Evolving business models

PharmTech: Has your business model evolved in response to changing market conditions? For example, to fit a preferred-provider model, has your company changed its range or type of capabilities?

DeCuir (Albemarle): Albemarle has always been a quality, reliable supplier with a large toolbox of technologies in which we are proficient, so our business model and offerings have not changed much.

For example, the development of a new sterile injectable product comes with specific challenges that a contract service provider can help solve, including formulation optimization, lyophilization development, and clinical-scale manufacturing. The needs and potential solutions change as the molecule moves through the development phases toward regulatory submission, manufacturing scale up, launch, and patent expiry. As the product nears the end of its maturity, the potential for enhanced delivery systems may offer a means to achieve life-cycle management objectives. This range of potential solutions within a single service provider reduces complexity for the pharmaceutical company and has increasingly become a factor in their decision-making process.

Josephs (DPT): DPT's business model is evolving, and we are responding now to this growing trend. We have benefitted because we have been a proven provider in this market for 20 years. While our service offerings continue to evolve, we would not change the type of capabilities we offer exclusively in response to the preferred-provider model. We are going to continue to add capabilities that complement what we do best.

Engels (DSM): We continue to focus on our core competencies and technologies, and to bring these offerings into the partnership. In other words, we do not try to be somebody we are not.

Kosko (PCS): With 40-plus years in the contract-manufacturing arena, PCS has a strong history of building excellent customer partnerships. From our perspective, the preferred supplier relationship allows us to more fully understand the challenges that our customers face across various aspects of their businesses, and how we may be positioned to assist. This focused and ongoing dialogue has enriched and expanded our existing customer relationships and brought new business opportunities while at the same time enabling our customers' to achieve specific business goals. Our response to the growing market trend toward contract manufacturing of highly potent drug products speaks to the preferred-provider model. Our customers' pipelines contain a greater percentage of potent compounds, and based on their feedback, and the strength of this growing market trend, PCS is focusing on high-potent drug-product contract manufacturing out of three European facilities. Our ability to develop and produce clinical supply quantities along with small and large-scale commercial quantities is a strong selling proposition for our current and future customers.

Ananthanarayanan (Dr. Reddy's): It is not enough to be able to offer general service any longer. To achieve "preferred" status, some kind of differentiation must exist for the supplier to offer added value to the outsourcing organization. That differentiation may come in the form of novel or expert technical abilities, in specific service abilities, in unique intellectual property offerings, in superior cost positions, and so forth, but the bottom line is that if a service provider is not adding value in a differentiated way, the opportunity to become preferred is reduced substantially.

Our particular business model does offer substantial differentiation because we have multiple in-depth technical areas, such as high potency facilities, activated PEG offerings, chiral-chemistry solutions and formulation-technology platforms. Being able to offer a wide portfolio of generic assets for use in innovative ways opens the door to strategic opportunities.

Cassidy (SAFC): A key approach at SAFC has been to find ways to differentiate our capabilities and expand capacity where needed to support customers' needs. The company has invested more than $70 million in recent years to meet market demand and customer expectations for API process development and GMP manufacturing, for example, including for high potency and viral manufacturing, and to provide both small and large molecules.

Soelkner (Vetter): As a strategic partner to pharmaceutical and biotech companies for many years, we have already implemented many measures required of a preferred supplier. We will continue to evolve and innovate and foresee great opportunities for our company in this process. An investment in our new US facility, which performs aseptic filling of clinical batches from preclinical to Phase II, is an example of our early response to customer needs. Other examples include our investments in capacities for secondary packaging, where we can meet higher demands on cosmetic integrity for final assembly and secondary packaging, the construction of a new logistics center, and the extension of our visual inspection facilities.