What type of formulation work is increasingly outsourced?
The type of work that is outsourced depends on a complex series of factors – including, most importantly, (a) the capabilities of the outsourcing company and the partner organization, and (b) the needs of the project. For companies that do not have inhouse capabilities, outsourcing is central to their operations and a key driver for their pharmaceutical development activities. For companies that do have the capabilities and routinely carry out at least some work in-house, outsourcing is meant to be a cost cutting and efficiency improvement measure focused on routine, repetitive work. For the purpose of my responses to this questionnaire, I would focus on the latter set of outsourcing companies (that do have in-house capabilities).
With continuing success of outsourcing partnerships in cost and efficiency aspects, the amount and proportion of routine and repetitive work being outsourced continues to increase. This work is important to making decisions and moving forward with pharmaceutical development. At the same time, the experimental work that is being conducted by outsourced partners is not the kind that would have unknown outcomes. In other words, such work would involve extending the boundaries of the known in addition to reproducing some of the work already done. This is exemplified by quality-bydesign, design space, and statistical design of experiment kind of studies. These studies involve investigating the impact of variations in one or more formulation or process attributes. Such work can be and is routinely outsourced.
Emerging trends in the outsourcing landscape include work that goes beyond experimentation. Other kinds of pharmaceutical R&D activities being increasingly outsourced include computational activities such as advanced modeling and simulation, and research projects. The outsourcing of these kinds of work is driven by the focus of a specific expertise in the partner organization. In these scenarios, the outsourcing company partners with the contract company to answer some specific question(s) on the project, but not necessarily desiring to increase internal capabilities in such area(s) of technical expertise. This is also increasingly true of the experimental formulation work, where work related to specific advanced technologies is outsourced to organizations that have developed expertise and experience working with different partners over several years.
Discuss how outsourcing formulation development ultimately accelerates overall drug development.
The outsourcing organization benefits in two significant ways. The first is cost and efficiency improvement. Simply taking some work off the table frees up internal resources for investment in other endeavors. This helps the organization sustain and increase portfolio, research, and development activities with limited increase in investments. A second, less tangible but more pronounced, impact is improvement in the scientific and technical depth of the work being executed. The outsourced partners typically engage in similar work for multiple clients. This leads to development and concentration of expertise and experience. The companies outsourcing their work are indirectly able to tap into this expertise as the two partners work together towards the shared goal of the best outcomes for the project. In addition, the outsourcing company benefits directly by tapping into a technology option that might otherwise have been inaccessible or difficult to execute by partnering with companies that are technology leaders and specialists in a given area.
Small and large pharma decide to outsource formulation development for different reasons. Discuss some of these contrasting key drivers.
The needs of the two organizations might differ significantly. As discussed, the objective each company is looking to achieve would be very much dependent on both the project and the internal capabilities.
How do contract companies differentiate themselves in this competitive market?
From the customers’ perspective, a key benefit that the outsourcing companies look for in an outsourcing partner is the concentration of experience and expertise that they are able to tap into for their project specific needs. This concentration of experience and expertise might reflect in efficient execution of the work, right-the-first-time outcomes, and/or a technology option that is not accessible to the outsourcing company. For a contract company, building on one or more aspects of this value proposition is central to differentiating themselves. For example, the contract companies that focus on a specific, highly sought-after technology enjoy a niche in the marketplace, as their reputation is built and sustained. Some other contract companies might be focused on non-specialized conventional technologies. They are able to gain an edge by exploiting the leanings from multiple different projects and clients to better planning, execution, and troubleshooting of the work being done. In addition, application of technological advancements such as process analytical technologies, and real-time monitoring and control capabilities, can effectively differentiate a contract company from its competition.
Discuss the importance of communication in formulation development partnerships.
The importance of communication in an outsourcing partnership cannot be overstated. Timely and effective written and verbal communication through e-mails, reports, presentation slide decks, teleconferences, and – sometimes – face-to-face meetings is indispensable to a successful partnership. The outsourcing company is always curious about how things are going, whether there are any adverse findings, whether the results continue to support work plans or whether some changes might be needed, and emerging likelihood that the initial planned timelines would continue to be met. The individuals constituting the partnership are always eager to discuss the progress and any findings to determine the best path forward for the project. In addition to fulfilling these objectives, timely communication helps build trust.
Another important aspect of communication is discussion. Both sides of the partnership need to be fully engaged in the what, how, why, and when of the work being done. This engagement can be effectively facilitated by a two-way dialogue in forums such as teleconferences and face-to-face meetings, more than the one-way channels of communication such as e-mail, that are great tools for status update, data sharing, and identifying needs for follow-up. Thus, both partners need to tap into all modes of communication for the specific stages of their immediate and long term needs.
Why the increased focus on outsourcing formulation development to India and China?
As much as it was initially driven by cost savings and greater capacity, the partnerships with overseas organizations continues to grow as the world becomes a smaller place through the technological advancements. Reducing cost and increasing efficiency of telecommunication, audio and video conferencing over high speed internet, and the ability to share one’s computer screen while discussing on the phone, have all enabled partnerships across the continents. A significant limitation in such partnerships is limited frequency of face-to-face meetings. The convenience and availability of air travel options – such as direct flights to distant destinations – have helped, although the cost of international travel continues to be prohibitive. These costs are often offset by the volume of work being outsourced. This makes higher amount of work being outsourced overseas not only a capacity advantage of the partnering contract organization, but also a need to facilitate effective partnerships that can bear the additional costs of travel and communication technologies.
Any closing thoughts?
Outsourcing is likely to continue to grow. As this paradigm evolves with increasing focus on specialization and concentration of expertise to different companies, it presents a win-win outcome for everyone involved.