10th Anniversary Special

Having Your Say

By Gil Y. Roth

cover montage by Jessica Carlin

When we first noted the upcoming 10th anniversary issue in our Media Kit last year, I began to have, for lack of a better term, delusions of grandeur. My plan was to write a massive, all-encompassing 5,000-word extravaganza about the 10-year trends and changes within pharma and biopharma outsourcing, exploring how they both result from and feed on the larger changes within healthcare, and setting it all against the backdrop of globalization and the hyperfinance bubble, while keeping one eye turned to the future.

Then I remembered one of the first terms I learned when I started covering this industry in 1999: scope creep.

So I stepped back and re-read the myriad responses that readers sent me after my query on this topic. Looking over these e-mails and the varied, intelligent perspectives they offered on the past decade, it occurred to me that — cliché though it sounds — our readers are the best resource Contract Pharma has.

I know it sounds like marketing-speak, but in this case, it’s true. I’d be nowhere without the interaction I have with our readers. Your feedback’s been invaluable to my education for the past decade, and so that’s why I turned our 10th Anniversary Retrospective over to you. On the next nine pages, you’ll find readers from across the spectrum answering one not-so-simple question:


Drop me a line at gil@rodpub.com and give me your two cents on the topic, too! —GYR

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Outsourcing has grown considerably over the last 10 years and is seen as part of the business these days. Ten years ago, the main question was whether to outsource. Now the questions are what and how much to outsource.

—Pinar O. Cicalese, Ph.D., biopharmaceutical technology manager, GlaxoSmithKline - Global Manufacturing and Supply

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Hearty congratulations to Contract Pharma on the occasion of its 10th anniversary! The journal has been a remarkable resource for those involved in the contract services, initially in the U.S. and throughout the world. Practitioners benefit from this information, and one hopes to offer the editor and the journal similar congratulations 10 years hence.

The editor’s remit is to discuss the biggest changes that have faced us during the past 10 years. Of course many topics spring to mind, but to this reader the chief of these is ethics: Contract Pharma was born, one suspects, from a perceived need among industry professionals to ensure that contract services were conducted according to the highest ethical standards, including such thorny topics as accurate, fair, and complete reporting of data and certified compliance with all relevant regulations.

Ten years ago we were concerned about these issues, and the passage of time has only heightened our appreciation of their importance. We engage in serious business that affects human welfare: Our bottom line, really, is people. Only with honesty, integrity, and the highest standards of ethical behavior can we continue to offer services that benefit our constituents.

So here’s a challenge for Contract Pharma: Don’t become comfortable, be hungry, and continue to lead the way. [Technically, that’s three challenges, but we’ll do our best!—Ed.]

—name withheld by request

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At a macro level, the largest changes in the last 10 years that have occurred in the pharma/biopharma outsourcing-contracting-consulting space is how it has become totally mainstream and in many ways regarded as a necessity to being competitive in a world where the classic pharmaceutical industry model no longer works. Layer on top of that what Thomas Friedman of New York Times fame labeled as The Flat World and it is no wonder that the outsourcing bandwagon is so much the order of the day.

The way Wall Street would put is that this trend is a result of a “secular change.” That change is rooted in failed pipelines, lower R&D productivity, the rapid ascent of generic drugs (over 70% of U.S. prescriptions in 2008), increased government regulations, the acknowledgement about the effectiveness of the sales force, extraordinary expense profiles, a public that will not or cannot appreciate the value of the product, a hostile congress and the advent of significant healthcare reform. When you combine those challenges with the enormous advances in technology and communication that enable global R&D and supply chains, an outsourcing strategy is not only prudent, it is a requirement. When one adds on the acknowledgement of the demand generated by the rising wealth and demand for healthcare from very rapidly developing countries including India and China, the necessity of using outsourcing as a way to enter those markets is on the top agendas of many senior executives in the industry.

