1. What type of formulation work is increasingly outsourced?
HC: QbD (Quality by design) and DOE (Design of experiments) related to formulation development have been increasingly outsourced to increase the efficiency of research experiments and decrease the time needed to perform them. Novel formulation development strategies (solid dispersions, supersaturated drug delivery systems, selfemulsifying drug delivery systems) as well as technologies that increase the solubility of poorly soluble compounds are also increasingly outsourced. New techniques for physicochemical characterizations, in vitro and PK modeling techniques, and cGMP facilities are gaining focus in outsourcing and becoming an integral part of drug development programs.
DB: In our experience, companies first outsource those projects for which they do not have pre-existing resource and they do not, for whatever reason, wish to develop this capability.
This may be recruiting personnel with the relevant experience, buying equipment with which to prepare the formulations or (and this is probably the most common) developing the capability to characterize the product. This is very common with topical products where the investment in rheometers, Franz cells, and similar is more than most companies are willing to consider.
So the specific types of work being outsourced vary considerably from company to company. That said, we are seeing a lot of inquiries for topical product (both sterile and non-sterile) development as well as for oral suspensions.
DP: The pharmaceutical industry is a conglomeration of many business functions and previously major pharmaceutical companies had outsourced several non-core functions. However, more and more companies are outsourcing major chunk of their research and development activities, which includes formulation development. The formulation work that is being outsourced ranges from early formulation development for animal studies to formulation development and optimization for phase I, II and III under cGMP compliance. In early formulation, the outsourced work includes physicochemical properties, excipient screening and feasibility for target-specific formulations. As the number of poorly water-soluble API is high, formulation development such as solid dispersions, lipid formulations, specific patented techniques to enhance solubility and develop formulation based on such techniques, is increasingly outsourced. In late phase formulation development, outsourcing involves optimization of certain formulations and manufacturing of formulation for clinical trials.
MW: In our experience, we’ve seen an increased demand for pediatric formulation development and work on potent molecules. The former is obviously linked to the US and EU initiatives to promote the development of age appropriate medicines, and the latter is predominantly driven by oncology products. These development activities take more time than standard solid oral dose formulations, due to increased preparation times for containment, clean-down and the development of more sensitive analytical cleaning methods for pediatric formulations.
RL: Several underlying factors in drug development translate into trends in formulation outsourcing. First, the important shift in the overall development paradigm for novel medicines of going “fast and lean to clinical Proof of Concept” (PoC), has replaced previous concepts of “early fi nal” and the like. To ensure a reasonable overall development pace and spend in the pre-PoC phase, clinical service forms –drug-in-bottle, powder-in-capsule, etc. – are being utilized where the biopharmaceutical and physico-chemical properties of the API at hand allow. This trend translates into an increasing amount of formulation work in the pre-PoC phase to be sourced externally.
Second, the aggregate portfolios of pharmaceutical companies show increasing numbers of drugs that need parenteral formulation technology, mostly driven by the growing number of biomolecules under development. External sourcing of standard parenteral formulation work, as well as development work on pre-fi lled syringes and delivery devices, is growing based on this portfolio shift.
Third, the increase of poorly water soluble small molecules requires utilization of sophisticated formulation technologies with the potential to increase oral bioavailability more often than in the past. This trend drives outsourcing of formulation work to drug delivery specialists who offer technologies in lipid formulations, hot melt extrusion, spray drying, nano-milling, and more.
CV: Historically, new active ingredients were targeted to oral tablets or vialed small volume parenterals. Additional delivery routes were typically investigated for life-cycle management. This approach was well-suited to development of active ingredients selected by rapid animal model screening for effi cacy against a range of diseases.
As knowledge of biochemical pathways has increased, active ingredient development has evolved into beginning with a hypothesis of a new therapeutic biochemical pathway. Using rapid throughput screening, molecules are selected to target that specifi c pathway. The most important step is demonstrating the viability of the therapeutic rationale and less important is having a molecule with optimized stability, solubility, bioavailability or activity. A more robust molecule can be later designed incorporating knowledge learned from the fi rst active ingredient.
Formulation development for novel dosage forms or delivery routes has become a fi rstline option for commercialization. The core competency for these novel approaches frequently resides in contract formulation developers.
