Sponsor companies' perspectives
Figure 1: Crucial issues in biopharmaceutical outsourcing (1).
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Among the 25 factors evaluated in the BioPlan survey, relationship issues are near the top of the list of problems cited
by sponsor companies (see Figure 1). Although the relationship trend improved slightly this year compared with the previous
years, relationships between sponsor companies and CMOs are far from optimal Only 58% of CMOs said that "establishing a good
working relationship" was "very important" in the 2010 BioPlan survey compared with 63% in the 2009 survey (see Figure 1).
One industry expert sums up the problem. "The recent increase in pharmaceutical outsourcing activities is creating headaches
at pharma companies," said Mark Mazzie, managing director at the Center for Professional Innovation and Education (Malvern,
PA), a pharmaceutical training company, in a recent interview with BioPlan Associates. "This is especially true for companies that haven't trained their managers to manage these new relationships or to understand
how time-consuming and difficult offsite managing can be. With the current economic crunch, everyone is being asked to do
more with less, so these problems are likely to increase unless personnel are given the requisite skills to manage these tasks."
Operational concerns are also an issue. The 2010 survey showed that 64% of respondents said that compliance with quality standards
was "very important" compared with 59% in the 2009 survey. These quality issues may be the result of worries about possible
cost-cutting and service reductions on the part of vendors. Biologics manufacturers may not yet be sufficiently confident
that their outsourcing partners can guarantee quality standards.
Sixty percent of respondents said that "protecting intellectual property (IP)" was critical. These IP concerns may be surfacing
because of increased interest in offshore (i.e., international) outsourcing. Also, sponsor companies' worries about handling
cross-contamination issues increased again in 2010. Only 20% said that it was important in 2007, but 52% of client companies
identified it as important in 2009, and 58% did so in 2010.
CMO industry shifts
This year, nearly half (48.2%) of biopharmaceutical manufacturers surveyed said they expect to increase their budgets for
biopharmaceutical CMO outsourcing. As more companies outsource, the need for effective project management will grow. In times
when there was less available capacity, CMOs with better technologies, expertise, and facilities, would have simply been too
busy and prebooked to handle new clients. Many of these shifts are the result of financial pressures, which are creating
real concerns over hiring and staff allocation. Not only do outsourcing service providers need to justify the cost benefits,
they now need to evaluate the effect of outsourcing on fill-time equivalents, staff allocations, and speed to project completion.
Looking ahead
Until effective project-management processes are in place, and the skills to manage external relationships are established
by both CMOs and client companies, the limiting factor in outsourcing may be relationship management. Human factors such as
relationship building, effective communication, and risk sharing are difficult to quantify but are crucial for long-term success.
Eric Langer is president of BioPlan Associates, tel. 301.921.5979, elanger@bioplanassociates.com
,and a periodic contributor to Outsourcing Outlook.
References
1. BioPlan Associates, 7th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production (Rockville, MD, Apr. 2010).
2. E. Langer, "How Scientist/Founders Lead Successful Biopharmaceutical Organizations: A Study of Three Companies," Antioch
University, Yellow Springs, OH, 2008.
3. J. Zhang and N. Patel, The Dynamics of California's Biotechnology industry (Public Policy Institute of California, San Francisco, 2005).
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