While the pharma/biopharma industry has been a notoriously slow adapter of change (yes, there are lots of reasons, not the least of which are regulatory) compounded by risk-averse cultures, the one thing they are not is naive. Gone are the days when top-line revenue is the only thing that is of concern of management. Today there is a focus on the bottom line, which includes unit costs, effectiveness and efficiency. Sure, there are other strategies being deployed, for example we have identified two camps in the industry, the consolidation camp and the diversification camp.

The “consolidators” would include the big pharma mega-mergers and include even some of the consolidation seen by several large biotechs. When you couple a parallel path by the big CROs, CMOs, consultants, etc., the appeal of awarding large pieces of business functions in either long-term contracts and/or joint ventures becomes attractive.

In a similar fashion, the “diversifiers” want to focus on their new business endeavors such as animal health, consumer pharmaceuticals or diagnostics and therefore are far more likely to look at an outsourcing strategy as a natural way to allow management focus to be aimed at their new strategies.

The outlook holds even more to come with innovative joint ventures, terms and conditions and capabilities that will aid the industry to continue its path toward attractive business results.

—Lawrence J. Rothman, Ph.D., executive adviser and editor, PharmServices

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One of the biggest changes in pharma outsourcing the past 10 years involves the evolution from nearly pure tactical outsourcing on a project-by-project and functional basis to a more strategic mode of outsourcing involving bundling of services. Biopharmas have reduced the number of CROs and technology providers that they employ and given larger shares of work to companies that can manage various facets of complex, global studies. As the need to conduct global studies has grown due to patient recruitment requirements, sponsors have found themselves shifting their outsourcing to larger, global CROs to manage trials.

A second major change involves the types of molecules in development. Today, as opposed to 10 years ago, the biopharmaceutical pipeline is far more composed of biologics. While chemical entities still comprise the majority of molecules, it is estimated that the pipeline consists of between 30-40% biologics, more than double the amount of 10 years ago. Large pharma companies which 10 years ago focused mainly on small/ chemical entities, are now also discovering, developing, manufacturing and marketing biologics. Within the past few years, moreover, large pharmaceutical companies have been active in acquiring some of the largest and most prolific biotechs. Today, most firms are hybrid manufacturers, producing both biologics and small/chemical entities. As a result of biologics growth, biopharmaceutical firms have adjusted their outsourcing behavior, requiring experience in both chemical entities and biologics from CROs.

Finally, the third large change in my perspective has been the move from paper-based trials to electronic ones. The adoption rates for EDC, ePRO, IVR/IWR, CTMS, and other data collection and management tools has exploded in the past 10 years. This growth in electronic data has been part of a larger effort amongst sponsors to streamline clinical trials, increase trial productivity/efficiencies, and make data available to clinicians to examine throughout a trial rather than mainly after database lock. With the rapid growth of translational medicine, adaptive trials, and global trial conduct, it has become imperative to collect and manage data electronically. Failure to do so slows trial progress and time to market.

—Joe Bedford, director of marketing, Almac Group

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Here are my observations over the last 13 years (that’s when I started paying attention to outsourcing):

1. It has become the rule rather than the exception to outsource, at least during the early stages of a project. Building infrastructure is not a good thing to do prior to de-risking a portfolio of projects; it just makes good financial sense to outsource. In a way, this trend has made the industry appreciate what goes into making bio/pharmaceuticals.
2. As a consequence, there is a high demand for pilot scale GMP facilities that can make enough material to go through toxicology and Phase I through to Phase II proof of concept.
3. There is also a growing need — or shall we say now the need is recognized — for people with skills in virtual project management, who know how the process development pieces need to integrate with the rest of the functions, and who know what the problematic areas are likely to be. Most important is an appreciation for those who know the difference between development and commercial manufacturing.
4. A couple of hot areas: real time monitoring (in line monitoring) for microbial contamination; electronic batch records; quality on the floor . . . have the quality people review the records right then and there; strategic clinical supply logistics (getting the most out of a lot of material, not wasting clinical supplies on inefficient block sizes, etc).

Congratulations on reaching 10 years!

