The virtual business model is growing in prevalence compared to the traditional organisational counterpart. While the former model has many advantages, some challenges may limit its adoption in the industry.

Robert Merrill, JD, Tracy D. Rockney, JD

First Published April 2018

Virtual companies have emerged in recent years, driven in part by the need to have a lean operating model to stay competitive (1). These companies are characterised by outsourced expertise, contract services, and remote teams with little or no fixed location and in-house facilities.

A virtual business model has many advantages over a traditional, fully integrated organisational model. It can offer reduced overhead costs, leverage a diverse mix of external expertise on an as-needed basis, provide a better work-life balance for employees, and requires less time and resources to establish and maintain facilities.

Not to be outdone, large pharmaceutical companies built with a traditional organisational model have also adapted, taking on a hybrid or semi-virtual approach through outsourcing and partnerships with top CROs and MOs (2). For example, Shire Pharmaceuticals outsources various aspects of its business, including drug discovery, clinical trials, data management, medical monitoring, and medical writing (3). In adopting a hybrid model, pharma companies can simultaneously optimise internal expertise and leverage external capabilities. Despite these benefits, the virtual model also poses a number of challenges.
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