In May, I spoke with Oskar Gold, Vetter’s vice president of Key Account Management and Corporate Marketing, about the parenteral marketplace and how it weathered the financial meltdown, strategic alliances between big clients and CDMOs, the pros and cons of asset-transfer deals, the impact of biosimilars from business and regulatory perspectives, and the importance of Customer Relationship Management (CRM) and Key Account Managers to Vetter’s business structure.
Contract Pharma: There’s been plenty of talk over the years about how pharma needs to change its mindset in order to develop strategic partnerships with contract service providers. What about the view from the other side? How do you think providers, particularly CDMOs, need to adjust their perspectives and practices in order to build those relationships?
Oskar Gold: I think the change in perspective is already happening. In the past, the industry was dominated by transactional relationships, and that’s not the model going forward. The key has been to develop a holistic approach, a long-term perspective.
In the CDMO business, working with pharma and biopharma means you’re not in the spot business. You have to position yourself for the development phase, which can take from several months to several years. Only a long-term relationship will work.
That involves building trust. Companies have to be cognizant of how they’re developing the customer relationship, making sure both parties have open lines of communication. It’s been a move away from “I want to get the business” toward long-term relationships.
This change in attitude is very important and I think it’s supported through the pharma and biotech industries and the way they’re streamlining their partner base. They’re selecting more carefully and want to make sure they have the right partners. They, too, are moving away from transactional behavior and trying to build long-term business relationships based on trust.
CP: Do you think this shift will involve more facility transfers, as we’re seeing in some of the CRO partnerships that have been announced in the last few years? I’m thinking particularly of Covance’s deals with Lilly and Sanofi.
OG: That’s a business decision for every company. There’s the model of building on your capabilities through your in-house know-how and core competencies, trying to develop and produce within that profile. Then there’s the option of expanding and engaging in running external lines and plants, which I believe is less focused and more about running a business. The latter model can work, but I don’t think it’s focused and sufficiently concentrating and valuing the core competences of our business.
If you’re interested in process development, project management, and manufacturing, then you need to do that with a team and an appropriate infrastructure. Running plants and lines elsewhere becomes a business-driven approach, a multiplier approach. In short, I believe every company has to decide which of these models to follow.
From Vetter’s perspective, we’re focused very much on developing aseptic processes and services within our facilities, network and infrastructure that we control. Partly that’s because we did not develop working teams that could be allocated to another site that we might potentially consider to acquire. To run that business model, you must have excess capacity in human Resources . If you’re not geared to that, it’s not a short-term opportunity for you.
CP: If we’re seeing more strategic partnerships between pharma and biopharma and CDMOs, do you think we’ll see more public statements about these, relating the “terms of the deal” and the business guarantees, a la Covance/Sanofi deal, even if they don’t involve asset transfers? Or will we simply have de facto partnerships without making a big splash about it?
OG: I sense that those big CRO announcements are unique, individual events, and not indicative of long-term trends. I have conversations with many major players, and it seems to me that those arrangements are more opportunistic and discrete than an indicator of the shape of things to come.
CP: If that’s the case, then what shapes do you think strategic partnerships between clients and CDMOs will take?
OG: The successful model is based on parallel teams based on strategic expectations, working together to make the best out of the platform of the customers’ development portfolio. This preferred type of relationship is not necessarily exclusive (that is, there may be a second or third provider involved), but for practicality’s sake, I think we’ll see a focus on a key core of vendors.
That said, relying on fewer providers requires a very strong trust level, in both the capabilities and the stability of these partners. That’s why you need a very thorough due diligence process in order to qualify such a partner. For many reasons — standardization, simplification, economics, and more — I think this is the direction we’re going to see in the next couple of years.
If you work with fewer vendors, you can improve efficiencies through lessons learned. If you have 20 parties you’re dealing with, then you’re absorbed in administration and management, not in improvement.
CP: How does customer relationship management play into this trend?
OG: CRM is one of the key focus areas for us. It’s more important than ever. If the relationship is not built soundly, then it’s not going to be aligned. You need to be able to share strategies and focus on the work that needs to be done for various stages of pipeline development through commercial manufacture. The relationship has to be nourished at different levels of the organization. When you do that, you can develop an understanding of the true needs of your counterpart.
If that level is achieved, you’ll have a very aligned, efficient, cost-effective way of working together. CRM is fundamental, because it’s at the root of getting all these teams to perform on an ongoing basis. If a healthy and trustful relationship is present, everything else flows almost automatically in the right direction. If it’s not there, you have noise in the system, you have sand in the machine, and you have misunderstandings and inefficiencies.
CP: How are you implementing CRM, and how are your Key Account Managers oriented within that customer-client matrix?
