Not long after Sanofi tied the knot with Genzyme in 2011, Piet Houwen was asked to lead contract-manufacturing operations. Now about 5 years into the marriage, I visit with Houwen to learn about this combination of Big Pharma and Big Bio, his role, and an attitudinal adjustment for better biologics outsourcing.
The Relationship Is Biological
Firmly embedded in industry lore, Genzyme’s story is of early scientist-entrepreneurs growing one of the first commercially successful (and profitable) Big Biotechs, and then suddenly finding itself a part of a Big Pharma network. What has that transition been like?
“Hindsight is 20-20, as they say, but I think the marriage and integration has been very positive,” says Houwen, who’d been serving as vice president and general manager at Genzyme before his being selected as head of outsourcing for the new organization. “It’s provided Sanofi with greater access to biologics, and Genzyme with resources, not so much from a financial point of view – although that’s important – but from a process and systems point of view.”
Houwen says pre-Sanofi, Genzyme still felt like a biotech startup – partly to maintain its entrepreneurial edge – but that was becoming “an Achilles’ heel.” He explains: “At a certain point, you need to transition, become more professional, really focus on your core processes, quality, and finances. We immediately got some of that rigor and discipline from the new mother ship. So with our mindset as a biotech, plus the discipline and structures of Sanofi, we created a nice mix that’s formed the basis for our future global role in biologics.”
Houwen must appreciate the fact that Sanofi – a traditionally small-molecule company, with an emerging biologics pipeline – selected him to head contract manufacturing operations, an increasingly key component for large molecule development. “There’s certainly never a dull moment,” he says. “It’s important to play this part in the company at this time, at the cradle of something great. As well as my own responsibilities, I recognize our larger ambition to become a global leader in biotech. Being part of that journey – regardless of where you are in the company – is energizing, and fun.”
But it is precisely because of where he is that we are most interested. What insights has Houwen provided Sanofi on the outsourcing of biologics services, and working with CMOs?
CMO Reputation Management
Houwen first reminds me that Sanofi is an experienced outsourcer on the small-molecule side of the business, and that has always been a corporate strength. “Biologics can introduce a level of complexity, but whenever you do drug manufacturing, you encounter challenges,” he says. “These also exist in your internal network – we’ve had our share at Genzyme – as well as with external manufacturers.
“The biggest difference I’ve experienced in my career,” Houwen continues, “is that sponsors quickly form strong opinions about even minor issues at the CMOs, while similar issues, if they were to happen internally, are more calmly and simply dealt with. One of the tensions I need to manage is not to become an easy target when things need to be addressed.”
To stave off these harsher judgments, Houwen first creates an opportunity for everyone involved to take a step back. This often results in the realization that issues encountered at their CMOs have also come up within their our own network. These challenges, in fact, can help inform sponsors of the areas they need to focus on.
“Nonetheless,” says Houwen, “perceptions can trump reality, and the level of forgiveness we afford ourselves tends to be higher than the level we are willing to employ to our partner manufacturers.” He believes this tendency is exhibited throughout the industry.
“Actually, I’m curious to hear about this from companies at the Outsourced Pharma Boston conference,” he interjects, referencing the upcoming event where he’ll join a panel to discuss the future of outsourcing.
“I think this is an important and continuing challenge in our industry – a part of reputation management for our partners. Biopharma service providers are very aware that even minor issues at one facility can impact the reputation of the entire company. CMOs must be held accountable, but at the same time, these partners should be free from this kind of negative background noise.”
Capacity And Costs Impact Reputation
Also at Outsourced Pharma Boston, Houwen expects to hear about capacity at CMOs. He’s already formed some opinions on the subject. Nobody would argue with his premise that “capacity management and risk assessment” are key areas, perhaps particularly on the biologics front, because “forecasts need to look so far into the future.” This early life-cycle assessment, says Houwen, calls for a collaborative risk management strategy, one that includes external partners early on. “How can you share capacity or mitigate financial risk – even intra-company – without involving your CMOs?” he asks rhetorically.
Where Houwen may differ substantially with others is his concern the industry could be heading towards over capacity. We explored this in detail in our first article with Houwen. He’s worried a consequence of too much capacity could result in “a destruction of value,” when instead the industry should be focused on ways to bring products to market in a more cost-competitive manner.
“This capacity theme should keep all of us awake at night,” he says. “How can those of us pursuing drugs that are biologics keep costs down and increase access to patients? Biologics still have higher cost-thresholds because of the associated technology, but that can’t be an excuse for not working towards reducing those costs. So my concern is around the investment wave in biologics manufacturing we see today. Is that money well spent? How can we work together across the industry to mitigate risks and leverage capacity, and be smarter around how we make our investment choices?”
Houwen sees a form of individual and collective life-cycle management as a key for the industry in answering some of these questions. “While it’s one of our strategies to engage new service providers and work globally, every industry and company has cycles. At a certain point you look to proliferation of CMOs, at other points you want to consolidate to establish more strategic partnerships with key partners.”
Houwen concludes: “With biologics, it may be more strategic to have fewer, but more strategic accounts, and avoid the proliferation of manufacturing locations. Otherwise, you may end up dealing with diverse challenges, such as compatibility, and costs go through the roof.” That, of course, wouldn’t serve the reputations of the biologics companies, the CMOs they partner with, or in the long run, the overall biologics industry.