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Trends in Outsourcing Laboratory Services

Lab professionals who outsource and those who provide contract services share recent developments in outsourcing

Rachel Muenz

Outsourcing is a key tool many laboratories use to meet their stakeholders’ needs. According to leaders in both the laboratory and outsource lab realms, outsourcing is becoming more important as the pandemic continues. Early in the pandemic, with non-essential labs forced to close, many turned to outsource providers to continue serving their customers, according to Neil Chapman, president of Impact Analytical, a full-service contract testing lab in Midland, Michigan. 

“We actually grew 36 percent last year as a testing lab,” Chapman says, adding that in addition to serving several other sectors, because his lab provides testing for the medical device and pharmaceutical industries, they were considered essential and able to stay open throughout the pandemic to support labs required to close down. “They relied on us to provide that analytical support which helped us grow and develop as an organization.” 

Once things began to open up again, Chapman says labs turned to outsourcing to help deal with the backlog of work they faced upon their return. 

Todd McEvoy, PhD, site manager, Chemicals and Pharmaceuticals, at Intertek Allentown, a contract analytical lab in Allentown, Pennsylvania, says his organization has also seen considerable growth over the last year, particularly on the problem-solving side. Like Impact Analytical, Intertek has stayed open throughout the pandemic as they are considered essential, though they did need to do some juggling of shifts to meet COVID-19 safety requirements. 

“We've just seen a significant uptick over the last year, in general across all the industries we support,” McEvoy says. 

Leaders of labs utilizing outsourcing services agree that the need to outsource is growing.  

Arron Xu, senior director of analytical services at INOVIO Pharmaceuticals, a US biotechnology company that develops DNA medicines, says that outsourcing was increasing in the pharma industry even before the current pandemic, and is now even more important. He adds the COVID-19 situation has brought challenges to both the pharma industry and the contract labs that support it, mainly on the clinical side with difficulties enrolling patients for clinical trials. 

Some companies are also seeing an increased need to outsource services they traditionally wouldn’t. 

Christie Bowden, senior group leader and research scientist at Arkema Inc., a chemical and materials company with locations in North America and Europe, says COVID-19 has meant less downtime in Arkema’s labs due to the need to meet increased safety protocols. 

“As a result, lab managers must re-think their approach to getting work completed and identify more creative solutions than traditional approaches,” Bowden says. “These creative solutions would include outsourcing laboratory operations that typically were not outsourced, so that scientists can focus on higher-value tasks.” 

For Arkema, such non-traditional tasks include onboarding new employees, training, outsourcing analyses to handle backlogs, as well as instrument troubleshooting and preventive maintenance. Bowden adds that while outsource providers just supported traditional laboratory needs such as instrument operations and consumables in the past, many larger vendors are becoming more of a “one-stop shop” for non-traditional needs such as those mentioned above, as well as recruiting, software development customization, optimizing workflows and asset utilization, and consulting. 

All four leaders expect the increase in outsourcing to continue even after the pandemic. 

“Moving forward, I expect there will be a continued need to outsource more laboratory operations and that doing so will become the ‘new normal,’” Bowden says. 

Chapman echoes that thought, adding, however, that labs will be less likely to do full lab outsourcing contracts, instead opting to outsource on an as-needed basis—a trend he noticed even prior to the pandemic. 

“I think clients are realizing now that they don't necessarily need to keep all of the services in-house—it becomes really a pay-as-you-use service when you use an outsource laboratory rather than a fixed cost,” he says. 

Meeting pandemic challenges

Other recent changes in outsourcing have increased the importance of clear, concise communication between labs and outsource service providers. As with almost every industry, travel and in-person meetings between outsource providers and their clients has largely been replaced by virtual options. 

McEvoy says Intertek had already been doing virtual meetings and calls with clients for a while, but they have simply improved at them during the pandemic. With people less willing to travel, he says these virtual meetings will likely continue to be common practice post-pandemic. 

“We got better at being more specific about…what details need to be discussed. We recognize everyone is extremely busy these days so creating more focused virtual conversations reduces the need to have multiple conversations on the same topic,” he says. “Overall, I think we've gotten better at the whole virtual environment.” 