—Elise Brownell, principal, co-founder, Zephyr Biotech

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I think one of the biggest changes has been the move to offshore sourcing. The change has already started to occur in outsourcing areas where the service cycle is shorter, such as analytical testing, formulation, process development, clinical trials, packaging, etc. The impact has not been felt across all sectors of the provider market yet, but it is on the way. In many areas, such as final dose form outsourcing, it will take some time for the change to be fully felt due to the need for the sponsor to file for approval to make a site change on an existing marketed product. The cost for a site change may be a deterrent as well, since this may cost over a million dollars depending on the dose form. For lower demand products, such an investment is not usually financially prudent. However, for products that are in the clinical stages with no manufacturing site yet chosen or approved, the decision to use an offshore site is much easier made as there is no regulatory or financial hurdle to overcome. Those are the situations where the financial incentive becomes significant and the product is manufactured at an offshore site.

—Bob Calabro, president, Pharma Outsourcing Advisors

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This is still a relatively young sector. The last 10 years represents a large proportion of the overall evolution of the Life Science, fine chemical and contract manufacturing industry.

There have been significant structural and well reported changes within the pharmaceutical industry over the last decade. A number of these changes have presented significant challenges to profitability for pharmaceutical companies and CMOs alike, and this rate of change does not seem to be slowing.

We expect the trend in outsourcing to continue as pharmaceutical companies move out of bulk manufacturing, allowing themselves to focus on their strengths as value chain integrators and product marketers. In turn this gives further opportunity for CMOs to play to their strengths (and raison d’etre) in supporting a leaner and more efficient industry with operational excellence, high levels of service and with the value added capabilities in their offerings.

Leading CMOs will continue to look at how they ‘can make a positive difference’ in responding to the trends and unmet needs. For example, new product groups will be needed as pharmaceutical companies seek to develop new and improved drugs. This is reflected in the targeted areas of investment for CMOs like ours, in such areas as high potency, viral vaccines and bioconjugation.

—Mark Cassidy, director of sales and marketing, SAFC Pharm

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The most noticeable change that we have seen is that companies are coming to us better prepared than in years past. Where there was once an assumed lead time of four to eight weeks to get a product onto our lines and out the door, there is now a level of understanding that the manufacture of a GMP lot could take upwards of three to six months.

It’s a maturing industry that is becoming increasingly more educated about the subtleties of technical transfer into a GMP facility.

—David Flowers, director of business development, HollisterStier Contract Manufacturing

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For me the biggest change is clinical trials going global. There has been a complete shift in the attitude of sponsors towards using sites in emerging markets. Initially they needed a lot of convincing to look at sites in emerging regions for trials, and now they seem to ask for a CRO’s experience in these areas at the outset of a business pitch! In the early 2000’s pharma companies seemed to be a bit reluctant about areas in Eastern Europe, but by 2004-2005 seemed very confident and enthusiastic to set up trials there. In fact it became a core strategy. We then had the same thing happen with China and India a few years later. The success of trials that have been run in these emerging regions and the improving regulatory conditions have convinced sponsors of the benefits of working in these countries. Furthermore, the fact that data will be considered by FDA and EMEA has encouraged companies to become more global for their development programs. Despite this, there still needs to be a tightening of the regulations to protect patients in these countries. It is critical for the pharmaceutical industry that they are seen as working ethically in emerging markets and are not portrayed as exploiting these areas just to gain access to more patients. In this regard anything the regulatory agencies can do to set standards for international trials so they are legally enforceable would be very welcome.

—Faiz Kermani, account manager, Health Interactions

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Our experience in outsourcing of aseptically filled biological and small molecule products dates back to the 1980’s when fledging pharmaceutical companies such as Genentech, Amgen, Centocor and others were looking for assistance launching their initial products. In a lot of respects the contract business hasn’t fundamentally changed since then when you consider contract customers’ basic demands: demonstrable commitment to their product and supply relationship, demonstrable experience to bring something tangible to the manufacturing process, and unwavering recognition of quality and compliance in all facets of the contract manufacturers operation.

