A New Way to Think About Outsourcing Partnerships

The challenges facing the pharmaceutical industry are multifold, including the patent cliff, productivity decline, global recession, and healthcare cost controls. These difficulties are forcing large biopharmaceutical companies to reevaluate the fundamentals of their business models.

The industry's response has manifested itself in many ways, from refocusing pipelines on specific therapeutic areas to restructuring organizations in an effort to be more nimble and productive to reevaluating current drug-development models to reduce the cost of bringing drugs to market. Companies are also focused on how to reduce their large fixed-cost infrastructures, but more importantly, they are looking at ways to maximize the productivity and innovation of their most important key resource—their employees.

Specifically, organizations are evaluating their operations and infrastructure to identify opportunities to optimize the drug-development process. In the past few years, biopharmaceutical companies have taken several steps to improve operating efficiency. These actions include: elimination of therapeutic areas, reduction of molecules in the pipeline, and business reorganizations. Each large biopharmaceutical company seems to be at a different stage of this self-evaluation process.

In addition, biopharmaceutical companies have turned to outsourcing to gain efficenices in the drug-development process. In general, companies seem to be comfortable with the concept of outsourcing as a means to create a more flexible and productive drug-development model. Each company is at a different stage in the outsourcing process as well, and different sponsors have different comfort levels with outsourcing. As a result, CROs must tailor their approach to each sponsor and develop a flexible program.

THE NEW "NON-CORE"

As a result of these industry changes, biopharmaceutical companies are reconsidering what represents "a core competency." Historically, Big Pharma has controlled all aspects of drug development, including areas such as safety assessment, where outsourcing has been more commonly used. Over the past few years, however, leaders in this changing paradigm have outsourced on a more strategic basis, using fewer vendors, frequently committing whole programs to a single supplier, and in some instances, divesting internal expertise in specialized areas (e.g., reproductive toxicology or inhalation toxicology). Companies are reexamining what areas are truly "core."

Safety assessment and, more recently, chemistry have already been outsourced to a large degree. But early discovery areas that previously were considered necessary to retain internally, such as pharmacology and drug metabolism and pharmacokinetic services, are now being considered for outsourcing. Companies are realizing that even in these innovative discovery areas, there are a number of studies that are run on a repetitive basis. Outsourcing such testing allows internal researchers to focus on true innovation through new model development and target identification.

A CRO'S ROLE

In response, CROs are rethinking their portfolios of capabilities. Certain elements of what the large CROs have always provided are still attractive to global pharmaceutical firms, including financial stability, global footprint, and broad scientific expertise. But success in some of the newly outsourced discovery areas requires a different expertise and way of doing business.

Scientific expertise in pharmacology, for example, was not traditionally thought of as a core strength for a CRO but is now a highly sought-after skill set. Early discovery work also requires the ability to process large numbers of molecules through standardized model systems, with minimal setup and reporting time, and efficient, rapid data transfer.

One way to achieve this new work is to take on a new level of partnering. The pharmaceutical company and the CRO can work together in each other's laboratories to share technology transfer and gain an understanding of the most efficient processes. These partnerships require stripping all non-value-added costs out of the model, so that scientific integrity is maintained, throughput is maximized, and costs are reduced from the original paradigm.

DEFINING SUCCESS IN A NEW OUTSOURCING PARADIGM

To succeed with this new strategic partnership between biopharmaceutical companies and CROs, crucial determinants include: transparency of costs and process, account governance with clear escalation routes for issue resolution, IT interface with rapid data transfer according to the client's specifications, and a mutual commitment to work together. The biopharmaceutical company gains a partner to perform portions of its drug discovery and development at a reduced cost, with no loss of control or speed. This allows the company's scientists to focus on drug discovery.

Together, these strategic partnerships offer a mutually beneficial approach to drug development. The trend towards outsourcing work earlier in the pipeline can lead to increased productivity and a more efficient and cost-effective drug-development process. Ultimately, the end result should be a pipeline of new, innovative and efficacious drugs, which are affordable and fulfill unmet medical needs.

Nancy Gillett is chief scientific officer at Charles River Laboratories, nancy.gillett@crl.com