What drives CRAMS outsourcing of research in the chemical and pharmaceutical industry ?

In part I. of the article series we have discussed the political and macro-economical implications of outsourcing. In part II. we have covered market size of outsourcing in pharmaceutical research and manufacturing.

 The pressures on global pharma companies to outsource are growing for several reasons. An ageing population in the developed countries is straining healthcare budgets. To manage cost inflation in healthcare, most Western governments are looking for cheaper generics and lower cost drugs. The poor efficiency of the pharma R&D pipeline, “the epic problem –low productivity of the R&D pipelines”, despite R&D spending of 18% of revenues, as well as expiring patents for blockbuster drugs, put pressure on profit margins.  With new drugs becoming more difficult to develop, pharma companies cannot sustain large R&D spending unless new blockbusters are developed cheaper.