Report: Pharma Outsourcing Grows At a Sizzling Pace

BY STAFF REPORT

The global healthcare BPO market is growing at a CAGR of 21.4 percent, and the sector commands the largest share (64.3 percent) of the outsourcing industry, says a report from analyst firm MarketsandMarkets.

Increasing R&D costs, low productivity, thinning product pipeline and increasing cost pressures are some of the factors driving the pharmaceutical industry to outsource a larger portion of its projects, the research firm noted.

Outsourcing activity will, however, slow down in the years to come, the analyst firm warned. Given its prediction, the pharma outsourcing market would grow at a lower CAGR of 14.6% from 2011 to 2016.

“The global pharmaceutical industry is slowly moving from the fully integrated model towards the model of outsourcing, where drug companies will utilize the expertise of its partners in clinical research, manufacturing, and other non-clinical services,” the report says.

Major segments that are outsourced in clinical research are clinical trials and central lab services. Non-clinical services that are frequently outsourced are supply-chain and logistics management, sales and marketing, HR, procurement, IT, and others.

Much of these jobs are outsourced to low-cost destinations like India, China, Philippines, and the countries in the Latin American region. India has a major share in payer, provider and pharma outsourcing. China and Philippines are however working hard to challenge India’s dominance.

“Healthcare outsourcing is largely managed in-house because of greater control on activities and less intellectual property issues. Agreements, collaborations, partnership and joint ventures are the most common strategy used by companies to increase their market share and consolidate their market presence,” the research firm said.

The major players in the payer and provider outsourcing market are Accenture (Ireland), MedusInd (U.S.), Gebbs Healthcare (U.S.), Omega Healthcare (India) and Inventive (U.S.).