Outsourcing: What is the Path Forward? - External consultants and contract service organizations will play a central role in biopharmaceutical expansion and commercialization during the next ten

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Outsourcing: What is the Path Forward?
External consultants and contract service organizations will play a central role in biopharmaceutical expansion and commercialization during the next ten years.


BioPharm International


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,

References

1. Big pharma turns to biologics for growth to 2010. London: Datamonitor; 2006.

2. Langer ES, editor. Advances in large-scale biopharmaceutical manufacturing and scale-up production. Washington, DC: American Society for Microbiology and the Institute for Science and Technology Management; 2004.


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