Genpact feasts on Pharmalink to take on Accenture in the life sciences regulatory space

When you’re feeling a tad queasy as a service provider and the prognosis is for lower-than-expected growth in the year ahead (4-6% in this case), one of the prescribed treatments is usually a healthy dose of M&A activity to boost market potential and make the competition sweat instead.

This inorganic medicine can be especially effective when the treatment aligns to a client vertical where you have a strong competitive position. So when Genpact announced the acquisition of Pharmalink Consulting earlier today, a global provider of regulatory services to the life sciences industry, it seemed like the patient was on the right treatment regimen.  Charles Sutherland takes a deeper look into the merits of this new acquisition…

Genpact has been a leading performer in the life sciences vertical for several years now, being especially dominant providing finance and accounting BPO for a host of the leading pharma giants such as Astrazeneca, Pfizer, Sanofi and GSK.  In addition to Genpact’s horizontal strengths in pharma and life sciences, the firm has been competing head-on with the likes of Accenture and Cognizant in industry-specific process areas such as Clinical Data Management (CDM), Pharmacovigilence (PCV) and Commercial Services. These BPO/IT service providers also compete in these industry-specific processes with a specialized set of life sciences companies called Clinical Research Organizations (CROs) who include such brand names as Quintiles.

All of these offerings are designed to reduce operating costs for life sciences companies, in particular to address the single most important business outcome in the industry, which is increasing the likelihood that a new drug will come to market with increased speed and with greater commercial success. BPO service providers have been helping clients for years to reduce time to market through improving the efficacy of clinical trial information through CDM capabilities and in tracking the efficacy of new drugs and compounds including measuring their adverse effects through PCV but until recently they weren’t in a position to help clients bring those together with support for managing the regulatory environment under which new drugs are evaluated by the Food & Drug Administration (FDA) and other bodies.

Accenture took a gamble at bringing these services together when it purchased another regulatory consulting company Octagon Research Solutions (read analysis here) in August 2012 to get access to their regulatory management software and consulting skills and now Genpact appears to be following a similar path with today’s announcement. We know that service providers also looked at a third regulatory services company, Liquent prior to it being swallowed by a CRO, Parexel in January 2013.

Charles Sutherland is EVP Research, HfS (click for bio)

Prior to their being acquired, all of these regulatory services firms primarily focused on software platforms and consulting services but both Accenture and now Genpact clearly believe that their life sciences clients are ready to move traditionally project based regulatory work into longer-term BPO arrangements. These arrangements will allow greater efficiencies in regulatory management and bring together CDM, PCV and regulatory services together with additional analytics services to have a meaningful impact on reducing regulatory times and bringing new blockbuster drugs to market sooner.

With this new model beginning to prove itself out with Accenture, we look forward to talking more with Genpact in the weeks ahead to see how they are going to create their own blockbuster compound of clinical data management, pharmacovigilence, commercial services and regulatory services in the life sciences BPO marketplace.  We’ll be back with more insights and views on where this market is headed after that.

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4 Comments

  1. Posted April 28, 2014 at 8:39 am | Permalink

    In my opinion the Pharmalink acquistion could be quite beneficial to Genpact as it moves along the value chain of providing consulting services to global pharma clients. At the end of the day value added services get the client’s attention and by delivering business impact Genpact can further enhance its credentials as a value added partner. Leading players like Genpact have realized – horizontal BPO services are getting more commoditized, thus the game needs to be around industry specific BPO solutions. Based on a lot of work we do at Booz in the pharma industry, the major clients have huge challenges around cost transformation, including the sunset of patents for a lot of blockbusters, thus creating opportunities in the space including BPO, pharma specific industry solutions and underlying IT platforms.

  2. Posted May 18, 2014 at 7:19 pm | Permalink

    No surprise. I am just surprised that it was Pharmalink – a company with 0 credibility in the industry. I expect ELC GROUP to be next on a radar of the big players. I do not see any other players in the field who are truly global except them. And lets be honest, companies like Tata Consultancy are way too late to get on board of the growing regulatory affairs business by their own. It will take them 3-5 years while other players will be far away already. So consolidation is the only choice for those companies who want to get a chunk of this business. And I think ELC GROUP is the one to be next after Pharmalink.

  3. Dennis L
    Posted May 21, 2014 at 4:20 pm | Permalink

    With regard to the comment above, I have to express my surprise (and a degree of cynicism) regarding the claims made by Suzanne.

    I am not affiliated with Pharmalink (have recently retired after 27 years working for 3 different major healthcare companies in and around regulatory affairs) – but have worked with Pharmalink consultants a number of times over the past 8 years. I guess the acquisition reflects my overwhelmingly positive experience of the company whilst working on a number of large, global projects and the outsourcing of key regulatory functions. Undoubtedly, it is Pharmalink’s credibility in the second area that made it most attractive to a BPO.

    What Genpact’s next steps are should be very interesting indeed for the Industry – and of real concern for their competitors in the field.

  4. Charles Sutherland
    Posted May 22, 2014 at 1:54 am | Permalink

    @Dennis and @Suzanne.

    What jumps out from me about this discussion, regardless of the views on any specific self-standing regulatory provider in the market today is that whether you combine a regulatory provider on the clinical development side (e.g. Accenture and Octagon Research) or in the post drug approval side (e.g. Genpact and Pharmalink) is the interest in the future possibilities that these combinations are creating. I look forward to seeing what other combinations appear in the market in the next 18 months.

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