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John Moore  
Pharma Outsourcing to Increase; Ing and Sandvik's Already Has
By John Moore, Ziff Davis Internet


Pharmaceutical companies may become more active in outsourcing as they look to trim expenses.

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That's the view of outsourcing consultants who follow the field. Vicki Tauscher, a vice president with EquaTerra, said she has seen increasing interest in outsourcing from pharmaceutical companies that aim to increase returns to shareholders and drive costs down.

"For the companies with whom we are working it is almost an edict," Tauscher said. "It is understood that each organization needs to look at more cost-effective ways of service delivery." She said EquaTerra is working with four pharmaceutical companies that are examining outsourcing.

Gus Vlak, a partner with Katzenbach Partners, added that the cost-per-molecule of bringing new products to market continues to rise, which compels pharmaceutical companies to tighten their belts.

Affiliated Computer Services Inc.'s $100 million pact with GlaxoSmithKline (GSK) provides a recent example of big pharma outsourcing. GSK said the company's outsourcing goal is to improve service levels and lower costs.

Another trend: a greater willingness among pharmaceutical companies to pursue offshoring arrangements. Tauscher said her pharmaceutical clients are actively exploring the cost effectiveness of offshoring. The Channel Insider Special: Managed Services in the Channel

Pharmaceutical companies have already moved clinical trials offshore. The clinical trial process is a natural for outsourcing, consultants suggested.

The world of clinical trials has more of an "external emphasis," noted Niko Canner, founder and managing partner of Katzenbach Partners. He noted that clinical trials involve investigators in various medical centers rather than "people whose paychecks come from a pharmaceutical company."

Other candidates for offshoring among pharmaceutical companies include application maintenance and human resources, Tauscher said.

More Dutch Outsourcing?

Ing Bank, the retail banking arm of Amsterdam-based Ing Group, may be trying to follow the footsteps of ABN Amro, another Dutch financial services company.

India's Business Standard reports that Ing Bank plans to pursue an outsourcing pact similar in scale to ABN Amro's effort, which was announced earlier this month. Amro awarded $2.2 billion in contracts to five vendors: Accenture, IBM, Infosys Technologies, Patni Computer Systems Ltd. and Tata Consultancy Services.

A spokeswoman for Ing Bank, however, suggested the outsourcing project may be more modest in scale. She said the company is considering IT outsourcing in the Netherlands. Ing Bank offers retail banking services in the Netherlands, Belgium, Poland, Romania and India. Ing Bank does not operate in the U.S., but Ing Group's direct retail banking and insurance units operate in the market.

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