How far do you go with your outsourcing? This question has by now faced all companies that strive to meet development deadlines by producing material and data needed to advance molecules in the clinic. The need to do so in a compliant and cost-effective way has increased dramatically in the last 10 years as regulatory expectations evolve and R&D budgets are under significant downward pressure.

For evolving or virtual biotech firms the financial questions come easiest, as the funding to build in-house development or manufacturing has too big a price tag for firms with assets only at a preclinical or early clinical stages. For a larger biopharm or well-funded biotech company, the choices put a premium on guessing right about continued robust growth or tightly managing current assets. Larger pharma companies, although having the most resources and thus the most options to consider, often also have the more difficult time of deciding on an approach. The challenge is to determine priorities. For all companies, assurance that quality product can be delivered in a timely and compliant manner is key. I believe that developing an innovative plan to use outsourced services — including reliable process development and manufacturing capability — could set apart a truly cost-effective strategy from one that is only a limited exercise or a reinvention of existing pharma infrastructures.

While significant outsourcing work has been underway for a number of years, few companies have gone all the way in attempting to fully tap the potential benefits. Large pharma and biopharm companies that had previously invested in building process development (PD) teams, quality control labs, and manufacturing facilities have significant money (i.e., overhead) in fixed people resources and bricks and mortar. Moving those fixed costs off of balance sheets and into a place where funds can be flexibly spent would take considerable effort but potentially reap significant cost savings. In larger companies, there was historically little incentive to look for CDMO alternatives to development because a leader’s success has often been measured by how large an organization he or she led and how few risks to issues were presented to pipeline deliverables. Conversely, company founders and leaders of virtual biotech companies have a strict bottom line based on managing funding from milestone to milestone and thus have been practically and effectively working with providers. Experienced CDMOs and contract services companies have worked with companies anywhere in this spectrum of size and comfort with outsourcing. So why is there still so much discussion about how and where to source work?

Biopharma Company Perspective
More established firms will move slowly to “test” one or more CDMOs — either serially or sometimes with multiple companies at one time and often with the same project! The immediate goal tends to be delivering material and information on-time. However, the approaches to do so can involve a complete tech transfer — sharing past data, platform information, and methods — or simply a hand-off of information, with the intent of letting the contract firm figure out the rest. Either approach can work, but sometimes clarity is lacking on both sides about what is optimal. Innovators and CMOs are both susceptible to the inherent risks of bioprocess development — nuances of growing cells and expressing novel proteins — but in general if the transfer of information and reasonable product quality expectations are well thought out, this should be a successful venture. The next step for a larger firm is the more difficult decision.

How does a company move to truly remove costs from the bottom line for process development, bioanalytical and facility costs? A current paradigm might be the outsourcing of one or two projects per year that seem warranted to relieve some capacity restraints and provide a company with some flexible capacity (lab or production slots). It is helpful to remember that significant synergy will not be gained with a preferred CDMO in this manner, due to the lack of regular interactions. Moreover, the dramatic cost reductions and ability to achieve a more flexible development capacity will not be achieved this way, either. The more aggressive and risk-based approach would be a near-virtual model, removing existing fixed capacity and source needs based on actual project flow and sourcing this work externally.

Maintaining key senior technical leads who can understand key product and process issues is a must. It is not unreasonable that the cost savings for a typical large pharma budget could exceed tens of millions of dollars each year. The challenge is two-fold: accepting the added risk of not being fully in control of process development at a CDMO (not that process development is always in control), and the financial burdens of appropriately repurposing assets. The anxiety is increased in a quality by design (QbD) mindset where product lifecycle management is critical and maintaining line of sight from product design through commercial manufacturing drives a control strategy.

CMO Perspective
A CMO must be capable of doing process support and manufacturing drug substance and drug product in a compliant manner. Additionally, the paradigm shift to participating in risk assessments of a client’s processing needs, control strategy and aspects of lifecycle for a product is key for the next step in the journey of client-CMO partnerships.  CMOs need to be prepared for clients across the board, ranging from those who are unsure of what is needed to advance to each development milestone to those having very detailed and nuanced requirements. This should be an expectation for a successful CMO and one that can be part of a synergistic relationship with clients, versus a CMO that essentially offers slots of development or manufacturing expertise and capacity. Some innovation and convergence of bioprocessing practices, such as the use of platform approaches and common equipment and materials, have made this possible from a technical standpoint. CMOs also must be prepared to invest in the talent able not just to execute studies and campaigns but to anticipate client requirements.

Interestingly, the evolving biosimilar industry may offer an even clearer view of what growing biotech or large pharma infrastructure could develop toward. Some smaller biosimilar firms by necessity will take a similar path as many start-up biotechs and avoid significant hiring and capital outlays to control costs and protect assets before key characterization data are known. A start-up innovator company may have one or two molecules for which some unique and many general specifications will be set prior to Phase I.

A biosimilar company must produce material that matches an existing profile for early regulatory and partner discussions. At the outset, it needs to partner with an organization that can offer significant knowledge on process scale-up, bioanalytical methods and GMP manufacturing to assure the production of similar material from the beginning of development. That partner must also offer the client help in the line of sight toward successful Phase III and beyond, all in a cost-effective manner. The dilution of market penetration by (potentially) many entrants into the market will make cost competitiveness essential.

This parallel becomes even more interesting as some larger companies are getting into to the game themselves but will likely not wish to apply the full PD costs in their infrastructure-laden organizations. So, those client companies willing to be “all-in” can elicit a true and perhaps innovative collaboration with a CMO that can benefit both parties as well as stockholders, investors and most importantly patients.