New Drug Development: What to Keep In-House vs Outsource

Choosing what to build internally and what to outsource affects scientific integrity, regulatory credibility, operational agility, and ultimately, a company’s market position.

In drug development, the pressure to move quickly must be balanced against the need to protect innovation, ensure compliance, and retain decision-making authority over critical steps. Companies that recognize which competencies are essential to own — and which processes can be delegated to trusted partners — position themselves for faster approvals, stronger partnerships, and more resilient growth.

A flexible, evolving hybrid model is a necessity for companies aiming to move efficiently from early discovery to commercial success without compromising quality or control.

Let’s go over everything you need to know.

What to Control Internally — and Why

Not every function is strategic. But some activities are so tightly linked to a company’s identity, intellectual property, and regulatory success that outsourcing them would erode core value. These areas must remain under direct internal control.

1. Scientific Core

Discovery activities such as early-stage research, target identification, and lead optimization define the intellectual property that underpins future commercial rights. Companies that outsource discovery risk diluting their scientific edge, delaying patent protection, and weakening their future negotiation leverage.

Retaining internal discovery capabilities is about maintaining scientific leadership. Especially in fields where differentiation is subtle — such as rare diseases or novel biologics — internal discovery efforts directly shape the long-term competitiveness of the organization.

2. Strategic Oversight

High-level project management, portfolio prioritization, and regulatory strategy are not operational details. They are central to corporate decision-making. They involve trade-offs between scientific opportunity, commercial potential, regulatory risk, and resource allocation.

Internal control of strategic decision-making ensures that programs are advanced, paused, or terminated based on a comprehensive, company-specific view of risk and opportunity, not simply based on operational feasibility.

No external partner, regardless of expertise, can make these judgments with the same alignment to the company’s objectives.

3. Regulatory Authority

Direct engagement with regulatory agencies is critical for complex or first-in-class products. Strategic regulatory discussions, including pre-IND meetings, protocol negotiations, and responses to regulatory inquiries, require deep, nuanced knowledge of the product.

While external regulatory consultants can prepare documentation, drug manufacturers must lead key agency interactions. Outsourcing these relationships risks inconsistent messaging, delayed approvals, and a loss of credibility with regulators.

Companies that build internal regulatory leadership early can navigate the increasingly complex global regulatory environment faster, more efficiently, and with greater confidence.

Example

A company developing a novel gene therapy for a rare pediatric condition should keep its discovery team in-house to ensure that every insight stays protected and drives future IP. 

As the therapy progresses, internal leadership decides how to allocate funding and which indications to prioritize — decisions that hinge on a deep, company-specific understanding. When preparing for critical FDA meetings, internal regulatory experts lead the conversation, ensuring consistent messaging that builds trust and speeds up the path to approval.

Where Outsourcing Creates Value

Where activities require specialized infrastructure, global reach, or deep technical expertise — but do not define the company's scientific core — outsourcing can accelerate timelines, reduce capital investment, and expand capabilities.

1. Specialized Execution

Functions that demand heavy capital expenditure, highly regulated environments, or narrow technical expertise, such as Chemistry, Manufacturing, and Controls (CMC) development, are natural candidates for outsourcing.

CDMOs provide ready access to validated GMP facilities, analytical platforms, and experienced teams, eliminating the need to build expensive internal infrastructure. 

For most companies, particularly emerging biotechs, outsourcing CMC enables earlier clinical entry without locking capital into facilities that may not match future needs.

In addition to traditional CDMO services, companies are increasingly leveraging specialized vendors that provide AI-powered solutions to enhance compliance and streamline regulatory processes. 

For example, companies like Signify offer AI-driven compliance agents that automate document review, identify potential regulatory gaps, and accelerate approval cycles. 

These AI agents can analyze artwork, packaging, labels, GMP documentation, and supplier information against thousands of international laws and frameworks, reducing review times by up to 90% and minimizing the risk of costly recalls. 

This capability is valuable for pharmaceutical companies that outsource manufacturing or other regulated activities, ensuring consistent regulatory compliance and accelerating product development.

2. Clinical Trials as Operational Partnerships

Clinical trial operations, including site management, patient recruitment, monitoring, and data management, are among the most commonly outsourced activities.

Even large pharmaceutical companies often rely on CROs to manage logistics across multi-center, global trials. CROs provide operational scale, established site networks, and regional regulatory familiarity that would be costly and inefficient to duplicate internally.

However, companies must retain strategic control over trial design, endpoint selection, and oversight of trial conduct to ensure that operational efficiency does not come at the expense of scientific rigor or regulatory acceptance.

3. Manufacturing Scale as a Strategic Decision

Manufacturing scale-up and commercial production almost always involve outsourcing for early and mid-stage companies. Building commercial-scale GMP facilities is financially prohibitive unless product demand is well established.

Outsourcing commercial manufacturing to CDMOs not only reduces fixed costs but also allows flexibility as production needs evolve across different phases of market entry, lifecycle management, and regional expansion.

Companies must, however, ensure that technology transfer processes are rigorous and that manufacturing partners can meet evolving quality, volume, and compliance requirements over time.

Decision-Making Factors: In-House Vs. Outsourcing

Determining what to outsource and when requires balancing several factors, each with distinct strategic implications.

The U.S. Context: Specific Pressures and Trends

Operating in the U.S. drug development field introduces particular pressures that influence internal vs outsourced strategies.

• Regulatory Compliance: FDA holds companies fully responsible for outsourced activities. Manufacturers must qualify vendors, oversee operations, and document compliance rigorously.

• Strategic Partnerships: U.S. companies are increasingly favoring deeper integration with selected Contract Research Organizations (CROs) and Contract Development and Manufacturing Organizations (CDMOs), moving beyond transactional outsourcing to partnership models that share operational and regulatory risks.

