STOCKBYTE

Outsourcing manufacturing and clinical-trial materials is an important part of pharmaceutical companies' strategy for drug development and commercialization. The outsourcing model, however, may be applied earlier in the drug-development continuum to include research and development (R&D). Gonghua Pan, associate director and head of the parallel medicinal chemistry (PMC) sourcing operations at Pfizer (New York), explains the company's approach to outsourcing R&D, including the role of offshore contract services providers.

Drivers for increased outsourcing

On an industry-level, Pan outlines the drivers for increasing R&D outsourcing. These include:

• Access to additional R&D capacity
• Access to expertise
• Access to novel enabling technologies
• To focus internal resources on core competencies
• To accelerate speed of development
• To obtain operational flexibility
• To reduce fixed costs.

Pfizer first began outsourcing certain R&D functions in the late 1990s. At that time, Pfizer had a strategic goal to increase the size of its compound collection generated by PMC techniques. PMC refers to using combinatorial chemistry and high-throughput screening to generate large libraries of compounds for testing for biological activity against a disease screen.

"PMC technology at this time was viewed as a specialized technology that was platform-centric, capital-intensive, and IT-intensive, which required a specialized skill set," explains Pan. "The company used strategic alliances to gain access to this technology."

In 1999, Pfizer signed multiyear collaborations to access PMC technology with four service providers: the UK business of Tripos (St. Louis, MO), Discovery Partners International (DPI, San Diego, CA), Arqule (Woburn, MA), and ChemBridge (San Diego, CA). Pfizer ended its drug-library agreements with three firms (Arqule, DPI, and Tripos) in 2005.

During the early 2000s, the business environment for contract drug-discovery services evolved, and several of Pfizer's early collaborators exited the market. Arqule, one of the largest contract research organizations (CROs) in the US, exited the contract-chemistry services business in 2005 to focus on developing its own oncology drug portfolio. DPI sold its drug-discovery service operations to Galapagos (Mechelen, Belgium) in 2006. Tripos sold its drug-discovery informatics division to Vector Capital in 2007, which created a separate and new privately held company Tripos Discovery Informatics (St. Louis, MO).