By Lorraine Mackiewicz, Clarkston Consulting
Macro industry trends influencing outsourced pharma services include the growth of orphan drugs that address small patient populations, the adoption of virtual manufacturing models to focus on core competencies, the need for shorter drug development timelines, and the desire for risk management amidst resource availability and demand fluctuations. With these trends in mind, pre-commercial bio/pharma organizations evaluating partnerships are faced with making key decisions around which capabilities to outsource, the degree of data access and ownership, and which external partners are the right fit to align with their overall business values and strategy. Aside from the major decisions to make about an outsourcing strategy, it’s equally, if not more, important to manage alignment within the organization to ensure all business decisions made across manufacturing1 and commercial operations are complementary to that outsourcing strategy.
When pursuing an outsourced commercial model strategy, capability needs and priorities2 may change as organizations move closer to commercialization. We outline four considerations to bear in mind so that forward progress can be made with implementing business and IT capabilities.
1. Define A Clear And Comprehensive Strategy Up Front
Determining the commercial model strategy for an emerging pharmaceutical organization requires input and alignment across the executive leadership team. At a foundational level, it’s critical for the corporate leaders to set the overall vision for the future of the company so that the rest of the organization has a north star and guardrails that drive future decision-making. Evaluation of factors including business core competencies, resource and funding availability, and global positioning and launch strategy will be crucial to the commercial model strategy. Some of these factors may change over time depending on internal and external factors.
The challenge many pre-commercial organizations face is that the capabilities required are dependent on the commercial model strategy. While a commercial model decision may be driven by the commercial operations team, it should be closely aligned with a broader set of functional leads, including manufacturing, quality, finance, and IT. Without a defined commercial model strategy, the requirements for operational capabilities cannot be fully defined. Decisions about capabilities like manufacturing and distribution agreements, IT and data infrastructure, and accounting require setup well ahead of commercial launch. Thus, the sooner a commercial model strategy can be solidified, the greater up-front alignment operations team decisions will have.
The outsourced commercial model strategy should depict overall objectives, timelines, milestones, risk mitigation strategies, and plans for oversight of outsourced partners. A clear strategy with defined goals and objectives from the top down will ensure cross-functional alignment and, ultimately, greater chances of success in achieving desired outcomes.
2. Evaluate Budget And Resource Constraints Against Potential Risks
Although cost savings tend to be a significant driver of which capabilities to outsource, the benefits should be weighed against potential risks. When evaluating external partnerships, determine to what extent the partner can meet known business and technical requirements and how well that partner can scale as capabilities change or the business grows. It could be worthwhile to build certain technology capabilities in-house if the business strategy dictates the importance of owning data in-house to drive business decisions.
Alternatively, it could also be worth investing in a more established manufacturing partner that has existing integrations, partnerships, and resources to support the unique requirements and drug delivery needs for the target patient population. Decision-making around outsourcing is similar across other industries, but in pharmaceuticals there are nuances given regulatory and safety requirements.
Questions to ask when deciding how to balance cost savings with risk include:
- What is the expected target patient population that influences required volumes for our first commercial product? Will that significantly vary for our second commercial product that may influence in-house capabilities or a more robust commercial partner (e.g., 3PL)?
- Are our existing outsourced clinical partners (e.g., CROs or CDMOs) equipped to manage commercial safety and adverse event reporting needs, or do we need to transition to another partner?
- Do we have the technical and process expertise in-house to manage the capability, or do we have the budget to invest in headcount to acquire and maintain talent?
- How will performance milestones and critical data trends be tracked, and can an outsourced partner provide the level of access required to complete desired self-service reporting as needed?
- What level of oversight and communication protocols do we need to put in place for outsourced partners to perform up to expectations?
- Do we have contingency plans to support a given capability if an outsourcing partner is unable to deliver capabilities as required?
Assessing the cost-benefit from personnel, financial, and data perspectives can be useful to identify whether outsourcing capabilities will contribute to the overall commercial model and business model strategy.
3. Establish Key Stakeholder Alignment Across Key Stakeholders
Typically, a pre-commercial organization is comprised of stakeholders with varying levels of experience operating in a commercial environment. Some personnel may only know what it means to operate in a research organization, whereas others, especially in commercial operations, may be hired with extensive experience working in Big Pharma organizations that have a different set of resources and technology readily available. Once requirements are prioritized and capabilities are charted on a road map, it’s critical for all stakeholders to be aligned on the established plan, along with who is accountable and responsible for each capability. By clearly communicating what each stakeholder can control or influence, there will be less room for interpretation of the commercial model strategy and execution plan.
In addition to establishing accountability with internal stakeholders, it’s equally important to define a RACI (responsible, accountable, consulted, informed) matrix that sets clear expectations, responsibilities, and accountabilities across all outsourced partners. At the onset of a partnership, spend adequate time reviewing and refining SLAs and agreements that will govern the processes, data integrations, and resources available to support your organization. By having core alignment with the cross-functional business and technical requirements needed to support business objectives, organizations can ensure that external partner agreements are framed to support those needs up front.
4. Monitor, Assess, And Iterate Along The Way
No matter how much time and effort are spent up front in defining the commercial model strategy, there will likely be external and internal factors that challenge assumptions and ultimately require a pivot. In the fast-paced environment of transitioning from clinical to commercial, it’s critical to put guardrails in place to monitor, assess, and iterate tactical activities for capability development. For example, there should be a structure in place to reassess the capability plan and adjust it on a regular basis as priorities shift. The review of capability planning should be a joint exercise across business and IT leaders due to the inherent dependencies across capabilities. When collaborating with external partners, the owner of the business relationship should inform the partner and determine what adjustments, if any, need to be made to their respective capability development plans.
Assigning milestones, including go/no-go decisions within the cross-functional review of capabilities, will ensure greater visibility and understanding of changes that impact the plans set in place. Through continuous evaluation and optimization of capability plans and outsourcing partnerships, the organization will be in a better position to efficiently flex and adapt as changes happen.
Looking Ahead For Outsourced Commercial Model Strategies
Making the decision to outsource capabilities to external partners comes with many benefits to maintain a lean organization but requires rigorous oversight and planning to ensure all external partners are aligned with the overarching commercial model strategy of the pharmaceutical organization. Spending the time up front to align on a comprehensive commercial model strategy, evaluate resources and budget against potential risks, and establish cross-functional accountability, and then monitoring progress along the way, can set the foundation for greater success when working toward a commercial launch.
- Erickson, S., & McGuire, E. (2023, March 17). Commercial Supply Chain Readiness for Biopharma Organizations. Clarkston Consulting. https://clarkstonconsulting.com/insights/biopharma-commercial-supply-chain-readiness/
- Patel, S. (2022, June 28). Capability Building for Emerging Commercial Biotech Companies. Clarkston Consulting. https://clarkstonconsulting.com/insights/capability-building/
About The Author:
Lorraine Mackiewicz is a manager with Clarkston Consulting and specializes in organizational transformation for the consumer products, retail, and life sciences industries. In the pharma sector, she has worked with several pre-commercial organizations focused on building capabilities for commercial operations. She is passionate about creating sustainable change in organizations and works with clients to solve their challenges through strategic planning, effective cross-functional collaboration, and analysis of key consumer insights and trends. Mackiewicz has extensive experience in organizational design strategy, process optimization, market assessments, and digital transformation.