What has changed in the past 10 years is the heightened scrutiny around the detail of the quality and compliance aspect driven by rising regulatory requirements, forcing up industry standards. The increasing barriers to entry make an ideal situation for those CMOs prepared to invest to stay compliant and embrace new concepts in quality and equipment to keep ahead of the rising regulatory tide. Good contract customers emerging in the past 10 years are those that raise the hurdles even higher than the regulations and collaboratively work to achieve these standards. We believe that in aseptic manufacture in particular, the quality demands and expectations are so high that customers will continue look to domestic manufacturers whom they can trust to support their outsourcing needs.

—Stuart Hinchen, president, JHP Pharmaceuticals

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1. Increased pressure from regulatory authorities for sponsors to “manage” their contract service providers, i.e. Quality Agreements, Change Control, Deviations, Investigations and Complaint Investigation. This trend has required establishing closer relationships between sponsors and service providers to support a more collaborative management approach to Quality issues.
2. Increase in safety issues that have led to greater levels of scrutiny regarding the pedigree of supplies. Both sponsors and service providers alike are expected to establish a more “forensic view” towards qualifying starting materials, components and vendors.
3. Tremendous increases in global clinical trials, driven by maturation of clinical trial sites around the world, higher enrollment targets (particularly in orphan diseases) and speed to market forces. This trend presents significant growth opportunities to support diverse filings, labeling, importation, testing, release, and distribution services.
4. High potency drugs have created demands for both the facilities and expertise necessary to safely handle these compounds. We have seen exponential increases in drug potency resulting in completely new standards of cleaning validation, permissible exposure, and facility/process design around containment.

—name withheld by request

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First, there was the acceleration of virtual companies that worked with a handful of key scientific executives who had acquired some pharma product rights but had no facilities. This came on the heels of every new company having to have its own facilities, then discovering that they were not needed to reach proof of concept. These virtual companies brought the proof of concept and first-time-in-man studies to the forefront of accelerated decision making on go/no-go decisions.

The next key development was the acceptance of large pharma of the proof of concept planning and using it in outsourcing planning. So now we see large pharma clients using the same speed to first-time-in-man studies as the smaller virtual companies have done for a while.

Finally, outsourcing management has become a common management theme in large pharma, with partnering and outsourcing planning now a key part of the whole client-service setting.

—Phil Hodges, president, Metrics, Inc.

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The major change we’ve seen in the past 10 years has been the emergence and fast growth of the biopharma CMO business with its current main focus on monoclonal antibodies. An industry pipeline of more than 1,000 active products at the various stages continues to fuel this growth and the outsourcing demand for cell line constructions, process developments and manufacturing services.

Another important change has been the weakening of the European and U.S. industrial base for the production of traditional pharmaceutical intermediates and APIs, following the trend toward outsourcing to low cost countries and leaving the industry with a significant amount of overcapacity. This situation is obviously exacerbated by two major economic crises during this span.

Increasing capital restrictions, cost consciousness and risk mitigation are the key drivers for a continued outsourcing trend and innovative and flexible CMOs will continue to be important partners to this industry.

—Stephan Kutzer, chief operating officer and president, Lonza Biopharmaceuticals

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From its inception, the outsourcing of CMC work was primarily done by big pharma looking for extra capacity or outsourcing work that was considered non-core to their business, such as micro and raw materials work. Today big pharma’s views on CMC outsourcing have become less tactical and more strategic in nature. No longer is the “end user” the decision maker. The decision in the medium-to-large pharma is now controlled by the procurement managers and may span multiple facilities worldwide. While capacity, expertise, TAT are key drivers, moving the decision into procurement’s hands means price is becoming the major factor in the decision-making process.

Compounding the price factor further, negative economics conditions have pharma and bio companies seeking creative solutions to get their work done while grappling with a fixed or reduced budget and staff. Outsourcing in the traditional fee-for-service model is still prevalent, but the use of FTEs and Professional Scientific Staffing (employed by the lab at the client’s site) offer innovative, cost-effective outsourcing strategies without the fixed-headcount worries, which is a timely concern.

