Big Pharma outsourcing will become much bolder in the next 12-18 months as companies attempt to dramatically attack cost structures, according to Covance's CEO, Joe Herring.
Increasingly bold outsourcing will help big pharma cut costs.
The trend will be supported by the looming patent cliff written about in this industry as well as by the development of a strong CRO industry that can take on the extra work. Big Pharma now has direct experience with numerous CROs and recognizes their value in replacing duties once performed in-house. The further benefit of being able to reduce internal staffing is also highly relevant.
Success of previous strategic alliances has been particularly important, said Herring. Many people thought the Lilly deal would fail but two years on both companies are happy with the transaction. Similarly, Sanofi offered its Porcheville, France and Alnwick, UK sites to 30 companies, but it was Covance that could make the deal work. Having made deals with Sanofi and Lilly, as well as Merck & Co, Covance is now the CRO people think of when considering making a strategic transaction, said Herring.
Since acquiring Lilly's Greenfield, Indiana site, Covance has added a number of capabilities while keeping costs down. Furthermore, the deal gave Covance the employees and capabilities to enter the drug discovery support sector which Herring predicts will grow. More deals are expected by Covance thorughout the industry in 2011 and coming years.
Posted by Bruce Lehr Feb 1st 2011.
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