Due Diligence Decisions Exercising due diligence during the outsourcing selection process is a natural and prudent component of the discovery phase. Some fact-finding now will yield dividends later. Is the outsourcer dedicated strictly to outsourcing, or does it provide outsourcing as a secondary function after performing the same functionality for itself? How many active projects does it currently handle? Does it matter to you? To some it doesn't, to others it might.

Does a customer's size, either in the complexity or magnitude of its needs, make a difference in the service it receives? How many customers does it support? "That's a double-edged sword," says Frieden. "Too many is not good, but too few is not good either."

Potential client companies often conduct preliminary audits at the candidates' facilities, meeting with staff to discuss their expertise and experience. It's an opportunity to see if personalities "click," and to speak with the scientists, technical personnel, and project manager who would be assigned to the project. A site visitation should include auditing the contractor's quality assurance and quality control systems for compliance. "In addition to technical capabilities, compliance of the contractor's quality systems is probably one of the most important parts of our selection process," says TolerRx's O'Mahony. And finally, as in all industries, references and reputation speak volumes - so check around.

For instance, define the scope of the work project and deliverables; what the client expects from the contractor, and in return, what the client will provide the contractor; and the cost of each step. Clarify which party is responsible for the cost of raw materials, outside testing, and any additional incurred costs. If an amount looks unrealistic, ask why. What is apparent to the outsourcing provider may not be apparent to the customer. Frieden admits, "One of the golden rules is that there is always pressure for a project to become more expensive than you originally anticipated. It's essential to try and predict as many of these issues and costs as possible, and to agree beforehand how the new subprojects will be addressed. As you get closer to marketing your products, there are many additional things you must consider."

It can take months to reach a mutually agreeable contract. Negotiations for terms and conditions usually stretch out the longest. Invariably, realistic timelines need to be discussed because every customer expects it will take a lot less time than is usually projected. And first-timers to the scale-up process may notice considerable time differences between what happens in the lab and what is required for manufacturing. Stability testing is one prime example. Don't expect that because a minimal amount of product remains active for three weeks in the lab's refrigerator, the same timeframe is applicable at scale-up. "Both clinical supply needs and regulatory requirements will dictate how much needs to be accomplished in a given time," says Ultee. Because signing a contract can be a year in advance of the actual work, it's good to include a timeline. But it's important to also realize that it's a "best guess" and it will never remain the same, reminds O'Mahony. He also strongly recommends planning a "shake-down" run at the contract site before going to larger scale.

Customized Quality Outsourcing specialists agree that having a quality agreement in place with an outsourcing provider can be useful. As Frieden points out, the quality staff usually provides the document sometime after the contract is already signed. It is a living document, he adds, and is constructed in such a manner that it can change as needs change. For instance, Alexion's quality agreement with Lonza contains many items regarding regulatory submissions for clinical products, but once the product is marketed, that emphasis will diminish and other factors will become more important.

The quality assurance group drives the agreement, and various other participants from key areas such as development, regulatory, quality control, and legal, all have input. "But in all honesty, the agreements are frequently written well after the fact of the contract," Frieden says. "Otherwise, you're trying to guess at what the problems are going to be. They can take a long time to negotiate, so you don't want to put that kind of pressure on top of starting a new relationship. One has to decide the right time to do it."

Close Communications All outsourcing partners need to regularly and clearly communicate. Face-to-face meetings usually occur at the outset. As the project advances and deadlines become closer, weekly conference calls, complete with agendas, minutes, dedicated tasks, and responsibilities, are par for the course in many outsourcing partnerships. Email is used to communicate information like test results, but electronic communications do not replace daily telephone calls between project managers as the project activity swings into full gear.

Outsourcing relationships are true partnerships, where both parties share as much useful information as possible so the contractor fully understands the client strategy and vision for the product. O'Mahony recalls that in previous years, there was hesitancy in revealing too much information, and trust wasn't placed so easily. But today, client companies even place a representative on the manufacturing floor during critical stages - to serve as a resource, not to look over anyone's shoulder. Contractors realize they are both there for success.

Strategies for resolving conflicts should be addressed in the initial contract. Most importantly, problems should be faced head on, whether they are of a technical or manufacturing nature, so the contract manager can notify the customer and they can work on a solution together. If the situation is beyond resolution by the project managers in an Alexion outsourcing partnership, says Frieden, it then goes before a steering committee with representatives from both organizations, including Alexion's president.

The ultimate success There is a touch of irony in the best measure of a successful contract manufacturing partnership. If all goes well, the client's drug discovery achieves blockbuster status. With that success comes substantial financial rewards, which means investing in one's own production facilities is more economically feasible than depending on outsourcing support. The ultimate reward for superb partnering could set the bell tolling for the partnership itself. BPI