Gen therapy

Why the clinical trials industry is embracing next-generation FSP models

For years, the functional service provider (FSP) model has given sponsors a practical way to extend internal teams and access specialist capabilities. What began primarily as a tactical resourcing model has become an established component of clinical development outsourcing.

However, the environment in which FSP models operate has changed significantly. Clinical development portfolios are increasingly complex and dynamic, workloads can shift rapidly and regulatory expectations continue to evolve.

At the same time, sponsors face sustained pressure to improve operational efficiency, maintain quality and accelerate development timelines. In this environment, a model based primarily on linear resource scaling is no longer sufficient.

The next generation of FSP models needs to address a broader set of strategic requirements. Sponsors increasingly need flexible access to specialist expertise, the ability to scale capability in line with portfolio priorities and delivery models that provide greater consistency, transparency and control. The focus is shifting from supplying capacity to delivering the expertise and operational outcomes required to support successful clinical development.

This evolution has important implications for how FSP partnerships are designed, mobilised and measured. A successful model requires more than the rapid deployment of resources. It requires a clear operating model, defined accountability, effective governance and access to the specialist capabilities needed to address increasingly complex development requirements.

In this article, we examine the trends shaping clinical trial outsourcing and consider why the traditional FSP model needs to evolve. We set out a practical framework for mobilising a next-generation FSP model, including the critical considerations for establishing an effective and sustainable partnership.

We also examine how sponsors should assess performance and value. Traditional measures such as headcount, utilisation and cost remain relevant but provide only a partial view of FSP effectiveness. A more meaningful assessment should consider the impact on quality, delivery, specialist capability, flexibility and the sponsor’s ability to execute its broader clinical development strategy.

Clinical trial outsourcing is entering a period of significant growth. More than 50% of clinical trials are now outsourced and the clinical trial outsourcing market is expected to reach $70 billion by 2029. By outsourcing model, FSP currently represents the largest segment, accounting for 49% of the market.

Cost efficiency, flexibility and access to specialist expertise are often cited as the primary drivers of this growth. There is also increasing scrutiny of the traditional integrated CRO model, with 80% of sponsors reporting that the one-stop-shop approach of large CROs is no longer cost-effective.

However, these factors alone do not explain the changing role of outsourcing in clinical development.

The development landscape itself is evolving. Scientific advances are enabling increasingly targeted approaches to drug development, with trials focused on smaller and more precisely defined patient populations. At the same time, the industry has seen growth in the number of smaller and emerging biopharma companies entering development.

These organisations often do not have the scale, infrastructure or range of internal capabilities required to support an end-to-end R&D pipeline. They are also more likely than large pharmaceutical companies to report lower levels of satisfaction with their CRO partnerships.

This creates a different requirement for outsourcing. Rather than transferring entire areas of responsibility to a single provider, sponsors increasingly need access to specific capabilities and specialist expertise that complement their existing operating model.

A further consideration is the growing importance of specialist capability. Outsourced providers operate within defined areas of expertise and can invest in the people, processes, technology and innovation required to deliver those services effectively.

In many cases, these capabilities complement the sponsor’s own areas of expertise. This creates an opportunity for FSP models to introduce specialist knowledge, established practices and new approaches while allowing sponsors to retain control of their wider development strategy.

This is particularly important as clinical development becomes more complex. The operational functions supporting the R&D pipeline need to keep pace with advances in science, technology and regulatory requirements.

Specialist FSP models can provide the expertise and operational capability required to support this pace of change, without requiring sponsors to build and maintain every capability internally.

The FSP model also offers an important balance between specialist expertise and sponsor control. FSP teams typically work within the sponsor’s systems, processes and governance framework, enabling them to operate as an extension of the organisation rather than as a separate delivery structure. The sponsor retains strategic oversight and control, while the FSP partner provides specialist expertise and dedicated operational capability.

This combination is increasingly relevant as sponsors look for outsourcing models that deliver more than additional capacity. The opportunity is to combine flexibility and specialist capability with the governance, consistency and strategic control required to support increasingly complex clinical development programmes.

Traditional FSP models are typically designed to scale linearly. As portfolio demand increases and timelines tighten, additional resources are requested and more senior profiles are introduced to mitigate perceived risk.

The problem is that this linear approach is misaligned with modern drug development. Over time, it can also create hidden inefficiencies as senior, skilled staff spend significant time on repeatable tasks. The result is often rising costs without proportional gains and underutilisation of automation.

At the same time, success metrics that worked for smaller pipelines with limited digital enablement no longer provide the insight needed to optimise outsourcing. Full-time equivalent deployment, onboarding speed and blended cost rates made sense when more work generally meant more people, but clinical trials today operate under very different conditions.

It is time for a change. Next-generation FSP models shift the focus from staffing to system performance. They do this by focusing on three core areas – resource optimisation, automation at a structural level and delivering flexibility by treating capacity as a service.