An Unexamined Life Is Risky Business
By Louis Garguilo, Chief Editor, Outsourced Pharma
“An unexamined life is not worth living,” Socrates supposedly said.
Following on our own recent philosophic-like introspection, let’s take up Socrates:
Have you sufficiently examined the “life” of your drug development and manufacturing outsourcing?
If your organization, like most today, relies on outsourcing as an external life force to get you into and through the clinic (and perhaps beyond), how you answer that has never been more important.
Outsourcing both alleviates and creates risk. It may or may not be the best path through the life cycle of your product(s) or business.
With a large degree of outsourcing, the risk of betting early on infrastructure and personnel is lessened. However, you (a) gamble on the ability to find those outside your company you can work optimally with, and (b) continuously roll the dice on available capacity and timing, quality (to a degree), and management.
Why? It appears we may have become the victim of our own success, and reached a higher level of complacency. Relying on CDMOs for CMC activities is as natural as relying on your lungs for breathing. What is there to question?
Albeit there are pockets of deeper introspection, and this is not a blanket categorization of today’s biopharma leaders. For example, start-ups in the cell-and-gene space, for a variety of reasons (e.g., smaller facilities/equipment need; lack of outside expertise), think hard about building over buying, or internal scaling over external services.
Still, executives I’ve queried on outsourcing strategy – much smarter business professionals than I – can appear somewhat coddled by convention. And the convention is to outsource.
Yes, there is the oft-stated strategy of segregating what is core to your organization, and what is not, and keeping internal the former and outsourcing only the latter. There are other risk-mitigating practices, of course.
But how do you go about opting for such strategies, and making them successful? What are those more strident best practices, and again, what are those risks and where do they lie?
Do we take up a deeper examination of the real risk of externalizing anything? What is the fundamental or cumulative value – Socrates’ "worth" – of your existence based on whether a CDMO continues to perform well for you?
CDMO Contretemps
“People have definitely read a lot about this, studied it, and the industrial logic for outsourcing drug development and manufacturing is so good,” says Kurt Nielsen when I present the above soliloquy to him.
“The argument for outsourcing is intoxicating.”
This from a former CEO of a CDMO, and a professional with years in the industry at other CDMOs and drug sponsors. He says the thought process today is overshadowed by this attitude:
“Everyone else is and has been doing it. What’s to focus so deeply on?”
Particularly, he explains, biopharma executives have “sexier things to think about,” and much quicker than they had in the past. This includes diving into the constant raising of funding as projects move forward, for example assuming fast-track status; the potential market opportunity and competition; or a potential sale to big pharma.
“I certainly agree all that is very important. But if you don't get past all the CMC activities, you don't get to talk about all that other stuff anymore,” says Neilsen.
“It's an intellectual exercise that’s needed," he continues.
“If I take a step back, and see how folks in the middle of some of these companies answer some of those questions about the risks of outsourcing, I'm sure they'll mouth the right words. But I'm not sure they really understand it.”
Understand what? For one, he says, no one will ever worry about your project as much as you. Whether a project report gets out on time or not may not be the biggest concern personnel at a CDMO may face during a week, it is vital to you. No report, no closing that deal to raise more money. “I just don't think many of these sponsors get it, and it kind of blows my mind.”
“You're giving up control. And this goes back to the whole point I was making around service as central at a CDMO. (captured in part one)
When Neilsen speaks with employees at CDMOs, he reminds them: “All these products and activities you're working on – you are not just writing up a report. This is a series of events that is the lifeblood of another company. It is their baby. There's nothing like focusing the mind if reminded we [CDMO] don't get this right, their biotechnology company goes away.
“And it blows my mind that investors and drug-sponsor companies alike are willing to take that risk without a deeper contemplation of the reliance. In many cases, I actually don't think they understand it. If they really did, I don't think we’d be set up the way we are now between CDMO and customer. The contracts would certainly be different.”
This is not a jab at CDMOs or the drug industry.
Hopefully though, it is a jolt out of a certain complacency.
As stated above, the drug development and manufacturing outsourcing industry has been successful. But how much more successful could we have been? And how much more meaningful can we be as the industry evolves?
Perhaps most of all, a successful life won't be fully realized if not carefully examined.