2. Discuss how outsourcing formulation development ultimately accelerates overall drug development.
HC: Outsourcing formulation development helps in the quick development of potential APIs. Availability of reputed for increased collaborations. Advancement in the field of information technology has further fueled outsourcing due to increased online collaborations. It has reduced time significantly for safe, reliable and confidential information/technology transfer.
DB: We see two examples where outsourcing formulation development can lead to a shortening of overall timelines. The first area is in the development of formulations for pre-clinical use by companies specializing in this area.
Velesco is frequently approached by clients ready to start a tox study but preparing a product suitable for animal dosing is proving problematic. Usually several weeks have passed before we become involved. Formulating for these studies well in advance can significantly shorten the overall timeline of the toxicology program.
The second area is where a company wishes to concurrently develop more than one formulation. Even where the company has the capability to develop the second dosage form they frequently do not have the capacity and so it is outsourced.
The pediatric rule has encouraged this with companies’ actively progressing pediatric programs (and hence needing suitable formulations which are predominantly oral suspensions). The resultant patent life extension more than adequately pays for the increased resources needed to file the two formulation types at the same time.
DP: Drug development is a lengthy process and outsourcing formulation development can definitely hasten this process. Every target is different and not every company has expertise in developing formulation for those targets. Further, formulation development is an expensive and extensive exercise; a higher degree of efficiency can be achieved at a lower cost by outsourcing. Through outsourcing, there is early access to state-of-the-art technologies and expertise. The key is to take advantage of formulation expertise available through outsourcing to accelerate drug development.
RL: Drug development is a highly integrated process and formulation development in particular shares numerous interfaces with adjacent R&D disciplines such as: medicinal chemistry, pre-formulation, analytical R&D, API process development, manufacturing sciences, GMP-manufacturing of clinical trial materials, clinical development etc. In order to effectively run the formulation development process for a portfolio of developmental drugs, it is critically important to meet development milestones of individual projects to optimally support the integrated process. De-bottlenecking the internal formulation development engine by complementing it with intelligent external sourcing of critical capabilities and capacities provides an excellent opportunity to accelerate overall portfolio delivery.
CV: From personal experience, working at an innovator company, the number of molecules a given scientist might work with averages from 1 to 2 per year. A scientist working in a contract formulation development environment might average approximately 5 to 6 molecules per year.
In an innovator company, molecules arrive and are progressed in order through serial development steps. The importance of the decisions made in each step may not become clear until reaching the next step. In a contract environment, however, formulation scientists may be involved with active ingredients each at a different stage. The impact of something as simple as observing the result of an exotherm during mixing at large scale on one given day becomes an experience that scientists may integrate in formulation screening on the next day.
Formulation development training is accelerated in a contract environment because teaching and learning experiences are not separated by large amounts of time. Training leads to fewer mistakes, avoiding the need for reformulation, project delays, and cost overruns.
3. Small and large pharma decide to outsource formulation development for different reasons. Discuss some of these contrasting key drivers.
GS: Pharmaceutical companies face numerous challenges when managing a new product from inception to launch. Many companies seek contract laboratories to outsource much of the intensive formulation and analytical method development work to ease the burden and accelerate the process, meeting growing demands and speeds of the industry. The relationship between contract formulation laboratories and pharmaceutical companies has changed over the years.
In general, there are many benefits when outsourcing specific formulation projects. For example, outsourcing small volume formulation development products allows a firm to focus on its core products and potentially reduce the cycle time to market.
Delays between the manufacturing of the product and the laboratory testing are avoided when outsourcing formulation development. This is even more applicable if the same source is utilized for manufacturing the material and performing both services. This also enables the company’s internal resources to focus on other key projects and allows the company to reduce formulation development cost and/or reduce staffing in the laboratory, whichever benefits the company. Pharmaceutical companies pursuing cost leadership and innovative differentiation strategies in outsourcing have successfully realized benefits of outsourcing formulation development projects. Due to the success in outsourcing formulation projects, pharmaceutical companies will continue to do so in the future.