Other trends in the outsourcing market are:

CMC providers have expanded their service offering to gain more of clients’ outsourcing dollars.
Smaller pharma and biotech clients also see outsourcing as a strategic part of their business plan. While their scientific needs may be similar to traditional pharma companies, working with these clients require a more consultative approach that requires the vendor to provide services like project management to help guide the client in the drug development process.

Overall, 10 years ago, customers would essentially tell us the types of lab services they needed. Now, beyond the scientific expertise and regulatory compliance expectations, they come to us for experience, program management and solutions to their ever-changing laboratory and staffing challenges.

—Eric Hoffman, senior director of business development and strategic marketing, Lancaster Laboratories

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The biggest changes I have seen over the past 10 years in pharma are in the outsourcing of commercial manufacturing/production all over the globe, followed by the huge shift to outsourcing of Clinical Manufacturing and Clinical Trials.

The major reasons of course are economies of scale and trends towards lowering overhead and costs. The mega-mergers among big pharmas have also caused this shift towards outsourcing. Also, due to the metamorphic changes of globalization, emerging markets such as China and India have provided the biggest impetus towards this trend; pharmas have taken note of IP protection related changes in these emerging markets.

In addition, we have seen a big boom in growth of biologics in the last few years. Growth in MAbs and vaccines in the last five years suggest that these sectors will continue to rise in the years to come. This also suggests an enhanced probability of success in clinical phase transitions for the biologics compared to those for small molecules, due to a variety of reasons.

—Makarand S. Jawadekar, director, portfolio management & performance, Pfizer Global R&D

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10 Major Trends

1. Pharma “blockbusters” have run their course
2. In general, the belief that biotech will be the next boom is false. Only the largest biotech companies have been successful in commercializing new biologics and becoming self-sustaining. Once-smaller companies like Imclone, Biogen and Genzyme (which are all parts of or are themselves large biotechs now) are exceptions.
3. The CRO/CMO/CDMO space shifted away from a pure supplier/customer relationship to a strategic partner relationship where risks and rewards are better integrated into the relationship.
4. The U.S. prefilled syringe CMO business has grown to more $300 million from less than $20 million in 1999.
5. With changes to EU guidelines, cytotoxic and highly potent compounds now require much more stringent containment controls, opening up a new opportunity for CMOs.
6. Consolidation has and will continue to occur in the development space.
7. The debt available for large private equity and start up financing of CMOs/CROs is nowhere near as prevalent as five years ago.
8. Valuation multiples in the space have gone from 10X to 6-7X in three years.
9. There is a tremendous talent pool available now due to pharma downsizing. This has historically not been the case.
10. Overall outsourcing demand has tempered vs. historical standards. There is some excess capacity in the space; until this capacity is consumed, prices will remain in check when compared to historical standards.

—L. Lee Karras, chief executive officer, AAIPharma Services Corp.

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The biggest difference has been the increased capacity of the CMOs in response to the lyophilization shortages of five to 10 years ago. This helped bolster the importance of the CMO industry to major pharma as well as startup biotechs. It has helped secure the industry and its importance for many more years to come.

—Rick Lapointe, vice president of technology & acquisitions, OSO Biopharmaceuticals

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Biggest Changes

• M&A activity
• Excess capacity in the market place (innovator and contract manufacturers)
• Willingness and the degree to which innovator companies outsource key products and manufacturing steps to CMOs

Factors for Success

• Operational performance and meeting commitments will build a relationship quicker than anything (well, almost as fast as their failure will erode one)
• Clarity of intent, commitment and alignment at all levels, especially senior management of both organizations, is vital to the health of the relationship
• Frequent, transparent and frank dialogue is the best way to resolve key issues in a mutually beneficial fashion.

—Bob Kanuga, executive director of external manufacturing operations, Merck & Co.