OG: The KAM concept we introduced is really a central part of our business philosophy. Key Account Managers are the interface between the customer and Vetter. They’re the managers of the relationship from both a business and development perspective. In one way, they represent the company but they’re also the voice of the customer into Vetter.
KAM’s deal mainly with multinational companies with different sites, different countries, different cultures, so this role requires individuals who have a fairly large scope of capabilities, social competences, and great communication skills, in addition to being experts in the pharma field. Those individuals are mirroring what is happening on both sides of the equation. Issues that need improvement have to be communicated to us from the customer side, and vice versa.
This is all about setting the framework, setting the atmosphere from which the two sides work. From our perspective, the KAM is like a general manager; he has the leading role in making sure that the relationship of Vetter and the global customer grow in the right direction. He has to bring all the interests and aspirations together.
It’s not a sales position, or a technical development or QA role. The KAM is somebody who’s multifaceted and has the sensibility to make sure that the teams on both sides work well together, and to intervene when something isn’t working 100% perfectly. It’s a critical role, and one that’s requested by the customer base.
CP: Do you think it’s more difficult for the KAM to bring an external problem to Vetter, or to tell a client about a problem Vetter is having in the relationship? How difficult is it to be an advocate for both sides? In which direction do things flow more easily?
OG: We’re very sensitive to our customers’ needs, so we pay attention to a lot of metrics, KPIs and the like. We get a lot of information about what we should be doing. As an organization, we’re very attentive to that.
The KAM is not only promoting Vetter’s perspective, but is also speaking for the customer. His role is understood by the customer. It’s probably easier to get the customer’s issues in to Vetter than the other way around, but it depends on the history with the customer. The ones with multi-year experience, they know they have an asset in the KAM, and that what he has to say is valid, relevant and beneficial for creating overall progress. Long-term customers understand that we work for a mutually beneficial relationship. Both parties need to feel happy with the relationship, and that means both sides need to communicate.
We have ongoing business and quality review meetings with customers, including all the functions involved. We measure ourselves against our KPIs and also measure our customers on metrics like accuracy, forecast deviation, API quality, reliability of delivery schedule and many other parameters. And the customers appreciate that we hold the mirror up and say, “Look, here: these are things you’ve promised and delivered. And over here are areas where there are issues.”
In other words, the KAM has a significant role at the customer, not just at Vetter. It’s almost irrespective of whose payroll the KAM is on; he’s about managing the relationship to improve it for both parties.
CP: How would you describe the health of the biopharma industry? And what about the CDMO business?
OG: Industry-wide, there’s a bit more light at the end of the tunnel, compared to two years ago. The mood has definitely become more positive. The financial situation back then led to higher scrutiny about funding projects. Development funds were tighter and some companies pursued just one or two candidates, rather than develop a full portfolio.
Now, I wouldn’t say we’re in a boom period, but it’s definitely a positive mood. Projects are being discussed with more frequency and more optimism. The pall from two years ago has definitely faded.
What we hear from customers and what we measure internally in terms of opportunities we take in, these tell us that things are moving in the right direction.
Keep in mind that parenterals had a slightly different position than much of the rest of the industry, so we weren’t affected as badly by the recession.
CP: Last year, Vetter added a development services facility in Skokie, IL, bringing earlier-stage capabilities into North America. How integral is that to building these relationships, in terms of working with clients earlier in the development timeline?
OG: It’s absolutely critical to our strategy. By enlarging our development portfolio, and adding a U.S. presence in preclinical through Phase III projects, we strengthen our customer relationships with existing clients and we hope with new ones.
Since the scope of our product portfolio is increased, and we have the geographic proximity to the North American customer base, this will definitely strengthen our relationships. It’s still early, but what we hoped would happen since we have started to accept client projects as well as planned for future ones has been confirmed by our customers.
To quote that character from The A-Team: “I love it when a plan comes together.”
CP: On that note . . .
Oskar Gold is vice president of Key Account Management & Corporate Marketing for Vetter and is responsible for the company’s global business development. Before joining Vetter, Mr. Gold managed the European business development activities of a pharmaceutical component manufacturing company, serving in various functions, including vice president and managing director of several related group companies. Previously, he was director of exports for a galenic pharmaceutical specialist company where he managed European markets and Eastern European and South East Asian business development.
Prior to entering the pharmaceutical industry, Mr. Gold worked for a multinational chemical corporation, and has taught and lectured on international business strategy and marketing at a European university.
Mr. Gold studied at schools in the UK, France and Germany, and he completed graduate studies in international business administration at INSEAD, Fontainebleau. He also holds bachelor’s and master’s degrees in business administration.