/leachables testing, inorganic analysis, and (still) analysis of clinical/biological samples by LC/MS. Pharmaceutical companies now consider outsourcing as a business model and operation strategy rather than an ad hoc service for excess workload. This allows companies to maintain flexibility of internal resources and utilize technical capabilities not available in-house. Therefore, more companies are implementing strategic partnerships with larger CROs (i.e., preferred vendors) that can provide a broad range of pharmaceutical development services, including analytical testing. This allows for a long-term collaborative relationship which can streamline business, technical, and compliance oversight and monitoring.
SB: Outsourcing more and reducing internal capacity in areas they are able to justify. As sponsors reduce the number of vendors they use, partnership between sponsor and vendor becomes a critical aspect in the relationship between the provider and the sponsor. The relationship becomes much more fluid with both sides sharing forecasts for future programs/capacity, mutual agreement of metrics that both parties track and review regularly and interactive dialog that serves to build and improve the relationship.
ND: There are more regulatory requests for very specific data related to product and drug development. During the drug development process and subsequent filing of applications, regulatory agencies are requesting additional information (as an example) related to extractables and leachables within drug container/closure systems in an attempt to reduce the risks of anything leaching or extracting into drug products.
RF: Customers are looking for a laboratory that can service both the analytical and microbiological needs in a rapid and accurate manner. Many clients are outsourcing all of the compendial raw material testing and microbiological environmental testing.
2. How, in your mind, has the landscape of analytical testing shifted in the last three years?
DN: The desire for cost reductions and efficiency increases in pharmaceutical development has led to a search for increased outsourcing opportunities and increased consideration for outsourcing, particularly for routing analytical testing. Innovator pharmaceutical companies have also started to organize better internally for outsourcing, many with dedicated outsourcing groups. The increase in numbers and sizes of CROs, along with the preferred vendor concept, has led to increased competition for customers.
SB: It has shifted as stated above to outsource programs that are not core to the sponsor's internal structure.
ND: It has shifted due to the downsizing and merging within the pharma industry. Companies are trying to be more efficient in the drug development process by focusing on their internal core competencies, so we are seeing even within our existing client base more requests to outsource work previously performed in house.
RF: Customers are looking for faster analytical response with a switch from short term solutions to strategic long terms partners.
3. What country/region, in your opinion, is currently leading the way in analytical testing services and why?
DN: North America still leads the way due to greater experience and development of outsourcing infrastructure from the environmental CROs of the 1980s to the pharmaceutical CROs of today. Pharmaceutical companies in North America have also been outsourcing analytical testing to a significant degree since the late 1980s. Europe had a less well developed infrastructure and less experience but is rapidly catching up. Asia has enormous potential due to relatively low operational costs and large talent pools.
SB: Midwest, we are seeing the pharma companies out source more formulation work that they kept inside as well as very specific testing like container closure support and large molecule characterization. While I think the US continues to lead the way, there is much more business and competition from Europe. Certainly, the viability of outsourcing to Asia/India is on the rise.
ND: That’s really hard to say, but if I had to guess the U.S. and Europe because of the more established laboratories and their familiarity with the regulatory environment. That’s not to say there isn’t a lot of analytical testing sent to China and India, but historically established laboratories have more depth of experience and compliance knowledge through their regulatory audit history.
RF: The United States still continues to be the predominant location for outsourcing laboratories with the West Coast leading the way.
4. If things progress as they have the past five years, what can we expect in the next five years, with respect to the outsourcing of analytical testing?
DN: Over the next five years I expect more companies to develop outsourcing as a business strategy, and therefore I anticipate greater outsourcing. Additional drivers of increased outsourcing will be the desire for increased efficiency and reduced pharmaceutical R&D budgets. The increase in the numbers of biological molecules in development as drug products will increase the levels of outsourcing for analytical testing specific to these chemical entities.
SB: Strong development of the partnership model described in #1. A shared interest in continuous improvement leading to cost savings that can be shared between the sponsor and vendor as a tool to manage costs.
ND: There are a lot of smaller analytical and highly specialized laboratories. Contract labs will continue to be asked to perform more technology-based early discovery work. For example, there are greater requests for characterization of impurities and degradation products for small molecules. Biologics and their early discovery support challenges will continue to grow in the outsourcing market.
RF: Customers will continue to look for long terms partners who have invested in expert staff and who comply with international quality standards.
5. In your opinion, what research field currently benefits the most from the outsourcing of analytical testing and why?
DN: So-called “routine testing” benefits the most because it is a commodity item and therefore price driven. Routine testing includes dosage form stability testing, release testing, and analysis of clinical and biological samples.
SB: I don't think there is any one particular field in analytical/CMC services that benefits more than another from effective outsourcing. A sponsor's success in outsourcing, whether it's a need for straightforward overflow capacity or full development of a product, depends on the culture of the sponsor organization and the judicious choice of vendors.
ND: It appears to be leaning more toward biologics now than small molecules in terms of benefit. For example, we see a lot of small companies requiring biologics support testing, such as RNA sequencing, gene expression analysis, microRNA profiling, and multiplex protein profiling. Companies that have the experience and platforms to provide these services will continue to see growth. In addition, those service companies that have cluster computing tools and bioinformatics data analysis capabilities will more preferred for biotechnology and biopharmaceutical companies. Specialty technologies that are emerging in the biologics testing space will continue to add value to drug developers.
RF: All areas of analytical chemistry and microbiology benefit from outsourcing. This ranges from wet chemistry analysis of compendial raw materials, stability testing and storage, analytical method development and method validation services.
6. What recent improvements/methods have been implemented in labs to make the outsourcing of analytical testing a viable option?
DN: The implementation of fully validated “Laboratory Information and Management Systems” (LIMS) that allow CRO laboratories to enter test results directly into customer data handling systems, along with harmonized data acquisition applications software serve to make outsourcing both more efficient and attractive.
SB: Adoption of operational excellence tools and a continuous improvement culture will provide a significant competitive advantage in the marketplace. The ability to understand and drive shorter cycle-time results in improved cost structure for providers and faster turn-around-time of data to the sponsor. These advantages drive greater flexibility in pricing models, scheduling and delivery.
ND: There is expanded technology and methodology available in the contract / outsourcing business sector. The ability to analyze outsourcing vendors and evaluate their technology quickly for outsourcing decisions can be exchanged more readily through social media, such as scientific specialty groups in LinkedIn. In the laboratory environment, the ability to become paperless and deploy increased efficiencies for client access to LIMS (laboratory information management systems) and specialized scientific databases to provide developers access to their testing data in real time is highly desired for decision making. Laboratories are able to continue to build upon their existing methodologies and build portfolios of validated methods to provide clients an easily accessible scientific resource to advance their pipeline.
RF: Use of web services allow clients to see project information and final reports and status.
Daniel L. Norwood, M.S.P.H., Ph.D. Distinguished Research Fellow
Boehringer Ingelheim Pharmaceuticals, Inc.
Stephen Beale, Ph.D. General Manager
Catalent Pharma Solutions
Nancy L. DiGiulio
VP of Operations
BioScreen Testing Services