HC: Both small and large pharmaceutical companies want to accelerate product development but have different needs for outsourcing formulation development. Smaller pharmaceutical companies are usually reluctant to add a specialized expertise/group/technique for a number of reasons. Adding this takes time and can become a liability if needed occasionally or for specific projects. Smaller companies need confirmation/support about the feasibility of formulation development of their important products and this drives them to outsource some key formulation processes. For large pharmaceutical companies, outsourcing makes a lot of sense as it provides access to proprietary development techniques and several novel technologies that can help in rapid and robust formulation development of several APIs. Large pharmaceutical companies are usually interested in outsourcing formulation work during the initial stages of product development.
DB: Velesco predominantly works with small pharma companies where the driver to outsource is inevitably based on resource management. Even those companies with a laboratory outsource a lot of formulation work as they prefer to utilize their lab space for discovery chemistry and biology.
DP: In large pharmaceutical companies, the focus is on speeding up the development rather than the original research or innovation. These companies outsource for, and take advantage of, innovative ideas and technologies for formulation development. Once they obtain those, the focus turns to manufacture and market. Small companies, on the other hand, do not have the finances to produce and manufacture formulations at large scale. This is where they tend to outsource. The key drivers may be different but the ultimate aim for a company of any size is to reduce cost and accelerate the formulation development through outsourcing.
MW: In general, we see small Pharma outsourcing formulation development due to a lack of internal capability. Pharmaceutical manufacturing facilities with associated equipment that meet current pharmaceutical standards are expensive capital investments, with complex and detailed procedures managed by technically proficient staff. Investing in such facilities is often a significant departure from their core competencies. Large Pharma tend to outsource in order to manage internal resource constraints and project timelines brought about by cost management, and this is happening more as these companies restructure and downsize. Dedicated outsourcing resource and procedures are now more apparent within their organizational structures.
RL: Small biotech and start-up companies often have a limited portfolio of development candidates, sometimes just one preclinical or clinical candidate, and therefore do not need to invest in an infrastructure for full and integrated drug development, as opposed to larger companies with huge portfolios. In today’s world, small companies can rely on third party providers of R&D, manufacturing and quality capabilities and capacity. They expect their formulation development partner to possess specific capabilities to formulate their individual candidate. Therefore, the availability of a matching technology platform is important. Often “proximity”, i.e. working on the same continent and thus the same time zone, plays a key role in vendor selection.
For larger biopharmaceutical companies, who typically have most development capabilities available in house, the main drivers for external sourcing are de-bottlenecking internal capacity constraints and usage of highly specialized formulation capabilities for one-off projects. Bundling of services will drive sourcing decisions for these companies, as significant amounts of their formulation work and the corresponding analytical work is often outsourced. Typically, third party organizations who provide various technologies, both on the analytical as well as the formulation side, and demonstrate a track record of delivering high quality on time, will be preferred partners for significant portions of portfolio work. Due to the fact that large companies generally have R&D presence in multiple locations, they also source from vendors in various geographies, or vendors with a multinational footprint.
CV: Typically companies of a smaller size can only afford to pursue 1-3 molecules for 3-4 indications. After successfully developing the formulation, the burden shifts from the development group more to Operations, Engineering, and QA. Maintaining a formulation group with enough people for critical mass becomes a substantial overhead expense. The alternative approach, to rely on one or two people for formulation development, greatly limits the range of experiences available to solve challenging formulation development issues.
Therefore, it becomes a more cost effective approach for small pharma to outsource the formulation development, gaining the experience of a large number of formulators and eliminating the need to reduce formulation staff in the future.
For large pharma, enough molecules are typically in development to continuously derive value from a formulation development group of critical mass. Large pharma might choose to outsource formulation development to evaluate a unique dosage form, dosage size, or delivery route or for potent compound containment. In this case, the benefits include: obtaining a second-look at formulation development of a challenging molecule and the ability to temporarily access a deep niche experience set that would take too long to cultivate internally.
4. How do contract companies differentiate themselves in this competitive market?
HC: Transparency and honesty between client companies and outsourcing providers plays a pivotal role in this competitive market. Contract companies should try to build a long-lasting and a successful partnership instead of obtaining contracts based on false promises. Contract companies should build their specialization of high quality and should deliver results in a timely manner. Contract companies should work toward providing solutions for multidisciplinary challenges to attract more formulation outsourcing opportunities.