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The pharma outsourcing business has gotten more sophisticated and very competitive over the last decade, thus clients have greater choice and leverage when dealing with manufacturing partners. This has resulted in the request for performance-based contracts where goals and objectives of both the client and the supplier are perfectly aligned. These contracts drive necessary performance by the contract manufacturer as well as create an environment of partnership and collaboration between the two organizations.

—Roger Martin, vice president, sales and marketing, Harmony Labs, Inc.

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Five Big Changes

1. A growing realization in big pharma that they could not be experts in everything.
2. An increasing number of spin-outs from universities.
3. Availability of VC funding that was comparatively easy to obtain, as many VCs did not and still do not understand pharma dynamics.
4. Availability of surplus sites and equipment due to mergers, down sizing, right sizing, etc.
5. Pressure to cut costs to maintain earnings in the light of patent expiries.

—Chris Moreton, consultant/advisor, FinnBrit Consulting

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The biggest change in the global market is the change from small molecules to large molecules which now require cold chain management across the world.

In addition, the demand for oncology projects has resulted in the need for potent handling capabilities.

The third major factor is the emergent global markets, specifically “BRIC.”

—Vincent Santa Maria, president, Bilcare Global Clinical Supplies, Americas

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I think the single biggest change in pharma/biopharma outsourcing in the past 10 years is the increase in number of company touchpoints that occurs to bring a molecule to market. Traditionally, the act of drug development would very likely have occurred within the same innovator pharma. The goal was to take a molecule to market and most development candidates were discovered in-house. When work was outsourced, innovators often sought global CROs, one-stop shops that could address capacity limitations or reduce development costs.

These days, companies manage product development pipelines through a variety of means; in-licensing is an important strategy. Accordingly, today’s pipeline candidates arrive with a history of multiple innovator touchpoints. (I have, on more than one occasion, heard of scientists “meeting the same compound again” upon moving to a new company.) The number of outsourcing touchpoints have likely increased, as well. The one-stop shop model works well when compounds have straightforward properties and when company spend is large enough to guarantee capacity and keep timelines.

But the model doesn’t work well for everyone. Virtual and emerging pharmaceutical companies seeking to sell at proof of concept or Phase IIa may be underserved by the volume-based models of the one-stop shop. The ability to overcome challenging molecular properties (poor solubility, poor bioavailability, limited API) may require a specialist.

I believe that these changes are positively transforming the pharma outsourcing sector. Where past strategy relied so heavily on M&A, the current state of the industry provides great opportunity for strategic marketing. Proper positioning requires an understanding of client needs and the willingness to build solutions to address those needs. Expansion alone cannot provide lasting advantage, but the unique combination of assets aligned to provide solutions that help clients work smarter, faster, or avoid costly delays has the potential to build sustainable competitive advantage.

—Richard V. Myer, director, business development, Xcelience, LLC

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The biggest change in pharma/biopharma outsourcing in the past 10 years has been the biopharma boom:

• the rise of biopharmaceutical blockbusters
• the growing pipeline of small and medium-sized biotech companies
• the emergence of biosimilars

—Friedrich Nachtmann, Ph.D., head of biotech cooperations, Sandoz Biopharmaceuticals

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The most significant trend of the past few years is surely the all-embracing changes that have taken place in all segments of the pharmaceutical and biotech industries. And they are still taking place. These include the expiration of patents, cost pressures in healthcare, up-and-coming markets and modified financial frameworks.

As a CMO, the changes have brought about many opportunities and new challenges for us. Outsourcing pharmaceutical production has become accepted, and that means orders for us. On the other hand, the demands made on us have become greater as well. Our customers not only want their products to be filled, but they also request support in development, in the approval process and in the long-term market supply, through sustainable lifecycle product management.

One of the emerging trends for the future, especially among larger companies, is the investment in pro-active early product lifecycle management strategies throughout a product’s entire life. Getting a drug on the market is no longer enough. Keeping it there and managing its success is just as crucial.