• Market Scale and Specialization: The U.S. hosts a large concentration of specialized CROs and CDMOs, offering sponsors access to a wide array of niche capabilities.

• Fundraising Dynamics: U.S. biotechs, often driven by milestone-based financing, use outsourcing to adjust operational spending to match fundraising cycles.

• Technology Integration: Outsourcing partners in the U.S. increasingly offer AI-enabled platforms, real-world evidence capabilities, and advanced manufacturing technologies, providing companies access to innovation without direct investment.

How To Manage Outsourcing Risks

Outsourcing expands capabilities but introduces specific operational and strategic risks that must be actively managed to protect program integrity and regulatory readiness.

1. Control and Oversight

Loss of direct visibility into critical processes remains the most significant outsourcing risk.

Mitigation requires:

• Strong contractual agreements defining deliverables, timelines, and performance standards.

• Regular audits, inspections, and on-site visits to external facilities.

• Embedded oversight mechanisms, such as dedicated internal staff managing key vendor relationships.

2. Intellectual Property Protection

Transferring data, methods, or compounds to external vendors increases your intellectual property (IP) exposure.

Mitigation strategies include:

• Clear contractual terms assigning ownership of all generated data and inventions.

• Stringent confidentiality agreements.

• Cybersecurity controls to protect sensitive information during data transfers.

3. Quality and Regulatory Compliance

Differences in quality standards across vendors can jeopardize regulatory submissions.

So, manufactuers must:

• Perform rigorous due diligence before selection.

• Require adherence to relevant GMP, GCP, and GLP standards.

• Conduct continuous monitoring rather than relying solely on vendor reports.

4. Continuity and Vendor Stability

Vendor disruptions — from financial instability to leadership turnover — can stall development.

Risk can be minimized by:

• Diversifying critical suppliers where feasible.

• Building redundancy into technology transfer and manufacturing plans.

• Structuring contracts with contingency provisions for vendor failure.

How To Build a Sustainable Model

Internal versus outsourced balance must evolve as companies grow.

• Early-stage companies prioritize internal innovation and outsource execution.

• Growth-stage companies selectively build internal regulatory and development capabilities to prepare for pivotal trials and commercialization.

• Established companies balance internal manufacturing and strategic control with external operational support for scalability and regional reach.

The most resilient organizations treat this evolution as a deliberate strategic process — not a reactive adjustment.

Emerging Trends in Drug Development and Their Impact On Outsourcing

Here's how continuous manufacturing, personalized medicine, and real-world evidence are impacting what's kept in-house versus outsourced:

1. Continuous Manufacturing

What it is: Instead of batch processing, continuous manufacturing involves an uninterrupted flow of materials through a production process. This offers increased efficiency, reduced costs, and better product quality.

Impact on outsourcing:

• Increased Outsourcing: Companies may outsource continuous manufacturing to CDMOs that have invested in the specialized equipment and expertise required. This allows them to access the benefits without major capital investments.

• Internal Focus on Process Control: Retain tight internal control over process analytical technology (PAT) and real-time release testing strategies, even when outsourcing.

• Internal Skill Set: To avoid dependency on a single CDMO or CMO for this work, in-house capabilities of process improvement, QbD, and scale-up are very relevant to the tech transfer activities of continuous manufacturing.

2. Personalized Medicine

What it is: Tailoring medical treatment to the individual characteristics of each patient, often based on genetic or biomarker data.

Impact on outsourcing:

• Specialized Manufacturing: Outsourcing the manufacturing of personalized therapies (e.g., cell and gene therapies) to specialized CDMOs that have experience with small-batch, complex manufacturing processes.

• Data Analytics: Companies are also more likely to outsource the complex data analytics required to identify patient subgroups and predict treatment responses.

• Internal Clinical Trial Design: Retain tight internal oversight over clinical trial design to ensure trials are appropriately stratified based on biomarker data.

• In-house Expertise: Retain expertise in companion diagnostic development internally.

3. Real-World Evidence (RWE)

What it is: Clinical evidence regarding the usage and potential benefits or risks of a medical product derived from analysis of real-world data (RWD). RWD comes from sources outside of traditional clinical trials, such as electronic health records, claims data, and wearable devices.

Impact on Outsourcing:

• Data Acquisition and Analysis: Pharma companies often outsource the acquisition, cleaning, and analysis of RWD to specialized data analytics firms.

• Regulatory Expertise: Accessing external regulatory affairs consultancies with experience in RWE submissions becomes more common.

• Internal RWE Strategy: Maintaining internal control over the overall RWE strategy, including study design and data interpretation.

• Internal Safety Monitoring: Maintaining internal control over pharmacovigilance and safety monitoring activities, even when using RWE data.

Impact of Emerging Trends on Outsourcing

Final Guidance: Balancing Control and Growth

New drug development is fundamentally about control: control over innovation, control over quality, and control over risk.

Yet no company succeeds by trying to control everything internally.

The companies that thrive are those that:

• Identify early what truly differentiates them — and protect it.

• Recognize where external capabilities are better, faster, or more scalable — and leverage them without abdicating responsibility.

• Build internal leadership strong enough to manage outsourced partners as true extensions of their own teams.

• Adapt their internal vs external balance deliberately as funding, pipeline maturity, and regulatory complexity evolve.

The decision to outsource is not about what is easier. It is about what is strategic.

When done thoughtfully, outsourcing is not a loss of control — it is an extension of it, deployed intelligently across the complex, demanding field of modern drug development.

With Signify, you can streamline regulatory management, free up your internal teams, and move life-changing therapies to market faster. 

Specialized tasks are handled with precision, while your core team stays focused on what matters most. Take control of your growth — try Signify for free today!