Outsourcing Services In House
How an alternative business model helps companies retain visibility and increase speed to market but remove day-to-day struggles.
The pharmaceutical and biotech industries are consistently looking for ways to bring biologics to market quickly, safely, and cost-effectively.
One way has been to outsource their drug discovery and development efforts. The market research firm Kalorama Information predicts over half of drug discovery will be outsourced to contract research organizations by 2021.
But companies can also insource a CROs expertise to save money and help move their drugs through the pipeline quickly. Insourcing is when a company, in many cases a CRO, is hired by a pharma, biotech, academic or other institute to staff their internal laboratories. The staff hired become employees of the CRO and therefore all of the human resource components of the staff fall on the CRO and not the pharma company. The CRO uses their scientific and operations expertise in running the assays to streamline the laboratory saving the client time and money and relieving the pharma of non-core activities.
Charles River got into the insourcing market nearly two decades ago to help out a single client who needed a lab tech. Out of that evolved a portfolio that now exceeds 7% of Charles River’s international workforce.
Charles River has over 800 scientists, laboratory technicians, and managers occupying “insourced” space in government, academic, and commercial laboratories helping them to run their facilities more efficiently and cost-effectively. The work ranges from managing a vivarium for a leading teaching hospital to helping companies meet regulatory requirements for their biologics. We have dispatched workers to natural disasters, deployed a team to cover an animal research facility when their workers went out on strike, and offered lab support to BSL-2 and BSL-3 labs.
What are some ways insourcing can work?
Let’s say, for instance, that you are a drug company developing a biosimilar to compete against one of the many biologics going off patent. You have the lab space but you lack some of the internal expertise for the development and execution of assays to determine comparability to the originator molecule. Why not look to an insourced model to be able to find and hire that talent for you and then use their internal scientific knowledge to develop, validate, and execute those assays for you. Less time investment from you and more efficient outcomes.
Or maybe you are a research hospital doing millions of federally-funded mouse projects. You might insource a veterinarian to oversee the vivarium and manage the vivarium’s staff.
Strong partnerships can also be built with the public sector using insourcing capabilities. Nearly a decade ago, Charles River opened a 52,000-square-foot facility at the National Cancer Institute (NCI) that supplies NCI scientists with customized mice and maintains a tumor repository.
These are examples of how Charles River is seeing clients use insourcing effectively.
Charles River currently holds a multitude of insourcing contracts and while we are the largest provider we are by no means the only one. A number of other firms also offer insourcing services as companies realize the value of using outside experts to staff their facilities. They help companies apply much needed efficiencies that allow them to cope with the increasingly challenging environment they face. The main differentiator to other companies offering this service, is that we are far from a temporary staffing agency. Our employees are full-time Charles River employees that are seamlessly integrated into the customer’s space executing the customer’s vision and mission.
Insourcing vs. Outsourcing
So what are the key differences between outsourcing and insourcing? While outsourcing allows a company to send work out to CROs that they cannot do internally, insourcing gives companies the ability to use laboratory space that they may already have and keep the operations on-site that they may not have the expertise for but may want to have the visibility and proximity around. Where outsourcing was often built on bids for lowest-cost services, insourcing requires a deeper relationship and partnership between the company and the CRO that is providing the insourcing. What’s interesting though is that insourcing and outsourcing can work together. Companies may have a laboratory that is insourced on site however they have ebbs and flows of work into that laboratory. When the amount of work coming into the insourced lab exceeds what it can handle, why not use the CRO’s outsourcing capabilities as a back-up to the internal lab. You can quickly send out your overflow work and keep the timelines you set in place.
Looking ahead, it is unlikely that insourcing will replace outsourcing or that insourcing will fade away. More likely, we will see companies embrace both tactics depending upon the situation. If a biotech has a new drug in the pipeline and wants to focus on its core business and what it does best, it will likely need insourced staff to keep the trains running on time. Conversely, contract research organizations will continue to provide safety assessment, GMP testing, and, increasingly, early discovery research for large pharmaceutical companies.
In other words, flexibility will be key.