Magazine Article | August 5, 2014

A Combination of Functional And Full-Service CROs Supports Strategic Outsourcing

By Kate Hammeke, VP of Market Research, Industry Standard Research (ISR) @ISRreports

Outsourcing has become part of the strategy of just about every business in the drug development industry. Subcontracting various procedures along the stages of development to outside firms adds value to the process by reducing fixed costs, shortening timelines, and offering access to external expertise.

As outsourcing has moved from being viewed as an option to reduce costs to being integral to drug development strategy, the term “strategic outsourcing” can be applied to almost any method of engaging outside providers, whether it is for a single element of the process or multiple steps along the way. 

There are benefits and shortcomings to the three main types of outsourcing relationships — tactical service provider, preferred provider, and strategic partnership — and most contract relationships fall somewhere between a one-off job and a long-term, mutually beneficial relationship. The decision of whether to engage functional service providers for tactical needs or pair up with a full-service provider that can assist with a broader range of activities comes through evaluating the needs for a specific project coupled with the long-term needs and goals of the sponsor organization. However, understanding some benefits and disadvantages of each — in addition to learning what has worked for similar businesses — can offer insight into which practices will bring the most value to your firm.