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INSIGHTS JULY 2014 46 CONTRACT SOURCING LIFESCIENCELEADER.COM T J I M Z H A N G , P H . D . GLOBAL DRUG DISCOVERY OUTSOURCING MARKET GAINING MOMENTUM By J. Zhang Global Drug Discovery Outsourcing Market Gaining Momentum There is no doubt that global pharmaceutical companies have a desperate need to develop better drugs with high success rates. Consequently, more drug companies are utilizing external resources, while still constantly streamlining their internal R&D; systems. oday, externalization has become a core strategy among pharmaceutical and biotech- nology companies for all types of activity, including R&D; and manufac- turing. In fact, the original concept of outsourcing has now been expanded to include all types of collaboration, includ- ing partnership and technology licensing. Drug discovery has been one of the core sectors of the long value chain of drug R&D.; However, in recent years, almost all major pharma and biopharma com- panies have focused on developing late- stage drug candidates due largely to the global financial crisis and the pressure of patent expirations of blockbuster drugs. Drug discovery research has been less focused, with many companies primar- ily relying on external resources, includ- ing R&D-focused; biotech companies and professional discovery research service providers (e.g., CROs). This focus on late-stage development is now making many large pharma and biopharma companies realize that their early-stage pipelines have become thin. Drug discovery research has, thus, recent- ly regained focus among these companies. However, their research strategy in this field has changed significantly. NEW STRATEGIES FOR DRUG DISCOVERY RESEARCH New R&D; strategies are constantly evolv- ing in global pharmaceutical and biophar- maceutical industries. The virtual drug discovery model for small molecules that is popular with R&D-focused; small bio- tech companies is now becoming accept- ed by the large players in the industry. Some of them are currently practicing this model in various therapeutic areas. Meanwhile, all drug companies have now recognized that early-stage drug dis- covery is not just for identifying a new medical (either chemical or biological) entity for a target. Rather, it is about vali- dating the identified therapeutic target and better understanding the disease biol- ogy, pathology, and interactions between the compound and the target (as well as those off-targets). Thus, biology-guided drug discovery has become a new trend in today 's pharmaceutical industry. Consequently, major pharma and bio- pharma companies are more focused than ever on understanding disease biology in order to have more accurate therapeutic targets and to employ new technologies to truly improve R&D; success rates. Besides traditional tasks such as lead discovery and optimization, pharmaco- logical property study and optimization, the disease biology-incorporated drug dis- covery now also includes the discovery and validation of biomarkers and proof of the therapeutic concept in in vitro con- ditions. This integrated, cross-functional discovery research methodology is now widely practiced. NEW DRUG DISCOVERY OUTSOURCING STRATEGIES Along with the change of their discov- ery research strategy and practice, major pharma and biopharma companies have been shifting their outsourcing strategy from a risk-sharing emphasized model to a more technology-concentrated part- nership. Discovering new therapeutic targets and thoroughly validating them have become the new priorities of drug discovery research. The integrated drug discovery outsourcing model has become the prevailing trend. To this end, drug companies need the involvement of academia in early drug discovery more than ever. Almost all glob- al major pharma and biopharma compa- nies have forged close partnerships with a number of academic research institu- tions in recent years. Moreover, they are increasingly integrating human genetics research into their discovery and devel- opment programs. Genomics and pro- teomics have been widely employed not only in drug development, such as for the development of companion diagnostics and patient stratification, but also in drug discovery, such as for target identification and validation, safety biomarker develop- ment and application, and development of novel antibody drugs. In all these R&D; activities, academia is playing increas- ingly important roles. The new outsourcing strategy also is creating broader collaborations, not only with peer competitors, technology-bear- ing biotech companies, and professional outsourcing service providers, but also with academics, for both drug discov- ery research and new therapeutic target identification and validation. The latter includes not only pure research on disease biology but also discovery and validation of new biomarkers and their applications. 0 7 1 4 _ C o n t r a c t _ S o u r c i n g . i n d d 1 0714_Contract_Sourcing.indd 1 6 / 2 3 / 2 0 1 4 2 : 5 6 : 5 4 P M 6/23/2014 2:56:54 PM