Laboratory Outsourcing in 2009

01 Jan 2009

Global Laboratory Outsourcing Trends in a Challenging Economic Environment

By Andrew Swift, Ph.D., Senior VP for Laboratory Outsourcing and Intertek Analytical Services.

Intertek sees continued interest and opportunities for strategic laboratory outsourcing agreements across global industry sectors for 2009. The economic challenges presented in 2009 make the option of outsourcing laboratory services, in an intelligent win-win approach, more attractive than ever.

Traditional in-house corporate laboratories are under pressure:

In-house dedicated company laboratories may be suitable for outsourcing to the right lab services partner. The traditional in-house laboratory normally is low on the list for budgetary funds, impacting the corporate lab's performance. The in-house lab can't deliver state-of-the-art testing, which very often is what the parent corporation needs. The in-house laboratory then becomes less useful to the parent corporation over time. A downward spiral begins. In-house lab instruments are not replaced nor improved, expertise and headcount are reduced to the point where the in-house laboratory cannot meet corporate needs and falls below justifiable utilisation rates. The long-term future of the traditional in-house laboratory is an open question.

What's driving the trend for lab outsourcing:

Structural cost and sustainability issues are driving the outsourcing of laboratory services. The chemical, petroleum and pharmaceutical industries are particularly affected by this trend. The in-house laboratory portfolio of major chemical, petroleum and pharmaceutical corporations is changing.

Where is laboratory outsourcing occurring:

Different companies have differing motivations to consider outsourcing. Economic and investment reasons are prime reasons, but there are other motivations to outsource laboratories. For example, as emerging economies enter global markets, cost savings are not driving lab outsourcing. Instead they encounter issues related to international recognition, international quality standards, need for technology and capital investment. So they're looking to organizations like Intertek to invest capabilities, expertise and international standards required to become accepted competitors in their global target markets.

Each lab outsource project is unique:

Every one of the lab outsourcing opportunities that Intertek has accomplished, worked on and reviewed has been unique. There is no 'one size fits all' in laboratory outsourcing. Intertek has expertise, resources and have developed proven business and management models to fit the needs of each of our client organization's requirements.

Lab outsourcing benefits:

Cost savings, commercial sustainability and optimal staffing are among the advantages driving the outsourcing of analytical testing for large companies. Our clients make annual cash savings for the existing cost of running their facilities because Intertek contributes new expertise in both laboratory technology and lab management, improving the way the laboratory is run. Intertek management expertise brings improved operational efficiency and improved performance, productivity and the return on investment for lab equipment improves. Factors include economy, sustainability, improved responsiveness in the laboratories, improved rapid import of new measurement technology to the laboratories, and capital investment in laboratories. It is easier for Intertek to invest in the laboratory than it is for corporate clients, as other the client often has higher priority investments to make.

How lab outsourcing works:

The traditional 'corporate laboratory' in many industries has been in decline for some time now. Corporations are looking for effective ways to break the cycle of high overhead and under-utilisation. A tailored lab outsourcing program will accomplish this goal. Intertek brings increased services demand and improved utilization rates to existing semi-redundant corporate lab facilities. Intertek as a result provides better service to existing corporations from our own facilities, often newly acquired from laboratory outsourcing projects. This arrangement makes economic sense, safeguards client intellectual property, and safeguards the stewardship of client know-how. Our laboratory outsourcing clients do not lose anything in terms of information, retain guaranteed access and enjoy speed of response. In fact, responsiveness improves when clients commit to outsourced lab services, and they gain a tremendous amount in financial terms by not having to meet lab overhead on an annual basis.

Lab outsourcing benefits corporate employees:

Intertek provides laboratory staffing levels that many companies are finding difficult to maintain for a variety of reasons. Intertek is dedicated laboratory services analysis and testing organization, offering excellent career paths for analytical chemists. Career paths can lead to senior laboratory, technical and executive management positions.

To learn more, please contact Dr. Andrew Swift by email. Be sure to include your contact details if you prefer a phone call. All enquiries are confidential.