There is a good deal of market competition, too, and the first company to market with a drug with a new mechanism of action likely to gain the lion’s share of the spoils, ahead of the competition. With pressure on costs allied to a need for speed, the pressure is on. And, as in any other business, savings need to be made in one area in order to compensate for increased spending in another.
Outsourcing has become a favorite cost-cutting tool. Routine analytical testing is one area where significant savings can be made by getting the work done by an external supplier. About two-fifths of all outsourcing comprises routine testing such as release testing and stability monitoring.1 However, it is essential that the pharma company ensures that any CRO or CROs they outsource to are reliable, meet the highest of quality standards, and can achieve all their compliance and regulatory requirements.
Routine testing that is ripe for outsourcing includes those analytical methods that have, in the majority, already been developed in-house, which can easily be transferred to the supplier as a wealth of detailed information is already available. The way the drug molecule behaves has been established, and all that is required is to take the know-how and pass it on to the external laboratory.
There is a big elephant in the room, however. It is not merely sufficient to find a CRO that can provide the required quality—it is vital that the pharma company trusts the contractor, its staff, and its procedures. Yet there is a real tendency towards an attitude of “guilty until proven innocent.” It is understandable, up to a point. Handing over your precious drug development project is akin to leaving your child with a babysitter for the first time. Logically, you trust them, but deep down there is always the feeling that you need to double-check on a regular basis that all is well.
This distrust can, in fact, be present on both sides, as the supplier needs to be able to have confidence that the client will not suddenly drop them at a moment’s notice. Both sides need to recognize that their goal is to find the right partner for them, one that they can trust implicitly.
Quality, not quantity
Historically, a big multinational pharma company had hundreds, if not thousands, of different suppliers. This posed huge logistical problems as each one needed to be qualified and audited, and repeating the process for all of them took up enormous amounts of time and effort. More recently, there has been a drive to reduce the number of suppliers, cutting the amount of qualification and auditing that will have to be done by the pharma company.
This, too, works both ways. A large global CRO will have multiple labs in different countries and regions around the world, and each of these will likely have many hundreds of clients. Every time a new client is taken on, a credit report and other checks will have to be run on them, and their procedures evaluated.
Global account management is a boon to the CRO, too—in an ideal world, 80% of a big CRO’s income will come from 20% of its top clients, and fewer clients makes life easier. A large multinational client may be sourcing from many different sites at the CRO, but there is still a single department overseeing global quality and a single procurement team. One global master service agreement will cover everyone for all legal and liability aspects. While this will clearly take longer to set up, it will be simpler for all sides going forward and it means any group at the client can go to any lab at the supplier for testing services. The quality has been pre-approved, and all the paperwork is already in place.
The importance of partnership
Although a CRO relationship involves a client and a supplier, the most effective relationships are run as partnerships. A multinational pharmaceutical company, as the client, will rightly state what they require to be done. But from the CRO side, they should not expect to be held to the client’s every whim, and not ask questions about what needs to be done and when, and whether it is appropriate.
Trust is key to a successful relationship that is beneficial for all. After all, both partners aim to be profitable, and have bills to pay and employees to look after. If a client pushes a supplier too hard for discounts, unnecessary additional levels of compliance or has other demands that will add costs, then it may well put the supplier’s long-term ability to do business at risk.
Both sides need to understand the difficulties the other is facing, and find commonality in their desires to make things better. Everyone is looking for on-time delivery, quality that meets specifications, and to make a profit. The client requires delivery to occur on schedule as they will have a launch date or a manufacturing campaign deadline they need to meet; meanwhile, on the other side, the CRO’s laboratory scientists are not dealing with a single client: it has its own schedule, and backlogs can result when priorities altered at the last minute.
The need for quality is a given, but it can be the biggest factor affecting a partnership. And this is where trust comes to the fore: a client that wants to micromanage a supplier’s operations to ensure quality is more likely to hinder than help that quality. This does not, however, mean the client should have no input into the quality. On the contrary: when transferring a project from the client’s labs to the supplier’s labs, involving both parties in quality issues makes life easier for all concerned.
By involving the client in the set-up of lab SOPs, the whole transfer process should go more smoothly. The idea is not that the client is policing the supplier’s operation, but rather the aim is that they work alongside the supplier, with everyone doing the same training and working together as one team. It also means the client can be part of the contingency plan in case of a crisis. These are rarely needed, but important to have, and the fact that this option is on the table only adds to the strength of the relationship.
Assurance of quality
A large CRO with laboratories or facilities in many different countries will likely have a centralized global quality team whose role is to ensure all the labs are running the same global SOPs, to the same level of compliance. The team will audit all of the labs.
It is, however, important to realize that there are unavoidable cultural differences in an international business, and so there will always be some differences between labs. A multinational client should understand this, as they face the exact same issue in their own business.
Acknowledging these differences is an important step to avoiding the problems they might cause. The answer to ensuring consistent quality may lie in additional training at certain sites. Ensuring the SOPs are in the local language, accurately translated, and include all relevant detail is vital.
However carefully SOPs are followed, occasionally a laboratory can suffer from a major issue. With a truly effective global network of labs, if a regulatory problem arises, for example, experts from one or more of the company’s other labs can step in immediately to help fix it. It is important that an issue at one site does not negatively impact trust in the whole network, and by immediately stepping in to remedy the situation, and having alternative capacity at a non-impacted lab should go a long way to maintaining trust. This, again, is something that a large pharmaceutical company should understand: they will know that if they have a manufacturing issue at one site, it does not mean that all of their other sites should be tarnished with the same brush. But it does highlight the need for back-up plans to be in place for all eventualities—and the importance of that strong, trust-based partnership between the two sides.
Overall, there are many advantages in multinational pharmaceutical companies working with global multi-site CROs. The pharma company will deal with a one-stop shop that can provide accredited labs in the EU, the U.S. and Asia, rather than having to evaluate multiple suppliers. The single quality system and master service agreement, sourced by a single procurement department, offers real advantages, and even the route to the discounts that the procurement specialists are looking for as a result of sheer volume of work. The savings in time and money resulting from the availability of a pre-qualified supplier can be significant.
Dr. Fadia AlKhalil’s background is based on a combined foundation of science and business education. She received two Masters of Science degrees from Université de Lille France; one in pharmaceutical chemistry and the second in polymer chemistry. After moving to the U.S., Dr. AlKhalil gained 12 years’ laboratory experience in environmental and pharmaceutical chemistry and 14 years in global business development. She received her MBA in technology management in 2000, and her Ph.D. in international business in 2007. Dr. AlKhalil joined SGS in 2008 and is presently vice president of global business development for laboratory services for the life science services division.