Consolidating Outsourcing Relationships
The trend in the industry today has been for pharmaceutical and biotechnology companies to consolidate outsourcing among fewer
vendors—a trend that offers several key advantages. By consolidating outsourcing strategies around the full development of
a compound, small- to mid-size biotechnology and small molecule companies can focus on their core competency: the discovery
process. An experienced consultant, who can manage manufacturing through preclinical and clinical development using a limited
number of external vendors, is able to build a repertoire of knowledge and experience around the compound. Even for a company
with in-house manufacturing and supply chain capability, outsourcing the entire development of a compound enables a vendor
to help the sponsoring company realize gains in efficiency, cost savings, and timeline management—greater gains than if the
vendor had been assigned only pieces of the project. Working with fewer vendors also helps minimize the time-consuming task
of transferring knowledge among multiple vendors.
Continued consolidation of the pharmaceutical market will present challenges to contract service organizations. In recent
years, the demand for manufacturing and development has fluctuated between feast and famine. Going forward, it is of paramount
importance that each vendor develop a portfolio of projects to spread its own risk. In the past, vendor portfolio diversification
was difficult to achieve. Now, however, the projected increase in the number of drugs moving toward commercialization suggests
that the biopharmaceutical outsourcing market will stabilize and grow. Smart vendors that provide a suite of services, from
manufacturing through clinical development, will survive consolidation, build a diverse portfolio of clients and projects,
and establish a rich pool of knowledge and expertise.
Outsourcing can Facilitate Growth
The value proposition of outsourcing has not only caught the attention of the pharmaceutical and biotechnology sector, but
of the investment community as well. Investors have become more savvy about corporate evolution and about the role of outsourcing
in leveraging and protecting core competencies. They recognize that as nascent companies, staffed with a handful of very bright
discovery scientists, approach milestones requiring increased production of drugs and delivery of clinical results, the mere
act of investing in internal development skills can be daunting and disruptive to an organization focused on new drug discovery.
For emerging companies that need to respond rapidly to pipeline needs, to mitigate risk, and to focus on discovery, outsourcing
development to consulting groups and service organizations has become a logical move.
Many pharmaceutical and biological products originate from truly innovative discovery-focused companies with little internal
development expertise. External consultants with broad hands-on drug development experience, and contract service organizations
with full suites of drug development services, will play a central role in managing the projected expansion and commercialization
of biopharmaceutical products over the next ten years.
William Kerns, DVM, is managing director at Aptuit Consulting, Lexington, MA, 978.456.9975, firstname.lastname@example.org
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Society for Microbiology and the Institute for Science and Technology Management; 2004.