—Peter Soelkner, managing director, Vetter Pharma International

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On the bioanalytical side, I think the belt tightening and pharma consolidations have forced at least a re-examination of just what gets done inside, what gets done outside, and whether the outside work is done overseas or in the U.S. I believe things are still in flux, with individual company financial models driving the decisions more than any sort of industry-wide strategy. The need for the development of good working relationships with a set of trustworthy laboratories may in part drive some reluctance for fast swings in industry trends.

—name withheld by request

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As the decade began we saw issues with the NASDAQ that made life tough for small biotechs sponsoring outsourced science. At decade’s end, we see similar issues for small discovery companies as investment capital is rattled by the potential of healthcare reform to discourage innovation. Between the two inflection points we saw the very rapid rise, both in talk and reality, in moving sponsored R&D globally. Over the years we’ve had a straightline increase in concerns for safety as reflected in more focus on QT prolongation and drug-drug interactions. It’s tough. It always has been tough. Stay on task. Fail fast and focus. Multitasking doesn’t work. I’ve tried it.

—Peter T. Kissinger, Ph.D., chairman and chief executive officer, Prosolia, Inc.

ONLINE BONUS

We ran out of space in the print edition, so here are more responses to the question of how pharma/biopharma outsourcing has changed in the past decade!

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The biggest challenges in the last 10 years have included:

• Everyone and their brother thinking they could put up GMP capacity in the early part of the decade only to see outsourcing demand shrink and a glut of capacity to be mothballed.
• Excess captive capacity being made available for contract manufacturing without associated "service business" infrastructure, mindset or skillets.
• The perennial impending "crisis" of lack of biomanufacturing capacity that never came, which we like to call, "the boy who cried wolf-cells."
• The misconception about the potential shift of everything to China or India and the resulting overreaction on pricing by western CMOs.
• Continual attempts to create "one-stop-shops" when there can be no such thing, given the diversity of capabilities and skills required across the development value chain. Like car makers trying to be good at making car radios too.
• Too much fine Fine Chemical mentality, not enough Pharm. Dev. and Service mentality

But it's all fixed now. . . .

—name withheld by request

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In looking back at the changes over the past decade it's been quite interesting to see a number of the biopharma organizations evolve from an R&D, delivery-based focus — often selling the rights to their compounds to big pharma — opt to start commercializing and take products to the market on their own. Many have been quite successful, while others have learned some difficult lessons. As the majority of biopharma organizations remain committed to the outsourcing model, the demands for contract service providers should continue to grow.

—Dan Stehn, director of biotechnology packaging, Sharp Corporation

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With mega mergers, there are more pressures on outsourcing personnel to handle more projects. When an intermediate is needed, there is increasing reliance on computerized systems to find intermediates. This also offers a way for niche players to compete with the so-called "one-stop shops" as well as with agents who have access to outsourcing people in big pharma.

Some of the systems used, I am told, are eMolecules, DWCP (Directory of World Chemical Producers), SciFinder, and SmartChem. There are other systems, as well as proprietary systems set up by the various Pharma companies.

—Martin Steinman, Kuraray Pharma America

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Although the most talked-about trend in the pharmaceutical/biopharmaceutical outsourcing industry is the noticeable increase in the number of companies outsourcing to India and China, we see the emphasis on data quality as critically important. The recent FDA‚Äàmandate on Incurred Sample Re-analysis (ISR) has set a renewed focus on assay reproducibility, a function of both assay accuracy (systematic bias) as well as precision (random error). As much as 20% of incurred samples can be part of the ISR study and successfully meeting the requirements is a metric indicative of bioanalytical assay quality. This metric requires agreement between original and repeat results, and more often than not, reflects the quality standard of the organization.

CROs such as ours are highly quality driven, and do so by establishing a 'process-driven' quality standard. Such an approach ingrains a quality metric in every step of the assay, from sample handling to reporting. This solution provides a consistent quality focused approach, which is a critical component of GLP, and results in improved reproducibility of results, the first time around. This is key in allowing sponsors to bring their drugs to market faster.

