The "Unexpecteds" Leading Us Into 2019

By Louis Garguilo, Chief Editor, Outsourced Pharma

What industry trends, developments or actual outcomes did not shape up as you had expected at the start of 2018?

The negative formation of this question forces a cognitive persistence applied to why these items didn’t materialize, and to thoughts of the upcoming year.

I’ve selected replies to this question from professionals on the Outsourced Pharma Editorial Advisory Board, starting with an insightful list from Darren Dasburg, VP and Head Learning and Development, Global Operations, AstraZeneca.

The Dasburg Dash

Dasburg’s reply is insightful because of its inherent honesty, and the number of areas included. It’s a list of “unexpecteds,” demonstrating the difficulty to forecast varying events in drug development and manufacturing, specifically applied to outsourcing and supply chains. Here’s his list:

• Budgets were tight on the client side [biopharma], but given the dialog in Washington DC on pharma pricing, I anticipated even more compression being pushed down to the CMOs as well.
• CMOs are expanding, but I expected this to trend more directly in line with approvals, which haven’t diminished in absolute numbers, but have in volumes due to patient specific treatments and gene therapies.
• I anticipated more of an uptick in immuno-oncology products, but instead have found them fighting against the age-old chemo treatments, even though the immuno-oncology products are a quarter of the cost.
• I expected more automation – especially in labs – given the power of cloud computing, and the challenges of hanging on to degreed workers employed in routine lab work.*
• I expected to see more blockchain mechanisms in B2B transactions, or at least early adopters eliminating the dreaded purchase-order and invoice-payment practice.*
• I envisioned more Amazon-like delivery drones playing a role in supply chains, and “lightening up” inventory levels.*
• I was looking for more pharma investment in the U.S., given the new tax basis for businesses.
• I also expected to see more sense arise from the Brexit deal – it is a mess. And it will impact supply chains and markets for biopharma companies.

For a more in-depth look at technology in our future, and a move to “Biopharma 4.0,” I invite you to read this feature article in the December issue of Life Science Leader magazine, where Dasburg and I explore a wide range of implications and applications. 

Prices, Policy And People

Rajiv Ginde, Associate Director, Strategic Procurement, Sandoz, went with a trio of unexpecteds, and added some analysis to each component.

1. Rise in commodity prices

Some of the sharp increases were as a result of natural disasters (e.g., Hurricane Harvey) or high demand/few new capacity announcements. However, while prices are fairly high as we ended 2018, my expectation for next year is for this to moderate.

2. Uncertainty in trade negotiations/tariffs

This resulted in more delaying of capital deployment and decision-making than perhaps expected. Some U.S.-based suppliers increased pricing whether or not their supply was based on imported goods, resulting in increased prices for steel drums, higher paper, packaging costs, etc.

3. Low unemployment level - trouble in hiring the right talent

There’s now a situation where the industry is facing unfilled positions, and higher workloads for existing employees, to the point of an arising inability to work on projects that could generate additional revenues/ profits.

Leading Technology Lagging

Bikash Chatterjee, President and CSO, Pharmatech Associates, and a frequent participant and advisor to 2018’s Outsourced Pharma conferences, also focused on three areas, those that have been “slow to evolve,” in his opinion.

1. Continuous Manufacturing.

While there has been a definite uptick in the activities in Big Pharma around creating capability, the actual adoption curve is pretty flat. Long term this presents a real opportunity for low-cost, high-quality drugs; however, most CMOs have been reticent to step into the fray to advertise expertise or equipment capability. This is partially because the cost is significant, and the characterization and regulatory challenges unique.

2. Big Data

Pharma and biotech are slowly putting a toe in the water regarding harnessing the potential power that can be derived from Big Data analytics. Most large pharma and biotech have ‘a pet project’ underway, but the integration of this analytics approach has been slow at best.

3. Quality Metrics

Despite the FDA’s guidance – which in my opinion was terrible – the industry still looks at KPI’s [key performance indicators] as window dressing rather than core components of business-performance governance. This is a paradigm shift that is slowly evolving. As we see broader adoption of more sophisticated elements of the overall manufacturing and supply chain, the need and value for KPIs to drive business performance via innovative approaches – such as blockchain – will become essential to realize the benefits from these advances.

Unexpected Of The Year

And finally, I’d vote for the entry of Vincent Kosewski, President, Manufacturing & Supply Chain Management, Kala Pharmaceuticals, Inc., as the “unexpected of the year.”

Similar to items above, he’s concerned with what might have progressed to a higher level:

“One topic that has been on my mind throughout the year is the integration of CMO and sponsor operations. At the Outsourced Pharma conferences we have spoken about improving operations by getting more strategic and integrated with our CMOs. I’ve experienced some good results with this concept, but have also had some frustration.  I’m curious to know how the industry as a whole is doing to form true partnerships as opposed to transactional relationships. 

“Related to this is my curiosity about how serialization is more broadly impacting the integration of supply networks.  Some in the industry have proposed that data sharing will force trading partners to become more integrated. I am not seeing this yet, but wonder if others are.”  

Your Unexpecteds

As Kosewski suggests, we’d like to hear from Outsourced Pharma readers. There’s space below this editorial to add your thoughts. Your “unexpecteds” are vital to helping us understand where we are as a drug development and manufacturing industry today, and what we should focus on as we dive into 2019.

Best wishes for a great start to the New Year.