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If R&D is the lifeblood of the pharmaceutical industry,

then analytical testing is the DNA of all pharmaceuticaldevelopment and production operations. Even in times

of drastic cost cutting across the board, industry-leading

drug-makers continue to spend large sums on R&D in order to

rejuvenate their pipelines and pursue a steady stream of suc-

cessful products. These organizations inevitably invest in ana-

lytical testing to support their product development from early

stage development to commercial manufacturing.

AN ESSENTIAL STEP

In bringing novel drugs to market, developing the necessary

methods to analyze intermediate drug substances and finished

drug products is an essential step in ensuring the quality of

the final product. Pharmaceutical companies have frequently

used contract laboratories and contract research organizations

(CROs) for all or part of their analytical development and test-

ing requirements. However, following the implementation of the

FDAs process analytical testing (PAT) initiative in the 1990s,

the subsequent and more pressing need for real-time analyti-

cal results gradually migrated these activities upstream to astage where manufacturing divisions began performing analyti-

cal testing. In addition, as the industry continues to adjust to

rampant acquisitions and consolidations that blur the lines

between pure CMO and CRO organizations, drug-makers are in-

creasingly starting to look to CMOs for pharmaceutical analysis.

Should this be the case?

The pharmaceutical analytical services sector mainly com-

prises companies that help businesses to manufacture, con-duct research & development, and validate and execute GCP,

GLP, and cGMP analytical methods that range from routine to

highly complex programs. Pharmaceutical analysis is a branch

of practical chemistry that involves a series of processes for

identification, determination, quantification and purification of

a substance, separation of the components of a solution or mix-

ture, or determination of the structure of chemical compounds.

The substance may be a single compound or a mixture of com-

pounds and may exist in any dosage form.

FDA REGULATIONS

Recently, a greater number of FDA safety regulations and

consumer lawsuits have led to increasingly rigorous testing

requirements and scrutiny of finished pharmaceutical products

prior to sale. The impact of this increasingly regulated environ-

ment is the unprecedented pressure on drug developers and

manufacturers to ensure the safety and quality of their prod-

ucts. In turn, organizations offering analytical testing services

- primarily CROs/CMOs - have thrived because of increasedGovernment regulation of pharmaceutical products, with 5.0%

growth expected in 2011 alone.

With costs escalating at every stage in the drug development

lifecycle, increased outsourcing to emerging markets is cur-

rently providing the impetus for topline growth in the industry.

It has been projected that emerging markets will account for

over two-fifths of global GDP, and 80% of the worlds population

by 2015. Contract manufacturers and researchers in these re-

gions are increasingly adhering to global regulatory standards,

which will generate additional growth through offshore provid-

ers of analytical testing. With regulatory scrutiny continually

tightening, the industry is expected to grow at an average

annual rate of 3.9% through 2011. This represents a huge op-

portunity for the industry as a whole but more specifically for

organizations that provide analytical chemistry services.

Testing labs have enjoyed an advantage during the recent

economic downturn because many clients havent abandoned

their testing regimes for drugs under development. And re-

gardless of economic conditions, government regulations stillrequire manufacturers to test their existing products to ensure

they comply with federal law. However, the recession has re-

duced the rate of revenue growth due to higher company R&D

costs, so with fewer products in development, the growth in

the demand for laboratory testing of new products slowed.

Pharmaceutical AnalyticalTestingWho should be doing your testing a CRO or CMO?n By Victor Coker of Nice Insight

n 22 NOVEMBER/DECEMBER 2011|PHARMACEUTICAL PROCESSING

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n OUTSOURCING

CMO's rate higher in four of the six drivers that influence analytical testing outsourcing.

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n OUTSOURCING

FIVE YEAR OUTLOOK

Over the next five years to 2016, the industry is projected to

grow at a faster rate as companies return to investing in newproducts and, in turn, increase their R&D expenditure. The

laboratory testing services industry is forecast to grow at an

average annual rate of 5.6% to reach $22.0 billion over the next

five years. An anticipated increase in government regulation of

consumer focused products and greater pressure on manufac-

turers to deliver high-quality goods will support this continued

growth. At the same time, it is expected that the industry will

continue a trend consolidation demonstrated in recent years

since larger testing laboratories that service a wider range of

sectors have proven to be more profitable.With the landscape of potential contract service provid-

ers constantly changing and the unpredictable reconfigu-

ration of service offerings, the choice of an appropriate

partner to outsource analytical services to during drug

development can prove to be challenging. Through in-depth

conversations with pharmaceutical and biotechnology in-

dustry thought-leaders, Nice Insight established four key at-

tributes that decision-makers should consider when select-

ing an analytical testing partner. These are: Regulatory compliance to CGMP-CGLP guidelines.

Accessibility (professional compatibility that influences the

daily execution of the project).

Affordability (defining the cost basis of the project).

Quality (correlates directly the to the organizations capac-

ity and competency to perform analytical testing).

To investigate if there were any clear advantages to selecting

a CRO partner over a CMO provider for pharmaceutical analyti-

cal services, Nice Insight reviewed Brand Index data from its

latest CRO/CMO report. Firstly, we identified all of the CROs

and CMOs that provide analytical services. Then we averaged

CRO and CMO performance relative to each of the six industry

drivers that comprise the customer perception score to estab-

lish a baseline measurement for each type of provider.

EMERGING PATTERNS

We identified a few patterns. CROs and CMOs rated similarly

on reliability and quality for pharmaceutical analytical services,

with no significant differences.This could be attributed to the evolution of best practices

across the industry. For example, as instrument technology

(e.g. high performance liquid chromatography (HPLC), mass

spectrometry) continues to develop, expertise in its use will

inevitably grow, migrating analytical testing from a process that

was strictly for early discovery work to one that includes final

product and raw materials release testing.

We also found that CMOs rated significantly higher in four

of the six drivers that influence outsourcing. CMOs were per-

ceived as more affordable than CROs for pharmaceutical analy-

sis, and rated higher in terms of accessibility than their CRO

counterparts. Respondents found CMOs to be more productive

and also rated them higher on regulatory compliance when

compared to CROs who provide pharmaceutical analysis. This

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n P H A R M P R O . C O M

Nice Insight Survey Methodology: The Nice Insight Pharmaceutical and

Biotechnology Survey is deployed to 40,000 outsourcing-facing pharmaceutical and

biotechnology executives on a quarterly basis/four times per year. The survey com-

prises 1200+ questions and randomly presents ~30 questions to each respondent in

order to collect baseline information with respect to customer awareness and cus-

tomer perceptions on 400 companies that service the drug development cycle. Five

levels of awareness from Ive never heard of them to Ive worked with them

factor into the overall customer awareness score. The customer perception score is

based on six drivers in outsourcing: Quality, Accessibility, Regulatory Compliance,

Pricing, Productivity and Reliability; which are ranked by respondents to determine

the weighting applied to the overall score.

indicates that CMOs offering pharmaceutical services have not

had a negative impact on the expected quality/outcome for

pharmaceutical analysis, as is sometimes the case when non-core players enter a new field and start to compete. n