—Dr. Rohan A. Thakur, associate director of mass spectrometry, Taylor Technology

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1. Asian Outsourcing: single biggest change in the industry,
2. Pharma industry mergers continue unabated,
3. Increase in number of competitors in every segment of contract services and accompanying price competition,
4. The advent of the reverse auction in on-line bidding of contracts;
5. The creation of the terms CDMO and CRAMS,
6. The decline in the drug development pipeline (number of candidates approved),
7. Surviving the worst recession in 70 years,
8. The introduction and popularity of the "Contract Pharma" Outsourcing conference, and
9. We still don't have harmonized GMP regulations.

—Sam Ricchezza, senior director, business development, AAIPharma Services

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For me, much removed from day-to-day activities, the big change has been the gradual trend of outsourcing of any function by Big Pharma. Some of it came before 1999. Once upon a time, all of the functions within a Pharma company were provided by its employees. Little by little functions once performed by FT Pharma companies were outsourced. At first facility cleaning, then security. Later, analytical functions for older products and then older projects not yet NDA'd. Mail Distribution and temps in all phases of development, analytical, formulation development, so much so that some companies had temps — provided by outside vendors — who could garner five-year service awards. Rules were made and broken to avoid suits from the temps alleging that they were truly employees of the host pharma company. My previous employer eliminated all safety/tox studies from in house and outsourced them. Analytical work was still being outsourced to a lab 60 miles away.

QA type positions grew to monitor and facilitate the transfer of information and work materials between the vendors and the host companies. I am sure that clinical CROs are doing a fair share of the clinical development, and the results are shipped off to vendors who prepare reports and regulatory filings.

One of the biggest changes I saw was the change in temp personnel available in areas such as analytical and formulation development. At first, the temp BC chemist pool had mostly rejects, people with limited skills and limited enthusiasm, unable or unwilling to meet expectations. This changed; recent college grads and downsized experienced veteran types now fill the temp pool, and they are highly competent, very eager and very enthused. The vendors who supply the new talent pool offer benefits to their clients that include insurance and vacation pay.

—Frank Chrzanowski, Ph.D., fmr. McNeil Pharmaceutical

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Over the last 10 years I have seen the mergers of many companies and the loss of positions in the industry. At the same time the proliferation of virtual companies is amazing. This has given the opportunity for contract development companies to satisfy the demand, except for the 2008-2009 timeframe, where the funding for startups has dried up. The rise of India and China to provide CRO and CMO services is having an impact on the established companies in this country.

—Dilip Parikh, president, DPharma Group

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In the last 10 years the industry has seen a definite shift from project-level outsourcing to process-level or functional outsourcing. Sponsors have seen value in strategic outsourcing and are now getting comfortable outsourcing critical processes that were previously considered core competencies that must remain in-house. First, clinical trial activities were outsourced. Now entire regulatory submissions and the subsequent maintenance activities that support the lifecycle of a submission are outsourced.

I think we as an industry are also starting to get past our self-inflicted constraints on outsourcing initiatives and see greater value in a more holistic approach that is not bound by departmental barriers. I think we are also seeing a much more partner-oriented approach from sponsors. Industry leaders aren't just looking for warm bodies at a good price, they are looking for insight, intelligence, capabilities and capacity: value for their outsourcing dollar.

How has our sector responded to the change? I think the Regulatory function was slow to jump on the outsourcing bandwagon, for all of the right reasons. Regulatory submissions are mission critical and complex endeavors that require smart people, clean processes and automating technologies. The market has evolved in the last 10 years. Outsourcing partners have gained expertise with electronic standards and modernized processes and are now competing on efficiency, productivity and compliance, providing viable and competitive alternatives to developing these capabilities in-house.

Finally, technology has played a large role in the evolution of outsourcing. Collaborative tools have enabled greater transparency and tighter integration of partnering organizations. Communications are much simpler and easier to disseminate, allowing sponsors to consider low-cost centers in emerging markets while also enabling quicker access to specific regional knowledge of local market requirements around the globe.

—Monique Garrett, vice president, global marketing, Octagon Research Solutions

Gil Y. Roth has been the editor of Contract Pharma since its debut, yes, 10 years ago.