The pharmaceutical industry is changing rapidly. There is still an ever increasing demand world-wide for new treatments of diseases such as cancer, diabetes, obesity etc. The world-wide pharmaceuticals market is estimated to be $870 B in 2009 and will reach one trillion around the year 2013. At the same time, pharmaceutical companies are working hard to make a business model work, and that relies heavily on their ability to launch block buster drugs. These are products that need to hit the market in time to finance the multi-billion dollar infrastructure necessary to invent, develop, manufacture, distribute and market the new drugs. The top 50 pharmaceuticals share the same business challenges.
1. Rising costs and decreasing productivity
2. A fast growing Generics Industry
In previous postings about the pharmaceutical industry, in general, and project management in that industry, in particular, those issues were discussed in greater detail. Now more than ever, pharmaceutical companies are trying to improve their operational efficiency. There is an emerging trend to strategically outsource entire segments of the R&D process. For quite some time, R&D work was subcontracted to third parties on a project-by-project basis. Examples of this kind of subcontracting are studies, the management of a clinical trial, data analysis etc. As a result, there are a slew of third party vendors called contract research organizations (CRO) that have taken on the role of an extended work bench. In 2007, this industry was world-wide about $18.7 B in revenue and is now estimated to grow about 15% annually over the next few years. In recent years pharmaceutical companies are taking the outsourcing process to an entire different level. Companies like Wyeth and Eli Lilly have begun to outsource entire functions to CROs.
1. Wyeth outsourced clinical data management to Accenture.
2. AstraZenica outsources major portions of their discovery chemistry work to ChemBridge Research Laboratories.
Those deals are indicative of a shift in the sponsor-CRO relationship. What we see happening is what other industries have experienced before. Similar relationships between major brand companies and their vendors exist, for example in the semiconductor, banking and automotive space. These relationships can yield significant productivity improvements if managed correctly. R&D projects are not only crossing functional boundaries but also run across multiple businesses. In this world project managers are becoming the new mid level management capable. They need to be capable of dealing with the different stakeholders in various functions and corporate entities.