1. What roles do contract research organizations (CROs) and contract manufacturing organizations (CMOs) play in the drug discovery/development value chain today, and how will their role change in the future?

Generally speaking, we observe a propensity on the part of pharma companies to increase their reliance on outsourcing as they seek to lower their fixed costs (e.g., in R&D and manufacturing), speed up drug development and launch, and focus on core elements of their value chain. This said, outsourcing behaviors vary greatly from one pharmaceutical company to the next depending on their respective tolerance for externalization of key value steps.

Besides these changes in the outsourcing models of pharma companies, other factors will drive up the importance of qualified CROs and CMOs, including the emergence of virtual companies as drug developers and the need for new technologies to re-energize product launch pipelines.

2. How have the requirements by pharma companies changed over the years, and how can suppliers manage to live up to them?

The increasing reliance of pharmaceutical companies on third parties calls for a rigorous selection of a limited number of reliable partner companies with tangible proof of expertise and sustainable operational and financial models. Opportunistic selection based on short-term criteria can lead to an explosion in the number of CRMOs to manage. Working with the wrong party can create a high burden for pharma companies in terms of deliverables and management attention. True partnerships are hard to come by, and experience suggests that they are facilitated by a shared set of values (e.g., safety and quality culture). Closely integrated communication and project management in combination with global operations are becoming more important for larger customers.

3. Which new business models, like project-based or value-based outsourcing, could turn out to be the most promising guarantors for a successful cooperation with the pharmaceutical industry?

We, at Evonik, believe that a seamless integration of our global competencies (e.g., in API and excipient development and manufacturing, drug product formulation development, scale-up, and industrialization) to create unique solutions is at the core of a successful offering. This integrating platform allows for constant addition and activation of new competencies whether developed internally or via external acquisitions. This model combined with flexible business models adapted to the customer's situation affords unique opportunities for long-term value creation for all parties involved.

4. The establishment of shared risk/shared reward partnerships has increased significantly. Can these partnerships accelerate drug discovery and fill up the innovation pipelines?

Flexibility in business and financial models is a prerequisite for many development programs to be born and to be value-optimized. Shared-risk/shared-reward models leverage the innovative and investment power that is needed in most stages of the value chain and, if well-designed and managed, can lead to meaningful value creation for both parties. We believe that the increasing trend to establish such partnerships contributes to reviving innovation pipelines particularly when the partner, like Evonik, can offer a strong combination of differentiated competencies and proprietary technologies.