The picture is rapidly changing these days. As I had quoted in last issue’s column, everyone at pharma has been closely watching the ‘Patent Cliff’ that each of the innovator companies is facing. This patent cliff has created a huge demand for alternative ways to squeeze life out of existing molecules, getting new indications approved through different dosing or through other forms of the existing molecule. I also believe that pharma and biopharma companies have raised their expectations of contract service providers, especially when it comes to return on investment (ROI). As pharma companies watch their margins get squeezed, they pass on the pressure to the budgets they spend on CROs and CDMOs. The biggest thing a pharma sponsor company expects out of a service provider is a ‘win-win’ partnership (much to my editor’s chagrin). This type of partnership results from some of the following attributes:

Credibility
This is the most important attribute for any contractor, and it is established by virtue of who you are, what you do, how you have performed in the past with other peer sponsor companies. Your output and your ‘industry image’ are not published anywhere, due to NDAs, but these things are widely talked about among peer groups during professional meetings. This buzz, either positive or negative, is quite important to anyone who is looking to outsource. When people are discussing opinions unofficially, they tend to share these opinions so candidly that it becomes the most critical info for any potential outsourcers to be knowledgeable about!

Capacity
A CRO can be an extension of the sponsor company for R&D activities, clinical supply activities and providing quality capacity for these, if and when the need for them arises.

Capabilities
In my opinion, having unique capabilities to do things for pharma always adds an essential flavor to getting that preferred relationship that providers are looking for. This could be in the form of drug delivery technology or it could be in terms of having IP-based capability, which gives a sponsor an added edge when the product is developed and launched. This is something that the firm does not have internal access to or available expertise or training or equipment.

Efficiency
These days, efficiency is a metric that every pharma looks at, when it comes to their CROs. They want to see how their equation for the ‘Speed, Quality and Cost paradigm’ continually improves. Again, ROI is integral to this metric and no matter what, ‘internal’ to ‘external’ efficiency is always premium, when it comes to deciding to do something in-house or to outsource it.

Quality Attributes
For a CRO or a CDMO, pharma is looking for those ‘quality considerations’ that include many of the following attributes, in no particular order: equipment; instruments; with uncertain product volume needs, available scale for manufacturing (pilot to commercial); SOPs; documentation and audit reports.

The Rx-360 for Audits presentation at the recent Contract Pharma Contracting & Outsourcing Conference was quite eye opening, as that practice will be followed by many sponsor companies in the near future. Other quality attributes include: Document and reserve sample retention, OOS and other deviations and failure investigations. For Clinical CROs, complaint and adverse events handling is quite a critical attribute. Some of the CROs, which are experts in conducting clinical and commercial stability programs on APIs and drug products, must stress that the ICH program guidelines are adhered to.

Costs
Although price is not the primary driver for outsourcing, at some point in the lifecycle of a product, it has to become a common denominator for everything what gets done externally. Therefore, it is quite important that you have your FTE calculations done correctly so that you can quote a fully loaded FTE rate to your potential customer, if probed. Depending on the volume of work, this figure could obviously fluctuate. However, it should still be possible to provide a ball-park estimate for the FTE dollar-rate figure, with a tiered approach tied to volume calculations.

I do stress that a successful client-contractor business relationship can be ensured through an open and honest exchange of information. The expectations of both sides of the relationship can be enhanced by frank, transparent discussions of the requirements for an acceptable work product or a service. For cGMP manufacturing projects with CROs and CDMOs, a quality agreement can serve as a strong foundation for ‘win-win’ relationships. (Sorry, Gil!)