DB: Contract companies can be divided into two groups, those that offer a wide range of product type formulation and associated manufacturing and those that specialize in one or two areas.
The former differentiate amongst themselves by the range and depth of their services. Clients look closely for the company whose offerings match their needs for a particular project. For example, one company may be looking for a CRO that offers Phase 3 manufacturing and packaging for a US only project and therefore does not need a CRO with an EU QP, though a company seeking a smaller scale manufacture for an EU study does.
The smaller companies focus more on the depth of their specific expertise and the extent of their network to provide associated services. In this case, the resumes of their lead scientists are their main marketing tool as confidentiality prevents them from publicizing the successful projects they have completed. Having a strong network of support companies is becoming an increasingly important factor as it can be offered as a way to reduce the client’s project management burden.
DP: Contract companies can differentiate among themselves by the expertise they provide and how they provide it. The key is to do few things but be an expert in those areas. For example, if the focus of contract company is solid dispersion then they should provide all the expertise for solid dispersions development. Another important area is the relationship building with the client through confidence building and being proactive in understanding the problem.
MW: Capability, capacity and cost are the main points that come to mind when characterizing and differentiating the companies offering this type of service. The more successful CDMOs will have a depth and breadth in complementary areas, such as having analytical and GMP capabilities. However, there are more subtle aspects to consider when choosing a partner for pharmaceutical formulation development. The geographical position of CDMOs, and the local availability of an educated workforce in many different disciplines often helps to define the quality of the service offering. This has to be considered in tandem with the organizational structure and headcount dedicated to the client project, along with the quality and maintenance of the facilities and equipment used for this work. It is often worth looking beyond the company website and corresponding directly with the staff to gauge a preferred partner.
RL: Contract companies providing formulation services cater to a broad array of clients. While basic needs and expectations of clients often overlap – demand for quality, reliability, speed, and value for money – other demands are specifically driven by the development challenges and opportunities of the potential client’s portfolio. The aforementioned needs must be fulfilled by any competitive contract company, though differentiation among service providers can be achieved at various levels. Two important concepts from a broader set of potential differentiators are mentioned below.
The Broad Integrator Approach
As previously discussed, larger companies often look for capable partners to source significant chunks of development work to. Preferred providers of the broad integrator type bundle services to reduce interface friction and loss of efficacies, delivering integrated CMC packages, both materials and information. The value created by integrating various aspects of the development value chain stems, in part, from the fact that the company does not need to invest heavily in oversight and integration activities on their own. Integration beyond formulation work (extending into API work packages, for example) can provide additional drivers for differentiation.
The Specialized Solution Provider Approach
As discussed, portfolio shifts are leading to more formulation work for parenterals and enabling formulations in the small molecule oral drug delivery domain. Providers of highly specialized services in such domains will be able to differentiate themselves from the competition. However, basic integration of deliverables is also a strong plus in these areas. An example includes providing enabling formulations solutions for oral drug candidates with a risk for low bioavailability. Here, e.g., a lipid formulation technology and/or a spray drying technology offering should integrate both non-GMP and GMP work with analytical and scale-up capabilities.
CV: The greatest factor in differentiation is institutional knowledge. E xperience c reates s caled b enefits a round all aspects of formulation development:
- Better costing models exist, minimizing scope c hanges and unexpected increases in spending
- Capital expenditures are reduced as equipment, suc h as multiple scales of lyophilizers or handling procedures for potent compounds, are already in place
- Supplier networks and relevant qualified vendor lists are already established to shorten material lead times
- Knowledge of specific aspects for a route of deli very or an anatomical target lead to integration of ideal product attributes such as including viscosity as a formulation parameter early in the process
- Equipment previously purchased for a specific product may be available to characterize or process a challenging formulation
- Previous experience preparing filings for a category of active ingredients such as antivirals or monoclonal antibody fragments results in regulatory knowledge to proactively respond to questions
Businesses are comprised of materials, equipment and people who have used them both to meet a previous goal. Institutional knowledge is paramount in understanding the next right step to keep a project moving forward.
