A recent white paper was released that traces the trajectory over the last ten years of 120 independent for-profit startups in the field of research workflows and scholarly communication. The author, Yvonne Campfens, presented the report at the Academic Publishing in Europe (APE) Conference held January 15-16, 2019 in Berlin. Campfens began the study with three main research questions:
- Do the startups still exist (independently) in 2018?
- If so, how were they funded and how are they doing?
- If acquired by 2018, by whom and when were they taken over?
Established in 2007 in an effort to disrupt and improve ‘research workflows,’ Scientist.com was included in the study, which prompted us to reflect on how the outsourcing model, as a key component of the research workflow, has drastically evolved in the past decade.
To say the last 10, much less 15 or 20 years have seen a continual evolution in organizational outsourcing strategies by pharma and biotech companies is an understatement. One could even say that the outsourcing landscape has not only changed immensely over the last two decades but appears to be nowhere close to slowing down.
Outsourcing as a business strategy was not really discussed until the late ’80s, and the world of drug discovery was by no means an early adopter, especially when it came to R&D. At the time, traditional research organizations were vertically-integrated, brick and mortar spaces where a majority of the research activity was housed within the walls of drug discovery companies looking to secretly gain a competitive advantage.
The changes in the broader biotech industry have been well documented, with large pharma struggling to meet the challenges of a drug discovery pipeline capable of addressing looming patent cliffs and sustaining future growth. As a direct result, the specialized biotech and startup model received a huge boost. Rather than build out a full suite of in-house research capabilities, the majority of these companies focused on a few innovative, tech-driven capabilities. This gave them a competitive edge while utilizing external, third-party organizations to complete the remaining steps necessary to progress their assets to market.
With that being said, the explosion of science-based companies focused on highly innovative science is not restricted purely to drug discovery companies. The global contract research organization (CRO) network has seen massive growth as well. In fact, an article published in 2018 states that the CRO market is predicted to reach $44.4bn by 2021. So, not only has there been an emergence of big CROs offering a wide range of research services to pharma and biotechs, but there are also now thousands of smaller suppliers offering exciting new opportunities for creating better and faster science.
Never before have we had the breadth of scientific talent that we do today, but at the same time the scientific focus of this group has never been so broad, meaning that the experts in particular fields can vary widely in number. While many of these experts still undoubtedly reside in big pharma and big biotech, the culture of entrepreneurship and innovation that currently envelops our industry means that many individuals (and the number is growing) want to sit outside the confines of a large corporate environment and work independently. R&D downsizing, coupled with redundancy from mega-mergers and the rise in the propensity of universities to create spin-outs at impressive rates has thrust many would-be ‘corporate scientists’ into the world of the start-up, further enriching the pool of scientific excellence that is accessible to drug discovery companies on an as-needed basis.
Rapidly changing technology and innovation in the industry means that investing in capabilities becomes fraught with risk. An investment can become obsolete very quickly as new and more advanced methods arise. This is a major reason to access expertise from throughout the CRO network rather than self-invest. The network will maximize utilization of new technologies or platforms for multiple clients, amortizing the expense across channels and clientele. Furthermore, when a new technology is uncovered, CROs will incorporate this into their portfolio or drug developers migrate toward CROs with the new technology, thus having constant access to the cutting-edge innovations without the risk and expense of investment.
In Part II, we will examine the specific reasons and benefits of why individual researchers and research organizations are choosing to outsource scientific services.