We are hired to manage and perform tasks to help bring a product or device to the market.

5 Reasons to Outsource:

1. Difficulty in aligning the varied functional needs with multi-product and multi-phased developmental pipelines
2. Increasing domestic internal costs
3. Globalization to reduce overall development costs
4. Harmonization efforts to facilitate globalization
5. Technology advancements

The impact of technology in gathering and disseminating information is a primary driver of this expansion.

The product development process in the health and science sector is characterized as complex, lengthy and costly. R&D costs influence decisions and policy options about how to best incentivize innovation to meet health needs and how to make end products available at affordable prices. This research synthesis focuses on the cost aspect of the process.

Industry R&D costs estimations for development of "new entities" ranges widely, from $43.4 million to $4.2 billion, based on market estimates. Estimations are usually from pre- stage to market approval and most do not include post approval costs, or costs for the discovery stage. Out-of-pocket costs and for capitalized costs (cost of capital/opportunity costs/time costs), constitutes from 14-51% of total costs depending on the capitalization rate, timeframes and methodology adopted.  

The type of expenses that are included as R&D costs can also vary and are not always explicitly mentioned in the calculations (such as costs of failures, expenses related to marketing of the product or tax deductions). You must have a strategic plan addressing critical deployment issues. 

These are the main cost factors companies need to assess to make an informed decision on whether to outsource or to do the services internally.

EMPLOYMENT
CRO vs Internal employment costs 34% 

OVERHEAD (GEN & ADMIN)
CRO 10% to 27% vs Internal G&A 20% to 60%

1. Executive management
2. Legal services
   
3. Accounting services
4. Marketing services
5. Sales services
6. Facility costs
   
7. IT costs
8. R&D costs
9. HR
   
10. Training
11. Quality Assurance
    
12. Insurance
13. Finance
14. Purchasing
15. Employee and consultant salaries

TIME ESTIMATION
CRO vs Internally start from zero

SCALE OF MANAGEMENT
CRO vs Internal management staff available to complete project

RECRUITMENT TIME
CRO vs Internal hiring can take up to 6 months

UNDER-UTILIZATION
CRO vs Internal staff on hand available to complete project

SUPPORT
CRO vs Internal SAS programmers, desk, computer, software, email, internet access, and IT support available

MANUFACTURING
CRO vs Internal manufacturing costs 40%.

A Retainer is required to begin custom scientific and technological services for the following fields:

• physical
• engineering
• life
• agriculture
• environmental
• biotechnology
• pharmaceutical
• medical
• health
• genetics

TECHNOLOGY (COMPUTER & HARDWARE)

A retainer is required to Design technology, hardware, equipment and instrumentation for a R&D facility or laboratory set-up including:

• IT servers
  
• computers
• printers
• pipettes
• beakers
• scales
• centrifuges
• burners
• hot plates
• freezers
• warmers
• incubators
• coolers
• stirrers
• water baths
• fume hoods
• eye wash stations
• safety showers
• chemical storage

Laboratory Safety Plans

• Laboratory safety plan that identifies the hazards present and explains how to control them. 
• Identify hazards in the laboratory space.
• Establish lab-specific training (e.g., conduct, PPE use) and emergency procedures (e.g., chemical spills, fire) for the lab.
• Establish Standard Operating Procedures (SOPs) for all hazardous procedures.
• Ensure that all training on SOPs, lab specific information, and emergency procedures is documented.
• Post emergency contact signs.
• Ensure that emergency equipment (e.g., fire extinguisher, spill kits, eyewash stations, and shower) is present.
• Establish correct waste disposal procedures.
• Provide access to Safety Data Sheets (SDS) for all chemicals.