5. Discuss the importance of communication in formulation development partnerships.
HC: Communication is the most important aspect of a successful partnership and a communication gap is a major hindrance for key outsourcing work. Process/data transfer can be a challenge and significant variability can arise due to improper communications. Communication helps build trust between the pharmaceutical companies and their outsourcing providers. Proper communication reduces time significantly for safe, reliable and confidential information/ technology transfer.
DB: As everybody will say how important communication is, “it is the air that we breathe” and similar, it is worth emphasizing that it is the quality rather than the quantity of communication that is important. There are a few points that I stress to colleagues when discussing communications with clients.
Talking is not necessarily communicating – someone needs to be listening. Also, give the other side a chance to contribute.
Same is true of e-mail, someone needs to read and understand it. I recommend the use of bullet points of no more than two lines each (rather than lengthy paragraphs) and trying to avoid acronyms.
Pay attention to what is said/written in response to a question asked; look out for gaps or absences in the information provided. Clients often know useful information but do not tell us as a) they do not realize its importance to us or b) are reticent to divulge more information than they feel is absolutely necessary for fear of giving away intellectual property.
Never, ever assume. Always check and ask clarifying questions. I find that sending an e-mail to a colleague (copying the client) saying “I’ve just discussed so and so with the client and we agreed…” will result in a correction or clarification by the client more readily than sending the client a “to confirm w hat we discussed…” e-mail.
DP: For any successful collaboration, communication between the parties involved is essential. Further, a partnership involving high technical aspects such as formulation development requires clear communication in terms of confidentiality agreement, data interpretation, technical reports, process knowledge, timelines and so forth. The importance of communication in formulation development is even greater considering the global nature of partnership.
MW: Communication is essential for a formulation development partnership. These skills are considered on an equal weighting with technical knowledge, as our end product is often a technical protocol, report or recommendation on technical strategy. Our customer base is varied and we need to account for diversity in language, culture and knowledge/experience in pharmaceutical development. Our practice is to listen to the customer and determine when it is appropriate to follow direction and when to offer guidance to achieve the best results.
RL: Communication is of utmost importance in formulation development partnerships, as is transparency relative to the outsourced work. Best in class providers of formulation work often use a two-pronged approach to communication and transparency, borrowing both from the world of high tech and low tech.
The high tech approach encompasses real-time visibility of program-related data and information produced at the labs of the vendor on the computer screens of the pharmaceutical company. Today, this is often achieved via special IT packages that allow for selective remote access to relevant data in real time.
The low tech approach still involves meetings, via the phone, web, or in person. It is important to note that drug development does not always follow a linear path. In a solid partnership, the responsible project lead at the third party organization will initiate a call as early as she or he sees unexpected results or warning signs for a potential milestone delay. This provides sufficient lead time to pull internal customers in and adjust programs accordingly. The main impetus here is to avoid unexpected news at a point when the options to react are significantly reduced.
CV: A basic training module for implementing ICH guidelines Q8, Q9, and Q10 states the main message of the new quality paradigm: “Science in no longer isolated; it is living across the lifecycle of the product/process within a Quality Management System.” This philosophy is manifest in the Product Development Report that comprises section 3.2.P.2 of the Comment Technical Document. This report can reach as far back as initial formulation development to justify control strategies.
The science behind the drug product development is now open to full scrutiny.
The best time to scrutinize work is before it is done. The Qualityby- Design process includes formulating hypotheses, anticipating responses to a range of outcomes, and then performing experiments. The time for customer/contractor communication is not only at the point of sending results but during the planning stages.
Taking the time to define a plan incorporates all the learned experiences on the team. Planning allows full incorporation of the customer’s knowledge base behind API sourcing, manufacture, and synthesis. Additionally, taking time to communicate a plan facilitates more timely review of original project scope, reducing cost overruns, preventing erosion of confidence between customer and contr actor.
6. Why the increased focus on outsourcing formulation development to India and China?
HC: India and China are emerging markets due to low cost and availability of highly-educated and specialized professionals. Companies with expertise in novel drug development processes, patented tools, etc., are increasingly turned to for outsourcing formulation development. Easy access and transfer of data/processes/results through technological advancement has also been a key driver for increased outsourcing to India and China.
