Biotech start-ups maximise the value of R&D outsourcing

While outsourcing everything from processing salaries to running computer systems is a common practice in business, it is rare for companies to outsource the early stages of research and development. However, the study, which is funded largely by the Engineering and Physical Sciences Research Council (EPSRC), and is part of a wider project investigating Financial and Organisational Innovation in UK High Technology, proves that this is changing.

Traditionally, it was thought to be too risky to outsource this type of research, but the study of 68 UK biotechs shows new managerial techniques are overcoming these difficulties.

“If you outsource your work and share your knowledge there is the risk, or at least the perceived risk, that those doing the outsourcing work might run away with your ideas,” says co-author Dzidziso Samuel Kamuriwo. “Outsourcing requires managers with a lot of experience to be able to manage projects at a distance and consider the risks that are involved. It relies very much on their project management skills.”

Being able to outsource the early stages of research and development allows companies to save money and provides access to resources and knowledge that were previously unavailable or unaffordable. Small biotechs are also able to take advantage of high quality public science labs.

According to the report, another crucial benefit of outsourcing is the opportunity to work internationally. Companies are now able to capitalise on knowledge and, in many cases, more cost-effective resources abroad, in countries in Eastern Europe, China, Russia and India, for example.

Kamuriwo said the trend to outsource research and drug discovery is not being recognised. “With just over a third of firms outsourcing core research and drug discovery, it struck me that this approach was more common than was generally acknowledged. I think this approach will become increasingly important as more scientific procedures become standardised or industrialised.”