10.08.2015 |

LOGFILE No. 45/2015 – Reasons for Outsourcing

Reasons for Outsourcing

An excerpt from the GMP MANUAL

by Dr. Frank Böttcher

The manufacture and testing of medicinal products have become far more complex in recent years due to new manufacturing and testing processes for medicinal products, and the growing number of regulatory requirements that apply to these products. The latter is caused by a continuously growing awareness for safety issues and the resulting political decisions. At the same time, pharmaceutical companies are facing increasing cost pressure because of efforts being made to limit the cost of medicinal products in health care systems. For this reason, pharmaceutical companies must not only ensure the quality of their products, but also the cost effectiveness of their processes.


The companies are now starting to focus on their "core competencies". They frequently outsource tasks and services related to the manufacture and testing of medicinal products to other specialised companies that can carry out these tasks and services faster and in a safer and more cost-efficient way than the pharmaceutical company itself.

The reasons for outsourcing services to a company are as many and varied as the types of services that can be outsourced. In some cases, the pharmaceutical company does not even have a manufacturing authorisation, and specialises exclusively in the marketing of a product, for example. The entire manufacturing, testing and release process must then be outsourced to a third party. In other cases, services are outsourced in order to gain access to special technologies that are not, or are no longer, available in the company, or to gain access to technologies that are available for limited periods only or to a limited extent. Services are not only outsourced for technical reasons, but for purely economic reasons also.

It may, for example, be too expensive to develop specialist expertise that is rarely required in the company itself, especially if the expertise only plays a minor role in the value-added chain of the product. In those situations, it makes sense to assign the activities and processes to contractors. This process is referred to as outsourcing(outside resource using). Generally, outsourcing refers to the purchasing of services from external providers.

Reasons for outsourcing

Financial benefits

Access to third-party expert knowledge

Access to specialist equipment and technology

Specialist technology bottlenecks

Staff or schedule bottlenecks

Faster completion of projects

Creation of in-house resources

Figure 1: Reasons for outsourcing

Services are usually outsourced to third-party service providers if a company cannot provide the required services itself for technical or economical reasons.

Outsourcing might be required for a limited period, in individual cases, or permanently. The required business processes must be defined in the QA system of the contract giver to ensure that a standardised outsourcing process can be carried out in a uniform and safe way and that it complies with the regulatory requirements.

Although outsourcing adds to the complexity of the manufacturing and testing processes for medicinal products, it can also reduce the cost of a product. This applies, in particular, if a product is only rarely manufactured or tested by the contract giver, whereas the contract acceptor can manufacture or test entire series of similar products or possesses with more modern equipment.

In the case of different development projects or projects involving the production of clinical samples, it makes sense to outsource services if the contract giver cannot provide additional capacities on top of their day-to-day capacities.

Irrespective of whether the outsourcing of services to third-party companies is a standard procedure (strategic outsourcing) or is only carried out in individual cases (tactical outsourcing), the contract giver must ensure that outsourcing does not have a negative impact on the quality of the finished product. For this reason, the legislators have established a number of regulations that govern the outsourcing of manufacture and testing.


Dr. Frank Böttcher
Labor L+S AG
Bad Bocklet
E-Mail: frank.boettcher@labor-ls.de

The text is an excerpt from Chapter 19.K Outsourced Activities of our GMP MANUAL.