Virtual Product Development Offers Cost Savings

Nov 03, 2006
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San Antonio, TX (Nov. 1)—The opening session of the “Pharmaceutical Technologies” track at the 2006 Annual Meeting of the American Association of Pharmaceutical Scientists in San Antonio, Texas was standing room only as R. Christian Moreton, PhD, vice-president of pharmaceutical science at Idenix Pharmaceuticals (Cambridge, MA,, and Richard O. Mannion of Purdue Pharma (Stamford, CT, discussed “Product Development Using a Virtual Company Model.”

Virtual companies

A virtual company model is one in which drug development is undertaken using external resources. The reason for using such a model “comes down to a question of economics,” explained Moreton. The cost of building an infrastructure (which includes building a facility, purchasing equipment, hiring staff, and paying for facility upkeep) to develop new drug products can be astronomical. By contracting out most development segments, companies can benefit from significant cost savings. The only activities kept in-house are those that don’t require significant infrastructure or cost.

Moreton also noted that although just about anything can be outsourced, several models for virtual companies exist, including the one-stop shopping method, the split-project approach, and everything in between.

But being successful in this type of environment, notes Moreton, requires much organization and teamwork. “You don’t have total control. You have to learn to work in a different way … You’ve got to be able to work at arm’s length,” he said. “Working in a virtual company is more like working as a project manager.”

Moreton observed that virtual development is a viable alternative for some companies, but can only succeed if both the sponsor and contract sides have confidence. To ensure that a virtual company is successful, there must be open communication and appropriate technical due diligence—which is a make-or-break point. Moreton stressed that visits to sponsors’ facilities are important to ensure that each side understands the other. And, contact must be maintained throughout the course of the project. For example, he suggested that making biweekly telephone calls and sending e-mail updates on the intervening weeks will “keep the project moving.”

Semivirtual companies

Semivirtual companies can be divided into two categories, said Mannion. One business model is that some projects are completed entirely at a contractor, and the other model involves contracting out only some aspects of all projects. Regardless of which category it belongs to, the objective of a semivirtual company is to maximize project capacity and the quality of drug development.

As is true for virtual companies, explained Mannion, semivirtual companies don’t have the same level of control as companies that complete all work in-house. Thus, interpersonal and communication skills are very important for those who work in semivirtual companies because they must serve as liasons and coordinators. To be successful in this business, said Mannion, “control without micromanagement is everything.”

One audience member pointed out that the semivirtual environment offers the best of both worlds: the benefit of outsourced manufacturing (e.g., cost savings) combined with the advantages of internal facilities (e.g., flexibility, speed).

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