Study Reveals 63% of Pharmaceutical Companies Rely on Third-Party Outsourcing

Aug. 10, 2010

IDC Health Insights recently announced the availability of a new report, Vendor Assessment: Life Science Buyers Guide to Manufacturing and Supply Chain IT Outsourcing (Doc #HI223980, July 2010) that reveals that life science companies are increasingly utilizing third-party outsourcing firms to both augment and/or replace varying aspects of their IT responsibilities, with continued growth in spending on these services expected over the next 12 months.

"With the global recession now in the rear view mirror, life science companies are slowly shifting their primary cost-cutting focus back toward long-term top-line growth," said Eric Newmark, research manager with IDC Health Insights. "Manufacturing and supply chain strategies not only remain a critical component of maintaining lower-costs, but also hold the key to reducing corporate liability, protecting brand equity and optimizing operational efficiency."

Key findings of the study include the following:

In a 2008 IDC Health Insights study, 48% of pharmaceutical companies suggested they outsourced some aspect of manufacturing or supply chain related IT. Over the past two years, this number has risen to 63%, demonstrating the growing importance of outsourcing within manufacturing and supply chain operations.

Industry sentiment and adoption trends all point to continued growth in IT outsourcing between 4-6% over the next 12-18 months, followed by moderate growth of approximately 4% annually for the next 2 to 3 years.

Of the 63% of companies currently outsourcing some aspect of manufacturing or supply chain operations, approximately 18% use only U.S.-based firms, 4% use only offshore firms, and 41% use a mix of both.

Technologies that support increased supply chain visibility and monitoring capabilities, as well as analytics and business intelligence solutions, are expected to be front and center this year.

This report provides a decision framework and a wide array of vendor-evaluative details on the top 12 vendors that provide IT outsourcing services for life science manufacturing and supply chain operations. The vendors include: Capgemini, Cognizant, CSC, HCL, IBM, Infosys, Intelligroup, Satyam, Wipro, Persistent, TAKE Solutions, and Tata Consultancy Services (TCS). The vendors are compared and contrasted across four major components (industry expertise, delivery expertise, customer references and industry focus) and 22 application-specific/functional areas of experience. Information included in this report is meant to serve as a starting point from which companies can launch their decision processes.