The challenges of outsourcing early development

Outsourcing early drug development can be viewed from a tactical or strategic perspective. These perspectives are often driven by the size of the company and provide different advantages.

Strategic outsourcing of early drug development provides small and virtual pharma companies with access to expertise, capabilities and capacity that they themselves do not have in-house. Rather than assume the cost of building these requirements, both from a personnel and capital perspective, the use of a CDMO can help achieve the product development objectives and necessary key milestones required for venture funding. Where a smaller scale client can find a CDMO with the capability to provide a full range of services, this relationship then becomes even more strategic.

Tactical outsourcing of early drug development is often seen in the larger pharma companies as a way of addressing peaks and troughs within their own available capacity. However, with resources and finances become more limited, many of these companies are now recognising the need to move into more strategic relationships with CDMOs. Again, the depth and breadth of services that a CDMO can offer often defines how 'strategic' this relationship becomes.

Both models provide for a variable cost as opposed to fixed cost for the client.

Reducing the risk of product failures

There are numerous challenges facing CDMOs involved in early stage drug development including:

• The changing nature of the API received for development and GMP work.
• The wide range of doses that must be prepared for early clinical studies.
• Limited API supply.
• Loss of knowledge between site of chemical development and pharmaceutical development sites.
• Optimistic planning on the client's part — clients often overlook the time necessary for back-end activities (e.g., generating stability data, collating and submitting their clinical trial application, etc.). Because of this, the timeline for development activities becomes intense, which may result in unnecessary risk taking.
• Risk of project cancellation due to toxicity/safety concerns.

The risk of product failures is one of the main challenges faced by outsourcing providers. However, to some extent this risk can be mitigated by the outsourcing provider monitoring and maintaining the balance in the portfolio of projects being worked on at any one time. I believe it is important to work with projects that are at various stages of the development lifecycle, as well as a mix of companies developing candidates for a range of different disease indications. However, product failures are not the only risk — funding failures and licensing strategies are also major considerations. Fortunately, as relationships are developed with clients who subsequently place multiple projects with the same outsourcing provider, projects can be reprioritised as some progress and others fail.

Another issue facing many European CDMOs is competition from India and China, particularly in the area of API synthesis. There is also evidence that competition from these locations has affected dosage form development and manufacture, but not to the same extent as European companies in particular remain very strong in this area and are particularly good at problem solving when issues arise. Additionally, intellectual property is still a significant concern when outsourcing to India or China, as well as perceived issues of communication.

Key advice

To help ensure a project runs smoothly, I recommend that companies:

• Plan ahead — approach a CDMO early.
• Try to have as many activities done at one site as possible to minimise loss of knowledge and ensure efficient communication and vendor management. This can also mitigate the risk of unnecessarily moving materials more than is necessary where you may come against problems in airports or customs.
• Consider whether your CDMO has the capacity to scale-up as transfers incur cost and risk.
• Assess how a CDMO manages projects — ask to speak to references for recent projects relevant to the one you are considering.

If you are considering outlicencing, consider the reputation of the CDMO you choose.

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