The Benefits of Life Sciences R&D Externalization – “To Go Far, Travel Together”


Externalization has been a buzzword in life sciences R&D, particularly in biopharmaceuticals, for several years now. It’s estimated that 58 percent of total R&D spending will be on external sources in 2017 - up from 33 percent in 2011.

Atrium Research defines externalization as “the pursuit of a fully or partially virtualized R&D model integrating partner companies with specific skills or capabilities.” This includes acquisitions, licensing, jointly-owned IP agreements, and more. It’s being driven by desires to lower costs, share risk, ignite innovation, increase agility, and - in general - put more (and fresher) eyes on problems.

External IP’s Outsized Impact on Late-Stage Pipeline Value

Research shows it bears fruit. Accenture reported that, over the past decade, 60 percent of innovator small molecules and 82 percent of innovator biologics were rooted outside of big pharma. 

Likewise, Deloitte discovered that external sources of innovation continue to have a significant impact on late-stage pipeline value (though not quite as much as seen from its analysis the previous year). Over half of the 12 companies studied were generating the majority of forecast late-stage pipeline revenues from external IP.

There are challenges to externalization and virtual R&D models, however. From an IT perspective, the practical challenges involve integrating the informatics ecosystem and identifying standards to make it easier and more efficient for organizations to work collaboratively.

Atrium Research outlined externalization’s impact on IT:

  • Multiple workflows are dependent on a growing number of partners
  • There are wide differences in vocabularies that often change
  • IP management practices differ among partners
  • There are different platforms and software to support
  • Materials must be distributed globally
  • There is low visibility into all potential system users

The report concludes that “R&D virtualization is the biggest challenge facing biopharmaceutical organizations over the next 10 years.”

Standardization: Tackling the Problem of R&D Virtualization

To that end, a variety of foundations, alliances, and organizations have emerged to solve some pre-competitive or non-discretionary challenges that plague the industry as a whole. They are working to create standards and methods of working, through improved collaboration within the industry. Examples include:

  • tranSMART Foundation - is building an open-source/open-data data sharing and analytics platform for translational biomedical research 
  • Allotrope Foundation - is building a “Laboratory Framework” to improve efficiency in data acquisition, archiving, and management
  • TransCelerate BioPharma - seeks to improve health by simplifying and accelerating the R&D of innovative new therapies
  • PRISME Forum - brings together information systems management executives to enhance the efficiency, effectiveness, and impact of IT on biotech and pharma R&D
  • Pistoia Alliance - brings life science companies, vendors, publishers, and academics together to lower barriers to innovation in life sciences R&D

John Wise, executive director of the Pistoia Alliance, acknowledges “we are in the age of externalization.” He has seen pharmaceutical executives shift from internal paradigms to collaborative ones, though he acknowledges some still have not. “I’m sure they are concerned about whether or not they should be following, and if they’re not, do they have good reasons not to,” he said.

There is this ambition that externalization will create more efficient R&D, will encourage innovation, and will drive real value to the biopharmaceutical industry in the release of new products to meet our medical needs more quickly,” he said. 

Many of the obstacles to innovation are shared obstacles, what Wise describes as “the cost of doing business.” These include a lack of information standards, or regulatory hurdles that affect everyone. 

One example is a unified hierarchical editing language for macromolecules (HELM). Working with Pfizer, a Pistoia project committee released its HELM solution into the open source, because it recognized that there was more to be gained from sharing the technology than a proliferation of disparate, incompatible standards. 

No one is interested in spending a lot of money creating bespoke solutions to pre-competitive, non-discretionary problems,” Wise said. “What they would like is to address those types of problems collectively and effectively, so that they can focus on their science.”

Additional common challenges that the Pistoia Alliance is focused on include building a chemical safety library, ontologies mapping and controlled substance compliance.

Biopharma Vendor Participation

Wise believes technology vendors who participate in such efforts as the Pistoia Alliance gain “a wide view of what is going on in the biopharmaceutical industry and are able to exploit that wide view for the advantage of their customers.”

He said such vendors, which includes PerkinElmer, “are not parochial and are open to wider thinking about how problems in life science R&D can be addressed through technology. That is a good thing.”

Wise typically ends his presentations about the Pistoia Alliance and benefits of participation with a slide showing a camel train crossing the desert . He tells his audience:


PerkinElmer is a participating member of the Pistoia Alliance, as well as the Allotrope and tranSMART Foundations When it comes to standards that benefit the industry, PerkinElmer wants to go far.

Michael Swartz, Vice President of Informatics Strategy & Business Development at PerkinElmer commented “We want to help our customers overcome informatics and other challenges and find it easy to do so using our solutions. Participating in these organizations keeps us abreast of the collaborative efforts and lets us contribute to the broader solutions.

Is your vendor future-focused and working collaboratively to innovate and solve industry challenges? 


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