Biopharma Outsourcing Analogs: From Cars To Eggs
By Louis Garguilo, Chief Editor, Outsourced Pharma
An analogy:
Imagine a potential customer, visiting two car dealerships interested in a specific vehicle.
At the first, the salesperson walks her around the car, and does little else than simply reading the stickers on the windows: it’s a 2022 model sedan, sky blue, with 10,000 miles, and here’s the price. She replies, “Look, I don’t have trouble reading. I don’t need you to do that for me…”
At the second dealership, the salesperson says, “This is a nce vehicle. But before we more seriously consider this one, you should know this model has had some recent recalls. Also, it has a somewhat faster depreciation than similar models. It’s a perfectly acceptable car, and I can also show you some others as well. She replies, “Thank you. Let’s do that.”
Quite easy to see that in the first case we have a sales organization working on a customer, in the second a partnering organization working on a relationship.
This is indeed similar to how so many readers (and CDMOs themselves) describe the difference in drug development and manufacturing outsourcing experiences.
I recently heard this specific analogy from Ali Pashazadeh of Treehill Partners, related more to advisors and investors, but as I listened, the sponsor-CDMO relationship was all I could think about.
The difference from the first and second scenario is the concept of value-added: providing additional knowledge on products/services/markets, including optionality, and building relationships.
Pashazadeh, with whom we earlier discussed drug development strategy, and enlightened commercialization decision-making, had a few more analogies I suggest are well worth a workday pause for some ideation on your outsourcing activities.
From Cars To Cooking
Pashazadeh uses this question to describe how his organization works with biopharma organizations who have gone or may be heading down an ill-advised development and clinical-trial path, pursuing targets and commercial markets that will not ultimately bring profitability:
How do you unscramble a scrambled egg?
Pashazadeh says the answer is to put the development pieces back together with data, and then present a new way forward – backed by new (and existing) investors. (see part one and part two)
The “data” Treehill utilizes comes from a collaboration with Evaluate Pharma (now owned by Norstella).
“They're essentially the Bloomberg of healthcare,” says Pashazadeh. “They're the biggest source of data being generated for healthcare, whether it's on the drug development/manufacturing or the patient side. They have clinical trial data broken down by the n’th degree.”
Treehill itself is composed of experienced professionals from large-cap biopharma – e.g., Gilead, Merck, Bayer. Others have been CEOs and senior executives of biotechs. “And at the core,” says Pashazadeh, “is me and a couple of others who are pure-bred investment bankers."
… So how do they unscramble a scrambled egg?
“You walk backwards,” says Pashazadeh, now alloying analogies.
“You know where the endpoint is, and you come to understand where you need to get back to in order to fix errors in decision-making. You do that before you can again reverse and move forward. Sometimes towards new goals.
“The expertise needed is ferreting out how many steps back you actually need to go. And how do you keep a biotech viable while you're making those retracements and transitions?”
Often, drug sponsors need to walk back to their CDMOs, for renewed development plans, different processes for manufacturing, new formulations, etc. And for ideas.
Of course, the optimal proposition is to prevent the need for walking programs back a stage (or two) in the first place.
Every Outsourced Pharma reader knows that, because in many cases missteps in later-stage development or in the clinic affords no second chance.
“Our focus isn't to find the biotechs who are in development or clinical-trial straits, or who have or are already making critical mistakes,” says Pashazadeh, although he does find a lot of those.
"The aim is to understand how to avoid mistakes in the first place."
Back To Cars
Here is Pashazadeh’s final analog, to use our own parlance, demonstrative to all of the above.
He again employs an example from the automobile industry (Pashazadeh loves cars) to think through the decision paths OutsourcedPharma.com readers will be making.
A new U.S. manufacturer wants to challenge Tesla. There're a couple of metrics by which they can beat an incumbent:
- entirely different offering
- different price point on similar product
- different value proposition
Rivian [EV automobile company] thought, ‘Why is Tesla messing around with a product like the Cyber Truck? We’ll have a much more broad-market appealing design, longer mileage range, and lower priced truck.
And they did take some market share with this new price point and value proposition with this approach.
But they ruined the momentum on poor manufacturing execution. Errant strategies and decisions were made at points along the development/manufacturing continuum. They fell well short of their delivery goals.
That could be the end of Rivian – unless they unscramble the egg (and walk backwards) under enlightened guidance – including from suppliers.
Next, look at Lucid [another EV automobile maker]. They say, “We've got a better version of Tesla’s Model S.”
The problem is Lucid comes in many years behind Tesla (which dominates the U.S. market), and they are at a relatively high price. Were these the best decisions?
it turns out customers are saying I’ll stick with Tesla.
These are strategic, development, and perhaps market misjudgments. Were there areas where better collaboration with partners and consultants, and better executive decisions could have been made?
Ali Pashazadeh of Treehill Partners thinks most likely, and these comparisons may add some food for thought to our drug and therapy development industry.
For now, though, we'll conclude our series with Pashazadeh, and our similarly detailed editorial series with Shailesh Maingi, founder and Chair of Kineticos Ventures. This also ends our present investigation into the rising investor-consultant class that increasingly influences our drug-development and outsourcing decision-making.
But I’m sure we’ll be revisiting them and their strategies in the future.
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Earlier editorials with Ali Pashazadeh of Treehill Partners:
Don't Blame The Molecule; You May Be The Problem
Drug Development Needs More Focus on Profitability