Decision Making in R&D Outsourcing: A Systematic Approach from the Pharmaceutical Industry

In an increasingly competitive environment, the pharmaceutical industry faces increasing R&D costs and longer development times, which increase a product’s time to market. Therefore, the issue of costs and outsourcing of
R&D is increasing in importance, but systematic approaches for understanding the decision making process on R&D outsourcing are lacking. To address this gap, we present a framework developed in the context of a multinational pharmaceutical company. The framework builds on general make-or-buy frameworks and incorporates specificities of the service and knowledge-driven areas of pharmaceutical research. Tactical and strategic outsourcing considerations are reflected in the framework, which also reflects the increased fine slicing of activities beyond the common dichotomy of core and non-core activities. The framework may be applicable insimilar R&D-intensive settings and it therefore contributes to the emerging area of research into decision
making processes on outsourcing in knowledge-intensive industries.