In the article, Every Company Tells A Story: Orexigen, Anti-Obesity And Outsourcing, we heard how the survival of a biotech – and a drug that today is helping thousands of people struggling with obesity – was predicated on the speedy and efficient establishment of an external commercial supply chain.
Phil Roberts, Senior Vice President, Technical Operations, Orexigen, describes the mindset – and some best practices – needed for that successful implementation.
Regional And Integrated
Orexigen developed and (eventually) got anti-obesity drug Contrave approved by the FDA. In the process, the company established itself as an exclusive supplier of the product to its commercial partner for the U.S. market. When in 2016, and as documented in our first article, that relationship unwound, Orexigen took full control of the product. During this time, Orexigen also received approval for the drug in the European Union, under the brand name Mysimba.
Seemingly overnight, Orexigen then transformed into a global organization and supplier to the world market. The company wouldn’t have even contemplated this without believing it could – with all alacrity – activate a supply chain of CMOs and other partners to reliably supply product to patients.
“The speed with which we transformed into a global organization was remarkable,” recalls Roberts. “In preparation for this growth, we established an office in the EU, transferred manufacturing capabilities to additional global sites, and qualified multiple API suppliers. We had this rapid expansion of sites and partnerships, which of course we now had to maintain.”
How did the transformation go so smoothly, and so quickly? For Roberts, a key component was identifying regional partners, and the more service-integrated those partners were, the better.
For the European and other markets, Orexigen opted to work with the CMO operations of Sanofi, particularly because of their ability to provide integrated services. Sanofi had the capability to manufacture and package the product, and could seamlessly supply a key ingredient from its opiate production subsidiary. “Their scale in the middle of Europe, and ability to provide integrated services, was powerful for us,” says Roberts. “CMOs with broad technical capabilities across their network enable them to be responsive and quickly commercialize products.”
Orexigen also started up a “supply-chain hub” in Ireland, immediately providing the company the regional presence and expertise to operate globally. With a team in Europe and a broad range of capabilities at providers, Orexigen became efficient as a global manufacturer using an outsourced model.
“These CDMOs are only getting bigger, right?” Roberts asks. “They’ve become more capable. The integrated service model allows you to move more quickly, and doesn’t require as many internal resources to oversee. Core partners, built around a chain of smaller partners, allow us to optimize overall value, whether by consideration of lead times, costs structures, exchange rates, logistics, or a variety of other factors.”
Nonetheless, there must be some secret for a relatively small biotech like Orexigen for managing a global commercial network. Roberts has at least one.
“I hate to use this word,” he says, “it sounds so ‘Big Pharma.’ But we strive to standardize how we work with suppliers. A backbone to this effort is an effective S&OP.” He’s referring to sales and operations planning – an integrated management process to consistently focus, align and coordinate all organizational functions.
“We ensure a focus on key performance indicators at our suppliers through this standardized approach to managing, and overseeing each CMO,” Roberts says. Orexigen forms supply chain teams across organizations. “We run a rigorous S&OP, consistently monitoring and reporting KPIs, to ensure both our intercompany processes and suppliers are performing.”
Orexigen also employs a “traditional SRM” [supplier relationship management] approach, and encourages internal supply-chain team members to see themselves as account managers across various suppliers. Roberts says this ensures a number of people at various levels share responsibility for suppliers, their performance, communication, and also business reviews, which, of course, are standardized.
“Our approach to SRM is to primarily manage the business aspect of the relationship, even some of the basic transactional elements like forecasting, POs and deliveries,” Roberts explains. “And because it is standardized, it’s scalable as we add suppliers.”
Important, though, is that this standardization doesn’t go too far, and separate CMOs from their established work patterns or SOPs. Says Roberts: “As it relates to how the vendors actually perform their work, we absolutely look to them to operate as they normally do. For example, we have a standard set of KPIs that we collect and measure, but when we go talk to a vendor, we ask them to tell us what their standard measures are. If they meet the intent of ours, we use theirs.”
For the outsourcing relationship to work as Roberts describes, he says Orexigen needs to share a lot about its strategy with partners.
“We may even end up over-informing,” he says. “But that enables CDMOs to understand how best to support us. We’ve always been of the mindset that the more information and data we share with providers, the more effective and collaborative they can, and will be.”
“When some people shared information with CDMOs, they asked themselves, ‘How can this be used against us from a business perspective?’ Well, you can’t get anywhere with that perspective. It might make sponsors feel safer, but you are never able to solve the bigger challenges.”
Roberts says some elemental relationships can be transactional, but as it relates to contract manufacturing of pharmaceutical products, you must adopt a strategic view of supplier relationships: “The consequences of a supply chain that isn’t functioning ultimately harms the entire market, and patients.”
“When I think about remarkable suppliers and great relationships we’ve had, they are the ones that clearly understand our corporate objectives,” says Roberts. “They’ve come forward with solutions we hadn’t considered, and that are win-win.” He adds: “Supply chain collaboration seems to be the topic de jour. But doing it well requires a very supportive corporate management structure, and the philosophy to enable it.”
This executive-level attitude can include helping vendors move forward in areas they self-identify for improvement. Roberts says Orexigen is often the first customer CDMOs approach to help execute on improvements. “We’re early engagers of change and innovations,” he says. “In some Six Sigma projects at vendors, we offer our staff for support, both for manufacturing our product, and in bringing change to their overall operations. We’re there to help service providers continue to be healthy, viable businesses.”
And as we have learned in this two-part narrative, when Orexigen needed those service providers most – for its own viability – they came through. “I’m open to the concept that a static CDMO, is really a dead CDMO,” Roberts concludes. But for Orexigen and its supply chain, it’s been much more of a mutually assured existence.