Communication has also been critical for Impact Analytical to meet the needs of clients and set clear expectations for the labs they serve, Chapman adds. 

“If you can catch a problem very early on in the cycle, it can be fixed very quickly,” he explains. “If that problem is not captured early on, by the time it gets addressed, it's not just a little problem, it's now a huge problem, timelines get missed, delivery dates get missed, and everybody gets upset. So, we insist on having that regular communication with our clients just to keep things on track [and] to make sure things aren't being missed.” 

For Xu, virtual tools have been essential in overcoming the challenges the pandemic has posed to his industry. The limited numbers of volunteers and staff willing and able to travel to a site for clinical trials due to COVID-19 safety concerns and protocols has affected the ability of both pharmaceutical labs and their contract partners to meet deadlines. 

“There used to be a lot more visiting, for example, the clinical team to the clinical laboratory to the clinical site,” Xu says. “Much of those [visits] are [now] being conducted remotely, through [virtual] meetings, data sharing,” and other tools. Those virtual options are also now being used to conduct clinical trials virtually—known as decentralized clinical studies—so patients don’t need to physically go to a site to participate. 

In terms of outsourcing challenges in general, Bowden says selecting the right outsource provider and product can be difficult. Carefully examining all the options and networking with other laboratory managers to get their feedback on outsourcing is essential to making the best choice, she adds. 

“At Arkema, we frequently share learnings across our different analytical labs to understand the pros and cons of certain outsourcing options,” Bowden says. “We also focus on developing and maintaining strong relationships with our vendors and keeping abreast of new vendor solutions and how we can benefit from them.”  

She adds that Arkema focuses on outsourcing routine work so their staff can focus on higher-value-added work, such as solving complex R&D challenges. When it comes to analytical labs in general, any time scientists are working in the lab performing analyses is higher value, Bowden explains. 

Other trends 

On the pharmaceutical lab side, Xu says most companies have limited resources and it’s important to prioritize them. Most pharma companies focus their own resources on the early development and discovery stage, and rely on outsourcing to support routine operation, but there is now a growing trend to outsource even early research and development work. The companies doing this sort of outsourcing are known as virtual companies. 

“That virtual company is made up of a small number of senior level scientists—they understand the biology, understand the drug development process very well, but yet, they have very little [and] in some cases, virtually no laboratory capability or capacity,” Xu explains. 

Chapman sees such virtual or small pharma outsourcing increasing on his side as well, where researchers will contract out almost all aspects of the laboratory work, meaning huge cost savings from not having to own and operate a lab themselves, as even a basic small lab can mean $5-10 million of investment. 

“You're better to use a contract lab that already has the people, expertise, and hardware to deliver those services,” he says.   

Outsourcing in the future

Going forward, Bowden can’t say for certain if the amount of outsourcing her lab is doing now will change, but that it will likely increase. 

“We expect some added level of outsourcing; however, we need to keep on top of current trends and our department’s needs so that we can evaluate the gaps and determine what we need to outsource,” she says. 

For many companies, including Arkema, finding qualified staff has become more difficult, so they’ve been turning to recruiting services more often. 

“Since it is so difficult to find qualified candidates with the needed skillsets, we need to leverage recruiters,” Bowden says. “Historically, we utilized recruiters for very high-level positions, but now we are finding the need to collaborate with recruiters for many positions.” 

Xu says his company is looking at eventually outsourcing more in the earlier stages of drug discovery, looking for the right expertise to assist at that stage, while in the later stages of drug discovery and development, the capacity the outsource lab provides is more important. 

“When we're looking at someone that will be able to support us, it's going to be driven [by] the needs at different stages of the project life cycle,” he says. “In some cases, we may be looking at just a laboratory with some very nimble technology and new technology that really will bring us some good information. And in some cases, we may be looking at a much larger outsource laboratory with integrated services, from discovery to site operation to logistics, and even some regulatory expertise as well.” 

While the technologies and services contract labs offer will likely change going forward, the need to outsource will not. 

“I think the different models will be highly selective,” Chapman says. “I don't think you'll see full outsourcing or very many full outsourcings. I think you'll see projects and business streams being sent out to contract labs because those seem to be the ones where the end user gets the most financial benefit while still maintaining control of their product.”

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