Outsourcing Virtually Everything: Making the Semi-Virtual Model Work - How an extreme outsourcing structure can continue to produce results over the long term - BioPharm International


Outsourcing Virtually Everything: Making the Semi-Virtual Model Work
How an extreme outsourcing structure can continue to produce results over the long term

BioPharm International

One success story in this semi-virtual network partnership involved expert shuffling of product in a record short time during a recent licensing deal. According to Carbery, "We have six branded products plus generics in the pipeline, and in past years have launched two on very short notice due to late stage in-license agreements. In 30 days, we not only owned the license to sell the drug, but also on the day the deal closed we had to start shipping, even though the product was still in somebody else's warehouse. Endo moved the product to its UPS-owned warehouse, conducted quality control checks, re-released it, and started shipping by 3 p.m. the same day. It's the rapid-response supply chain equivalent to buying a house and bringing your moving van along to the closing. The flexibility that our outsourcing partners give us to ramp up and down is incredible."

Can a CRO be an Alliance Partner Rather Than a Supplier?

In mid-2005, Endo began yet another outsourcing initiative that challenged the norms of the industry. Instead of building its own clinical operations infrastructure to meet the growing demands of its development pipeline, Endo decided to move in the other direction. It defined its core capabilities as designing clinical programs and studies and interpreting the resulting data. Endo then sought a well-qualified partner to perform all the necessary implementation work to place and conduct the studies and collect the resulting data. The result was an alliance relationship with PPD, Inc., a premier CRO. This was different from the typical industry approach of establishing a CRO relationship where the CRO is simply a preferred and qualified bidder. The company's goal was to find a forward-thinking CRO as an alliance partner becoming the only provider.

Biopharm companies have many vendor relationships with CROs that seem to work, so why take it further and lock oneself into one CRO as an alliance partner? The answer is clear to any biopharm company that has used CRO services, and knows these services have almost become commoditized, limiting the relationship and the output to a one-time profit opportunity for the CRO. Roland Gerritsen van der Hoop, MD, Endo's senior VP of R&D and regulatory affairs, explains, "We were looking for an extension of Endo, with a CRO providing dedicated resources that would be more efficient in training, and more Endo-aligned. Our goal in this initiative was to reduce planning and start-up time; we knew there could be closer involvement in our in-house budget process that would yield better planning for both. Also, a CRO as partner could produce better product development and lifecycle management plans, help prepare better evaluations for new in-licensing candidates, and even connect us more quickly to potential in-licensing opportunities."

The result was the establishment of a mutually committed relationship with PPD for top-tier design and execution of clinical development programs. Although too early to tell, the relationship should at the very least soon produce some short-term benefits for Endo. Dr. Gerritsen van der Hoop continues, "For Endo this could mean no more involvement in day-to-day study activities, such as monitoring sites, compiling progress reports, or resolving queries. Instead, Endo's core development staff should potentially be freed to drive significant innovation for the company by focusing much more on interpreting data; thinking of, formulating, and programming additional in-depth analyses; improving study designs; providing input in discussion sections of reports or clinical sections of submissions; and contributing to acquiring technology for the company through due diligence assessments for in-licensing."

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