Top 5 Reasons for Outsourcing Your R&D

To innovate, a variety of expertise, skills, and equipment are required. Things that we don’t necessarily have in-house. So, outsourcing your R&D naturally appears like the right solution then.

You could say it was easier to outsource in the past: the process of outsourcing was more of a give-and-take between two already-knowing-each-other parties: “I’m glad I could help with such-and-such analytic services” or “Maybe I could give you a hand with that measurement.”

Nowadays, we face such an abundance of service supply possibilities. Numerous CROs (or contract research organizations) are emerging from the academic world offering their expertise in specific processes. Traditionally doing on-demand research, offers have evolved to become catalog-based deliveries.

From the need’s point of view, two 2016 Nice Insight surveys reveal that outsourcing is more common in the pharma/ biotech industry. Where the majority takes advantages of CROs, other only outsource tasks to contract development and manufacturing organizations (CDMOs) and/or contract manufacturing organizations (CMOs).

But still, you might be questioning the reason why you should outsource. Here are the top 5 reasons for outsourcing your R&D.

Benefit from the expertise and innovation of an expert company

“One can only hope that the commercialization of science will provide investigators with more channels and greater opportunities to accomplish their goals and test hypotheses”, said David R. Smith from University of Western Ontario when interrogated on outsourcing and commercialization of science.

Outsourcing offers scientists clear advantages. It opens doors to work with different companies and academic groups. It also has lots of different expertise within reach, which means making partnerships and benefiting from the knowledge of experts to pursue innovation.

Interestingly enough, the insight of Dr. Smith coincides with the first reason why a lab/company outsources R&D. According to a study from the R&D magazine, they outsource to have expert companies performing their lab’s non-core activities.

Consider a lab that works on understanding mechanisms of the Zika virus to develop a diagnostic kit. The researchers would need to get some partners on biomarkers research to ask them for specific synthesis or testing. Working with experienced experts will increase the scientific value of the project.

Each lab has its own expertise, the necessary knowledge, and equipment that relates to it. If the research requires a specific experiment that cannot be carried in-house, outsourcing is a serious option to consider. Other options would be partnerships, training, pivot in the research.

Hiring a CRO is probably of lower investment and improved performance on given tasks. And this brings us to the second reason for outsourcing your R&D, which is saving your money.

Optimize your costs

As Kathy Ramirez-Aguilar, CU Green Labs Program Manager at the University of Colorado Boulder said: “Two general components of overhead costs [are] administrative costs (capped at 26%) and facilities costs (not capped.)”

The process of outsourcing R&D reduces cost and enhances performances in a given activity according to many companies.

Not having to pay for a facility or the equipment used for punctual projects has proven to be a capital savior for companies. In addition, they can spare money on wages and training for specific devices.

Take the example of water quality measurement needed at a specific time. What are the options? Buy a specific material, do the training with video on the Internet and make the measure. This is a high-cost option. Another option would be to hire a company that would do it for you. Then, you can get official accreditation, and there is no need for the time and the investment on the equipment.

To be short, there are three items you should consider when facing the dilemma of outsourcing vs. in-house investment: the cost of equipment, the cost of maintaining the equipment (consumable, periodic calibration, etc.) and the personal cost. Don’t forget to estimate the personal cost when you want to initiate a new activity vs. outsourcing a test, analysis or any kind of process. It comprises the time you will need to make the purchase, the time needed to train the team to the process/equipment, and the time of maintenance.

Avoid capital investment

On the one hand, while a lab practices exclusively one process, they can invest in large or expensive devices. They might return their investment by offering the service to other labs. It adds up pretty well if you know that the United States Code of Federal Regulations (2017 version) stipulates that “during the time that equipment is used on the project or program for which it was acquired, the non-Federal entity must also make equipment available for use on other projects or programs”. If you do have money to use for a piece of large equipment that you are going to use daily (or so) you should consider outsourcing the expertise. That could help remunerate the significant investment.

On the other hand, contracting with another company means a lab does not have to buy large equipment. Indeed, buying lab equipment often represents a major long-term investment.

Concentrate on your core expertise

Companies and labs can identify their core expertise by looking at what they can do to develop new hypotheses, products and/or services.

When you outsource the tasks that are not part of your core expertise you are able to concentrate on the ones that are part of it. In the meantime, people that are working in your lab are free to engage in whatever other important tasks they need to do. How is that? Because they have time. In short, outsource to keep your resource!

Develop strategic alliances

Choosing an outsourcing partner means creating a relationship between labs and/or companies. And that can be very useful for building a consortium for example.

Among other things when looking for project funding money, especially when you know that as a general guideline for European projects, a minimum of 3 partners from 3 different member states is required for the assembly of a dossier according to the recommendations of the European Commission.

As you read through this, you probably grasp the main message about outsourcing your R&D needs: there are a lot of advantages, and here we only commented on the five most essential.

Then, you might begin to understand that outsourcing your R&D and seeking partnership are two very close notions.

The bottom line is that the choice can be complex of how and with whom to outsource, but every lab can leverage from expertise, equipment or technology provided by the right partner.