DB: Once the decision has been made to outsource a formulation project, it quickly becomes apparent that there is considerable CRO capacity and capability in Asia to support it. A quick check will reveal no end of articles in the trade journals detailing the growth and strength of the pharma CRO industry in both India and China and the cost advantages of having work done there.
That said, our experience demonstrates that India is taking the lead in formulation and drug product manufacturing rather than China (which appears focused on drug substance). Furthermore, the focus of these CROs and CMOs is on the more common tablet, capsule and injectable solution formulations. Developing products for other routes of administration and dosage form types, e.g. topical products and oral suspensions, do not appear as readily available in Asia as they are in the US.
DP: The focus on outsourcing formulation development to India and China is increasing due to a combination of many factors providing faster formulation development. These countries offer access to a pool of highly skilled and competent personnel along with cost effectiveness in formulation development. The advancement in information technology has effectively reduced the communication time between global partners, which is key to outsourcing formulation development to India or China. Further, facilities approved by the FDA have increased; thereby the products are expected to meet quality criteria.
MW: If anything, our experience is that the trend is reversing for formulation development and manufacturing of drug product. We can provide strong communication, scientific knowledge and adherence to timelines.
RL: There are various drivers for sourcing formulation development from India and China. Two important factors are noted.
The first is the availability of proven capability and ample capacity at a reasonable cost structure. While over the past five years, the cost structure in these geographies has changed and costs in general have increased, there remains an economic incentive to source work with capable providers in these regions.
Second, and more importantly, development of new medicines is often performed for multinational, heterogeneous patient populations. In order to fully embed global patient needs into the overall development of novel drugs, many of the multinational pharmaceutical corporations have invested in R&D centers in Asia, particularly China, over the past decade. This patient need along with the growth opportunity in these geographies act as key drivers.
7. Any closing thoughts?
HC: Pharmaceutical outsourcing will be a fast-growing field in the near future, catering to the needs of both small and large pharmaceutical companies. It will play an important role in the success of formulation development. Rapid growth of companies providing highly specialized expertise in various areas of formulation development can be expected. Long association from beginning to the end of the product development cycle between client companies and outsourcing providers are expected. Disintegration of bigger companies into smaller companies, with increased emphasis on outsourcing instead of developing in-house expertise is a strong possibility.
DB: Outsourcing any project involves considerable effort on both the client and the contractor. Companies planning to outsource need to realize that such projects require management and oversight by people familiar with the science of the project and of the project’s place in the larger scheme of things. There is no place for a “throwing it over the fence” mentality.
Accept that issues that have not been anticipated will arise and they need to be dealt with openly and resolved in a supportive manner.
The problems are not always the CRO’s fault – the late arrival of API (of a new polymorph if you’re particularly unlucky), clients providing analytical methods that aren’t as robust as expected/advised, and discovering previously unreported impurities are more common than one would expect.
DP: Formulation development is a high risk research area. In today’s atmosphere of declining research productivity and the pressure of maintaining profitable growth, the pharmaceutical industry is facing tough challenges. Outsourcing formulation development can provide an effective approach to decrease the overall cost of drug development. It can also lead to faster formulation development. The trends indicate that small and large pharmaceutical companies will increasingly outsource, developing formulation through CROs/CMOs.
RL: To create strong partnerships between capable service providers in the formulation domain and pharmaceutical companies, it is necessary to look at the bigger picture. While closely monitoring the quality and timing of the delivery of specific CMC work packages is crucial, the ultimate goal to create value for the patient must be realized. By utilizing a patient-centered approach in the overall development of new medicines, including all aspects of dosage form development, packaging development, and usage information, valuable medicines can be designed to achieve better outcomes for patients. To unlock this potential, one needs to establish a highly functioning partnership between service provider and originator.
CV: Combined populations of China and India represent over one-third of the people on the planet. Due to a societal change, consumerism is increasing. China is projected to have greater than 15% pharmaceutical market size growth through 2020. Due to differences in factors as simple as climate, one might expect that even common diseases differ from those found in Europe and North America.
New pharmaceutical products are presumably developed to meet local needs and preferences. As capacity is built to create products for their local markets, performing formulation development for international markets presents a business opportunity for both customers and contractors.