Finnish Pharma outsourcing Business – Keys to Success

The global outsourcing trend of the pharmaceutical industry is driving large amounts of business to a small group of clinical research organizations (CROs) that possess the capabilities required to handle the late stage needs of leading pharmaceutical companies. By forming mergers and strategic partnerships with their pharma clients, the CROs aim to offer a better and increasing service portfolio.

The tightening competition of customers and the downturn of the investment markets are posing growing challenge for the Finnish vendors serving the pharmaceutical industry. Also the number of clinical trials has seen a significant decrease during recent years.

According to a recent survey conducted by Culminatum Innovation Oy Ltd, the main challenges for the Finnish vendors are their small size and limited service portfolio. Improvement in business knowledge and long-span marketing would also be required.

“Majority of the Finnish vendors are small companies with limited resources, not adequate for international marketing. The international commercialization of services is however a necessity, as there are not enough domestic customers”, says the author of the survey, Marjut Ranki-Pesonen from Medical Interscience Talents M.I.T. Consulting Ltd.

Currently there are 43 pharmaceutical outsourcing vendor companies in Finland whose range of services cover the entire value chain of pharmaceutical R&D, from nonclinical contract research and clinical trial services and contract manufacturing to biostatistics, bioinformatics, and diverse special services. In 2010, the turnover of the sector was €162 M.

Competitiveness through networking

Successful vendors have understood that in order to maintain the competitive edge, business must be built on solid core competence. Many of the Finnish service-providers are spin-offs from university groups possessing some unique skills in areas such as vaccine research, carbohydrate research, organic chemistry, neurobiology, cardiovascular diseases, and cancer biology.

“Reliability, quality, flexibility in service provision, professional business know-how, and long-span marketing are the keys to success. The fact that smaller pharma clients are best served by outsourcing vendors of equal size is a clear possibility for Finnish vendors – assuming, that through networking they are capable to provide the whole array of services the customer needs”, Ranki-Pesonen reminds.

Service-sector integrating into drug discovery

”The global pharma´s need to outsource R&D is constantly growing”, envisions Elina Niskanen, the chair of the board of Admescope Ltd., a Finnish company providing research services in drug metabolism, drug-drug interactions and quantitative bioanalysis.

As a special challenge for small vendors, Niskanen points out the capability to find the balance between the chosen business model and the core competence-based brand. The business model has to be flexible enough to serve the customer´s needs as well as adjusting to the fast changing market. On the other hand, the stability of the brand helps the services to stand out, even with limited resources.

“The tightening competition will push small vendors to merge in order to cover a larger service portfolio and to conquer new market areas. However, I believe there will also be market for niche-players with high expertise, such as Admescope”, she says.

Sirpa Pietilä

Culminatum Innovation Oy Ltd seeks to improve the international competitiveness and attractiveness of the Helsinki Region. The Verkkovoimaa -project supports networking and internationalization among expert service companies in the life science sector.  Operations of the project are co-financed by the European Social Fund.

Finnish vendors serving the pharmaceutical industry – What is required for business success?
The Survey

• Culminatum Innovation Oy Ltd