From The Editor | January 6, 2020

Biopharma Outsourcing: Propelling Productivity Past 2020

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By Louis Garguilo, Chief Editor, Outsourced Pharma

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Stanley Crooke, M.D., Ph.D., founder, chairman, and CEO of Ionis Pharmaceuticals, proclaims: “Biotech has done a wonderful job of convincing Big Pharma to outsource.”

“Early in my career at Big Pharma,” he explains, “I was anxious about outsourcing. But that whole industry has advanced so wonderfully. It makes total sense for small and large companies to outsource all those activities CDMOs do better for a living.

And, he adds, “If you think about biotech, it primarily was a financial revolution.”

Financing And Productivity

Stanley Crooke
“What is remarkable is that American capitalism could support the dollars and risks biotech needed to take on and take in,” Crooke says. “Investors had become frustrated with putting their dollars in the hands of heads of R&D at Big Pharma to do their investments in technology and new drugs. They concluded a portfolio with different investment metrics would do better.

“They were 100 percent right,” he continues. “If you look at it, most of the major technology innovations have happened in biotech, and many first-in-class drugs came from biotech, despite having resources that were much less than the big companies. Bigger pharma companies have indeed learned by example, and jettisoned the tasks that can be safely distributed to CROs and CDMOs.”

But Crooke identifies an even more “interesting shift” — and it adds to an important narrative on his favorite subject: productivity.

That shift starts with how bigger drug companies also have moved to outsourcing innovation.

There are plenty of innovative people at Big Pharma, he says, but, importantly, innovation is also “farmed out to more productive collaborators in smaller biotech companies.”

Sounds like a good thing, you might say.

“But then look at productivity,” says Crooke. “Look at what happens to biotech companies as soon as they are successful. They, too, become more fully integrated, and in most every case, innovation declines. It doesn’t go to zero, but it recedes. Then the biotechs themselves become innovation buyers.”

And thus, according to Crooke, while biotech has taught us important lessons, one isn’t how to keep initial productivity spurts from falling off.

Diagnosing The Dilemma

Crooke originally recognized all of this years ago, and then set out to change the dynamic.

At Ionis, he says, he has created a business model of sustained productivity, and one of the most efficient approaches to drug discovery and development. He has the commercial products and promising pipeline to back that up.

But now the key is to stay the course, “to continue to demonstrate we can enhance the productivity of drug discovery and development through the technology that we’ve created, and continue to invest in it.”

“When you combine the business model with this efficiency and the technology, the numbers are hard to believe,” says Crooke. “If we look at the core of Ionis, around 450 people are the engine of discovery. We have one drug in development for every 12 people. If you compare that to traditional pharma, it’s probably one drug for every 1,000 or 2,000 people in those organizations.”

That combination of efficient technology and business model — and the ability to outsource manufacturing and not require a build-out of infrastructure — gives Ionis and other biotechs a productivity boost.

Crooke adds, “I’m hopeful other models that begin with a new, disruptive technology will be incorporated into our industry, and we can arrest the decline in productivity we’ve seen over decades.

In fact, he says, “We must do that. This is what I’ve been most interested in for the last number of years. It’s what I find most exciting about the future of this industry.”

Don’t Call Them “Service Providers”

James Mackay
However, that excitement could be cut short if our industry on a wider scale can’t form the relationships to maintain the outsourcing that allow biotechs to focus on what they do best.

Biotech and IT, biotech and pharma, and biotech and service providers all need to come together to form this more perfect orchestration for patients.

Regarding that final pairing, James Mackay, Ph.D., founder, president, and CEO of Aristea Therapeutics, wants to ensure all parts of the industry are reading from the same sheet of music.

For instance, he mentions my use of the term “service provider.”

“The way I look at interactions between biotech and CROs or CMOs is much more of a practiced partnership between organizations,” he explains. “Too often, the CMO is seen as the provider and the biotech as the customer. In doing so, though, you get stuck in that outdated ‘customer/supplier relationship,’ where the CRO or CMO can be reluctant to tell the biotech something’s amiss, or they are behind schedule, or to communicate quickly there is a challenge that needs to be addressed.”

He adds: “Being able to break down that customer/supplier relationship is vital, just as it is with other relationships. There always will be issues in R&D, and to increase productivity, those issues will need to be addressed as early as possible and collaboratively between the CRO or CMO and the biotech. Honest communication is critical to the success of this model. Starting with that premise, that’s where I focus my efforts in every relationship we build at Aristea.”

And Don’t Leave Consultants Out

Finally, Mackay mentions he and company receive critical assistance selecting partners with which to build those relationships, and he highly prizes “a network of consultants who are subject matter experts,” whether for drug substance, drug product, toxicology, pharmacology, or other technologies.

“We don’t tend to put out the classic RFP and get a glossy presentation,” he says. There is very little value in that activity. I prefer to spend time getting to know the actual team we would end up working with.” The overall expertise of the partner, he says, isn’t relevant if the biotech doesn’t get to work directly with the individuals or team holding the exact expertise needed.

“Consultants can play a big role here,” Mackay says. “It isn’t surprising we often work with those CDMOs we have partnered with in the past, or who have already worked with our consultants.”

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This editorial is adapted from my original published in Life Science Leader magazine’s December issue.