From The Editor | June 29, 2020

"We Forgot Our People": The Time Outsourcing Might Have Stopped

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By Louis Garguilo, Chief Editor, Outsourced Pharma

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Fault lines, earthquakes, tornadoes, hurricanes; CDMO audits and inspections, backup contingencies; funding streams, milestones, timelines.

Check. Check. Check.

“But we forgot our people.”

So says an introspective biopharma executive, regarding pre-coronavirus risk assessments, and the ensuing struggles brought on by the ongoing pandemic.

“You can say we weren’t prepared for a pandemic. But more fundamental, we weren’t prepared for what happens to our workforce.”

A number of industry leaders have opened up about their thoughts on how drug sponsors handled the “people component” of the COVID-19 outbreak.

As we’ll see, it was a time reliable outsourcing might have been lost as a viable option for drug development and manufacturing.

What If Outsourcing Is Outlawed?

For years, outsourcing as a fundamental business model for drug development and manufacturing companies has driven operational decision-making.

We know – though at times still shake our heads in disbelief – that virtual biotechs can be 100% reliant on externalized drug development, processing, and product manufacture.

Even at these levels of reliance, various sources and widespread reporting over the past six months verifies CDMO arrangements performed exceptionally well.

Our outsourcing system held together nicely.

There were, though, some rough realizations. A lack of “people” risk-planning was one of them.

You’ve employed risk-mitigation policies and strategies, established best practices and supplier relationship management (SRM) techniques, activities aimed for at least the perception of security and safety in a highly leveraged outsourced environment.

“We all really strive to run all sorts of risk assessment scenarios,” says a biotech executive with earlier career experiences in Big Pharma.

But she suggests we now take a somewhat more jaundiced look at that focus and implementation.

“For example,” she says, “recently we brainstormed with my suppliers about the risks to their geographic locations. ‘Wow, do you realize there’s a hurricane in the area every 5 or 10 or 20 years?’ we contemplated. Our supply chain could be down for two months. What would we do?

“Years ago I recall considering selecting a CDMO in a certain region. Even though their facility was not actually in, but proximate to, an earthquake zone, we sat around the table and asked: ‘Can we live with that risk?’

“But now with the coronavirus, we’ve discovered what it is we never ask:

What if no people are allowed to work in a certain facility?

What if many of them are at risk by coming to work?

What if human travel as well as material shipments is curtailed?

In other words: What if outsourcing were effectively outlawed?

Risky Imagination

“As an industry overall,” said one supply-chain executive, “we need to admit we lacked imagination for our risk scenarios.

“Or, worse, should we ask if our thinking has become flawed?

“Did we imagine a scenario where, first, the biggest impact is on humans, and then how that’s magnified by the fact so many biopharma organizations are helpless without their CDMOs – some of them located vast distances away?

“This is more than about individual supply chains being disrupted. We have a system of drug development and manufacturing that is now under a harsh spotlight.

“We do have all these quite excellent communication and networking technologies for working from home and with partners. Yes, we can sustain ourselves for a number of months, and still be effective and efficient.

“But if our CDMOs cannot supply us longer term, we’ll grind to a halt. Issues will pile up. That’s the fundamental challenge of our highly leveraged outsourcing system today.

“And what could stop production at CDMOs in China, Italy, or the U.S.? The common denominator is people. The one risk analysis we missed is the most fundamental.

“We were totally reliant on CDMOs to protect and take care of their employees – our extended workers, if you will – while we dealt with our own personnel safety and challenges.”

Caught Up In Contagion

Now the coronavirus has exposed our populations to a frightening disease, and our outsourcing models to a higher level of concern, what’s next?

One executive believes a key learning is one we touched on above:

“Focusing on improbable events in isolation, and spending inordinate amounts of time crafting the perfect business-continuity strategy, may not be the best use of our time.”

That paradoxical positioning implies that, in an era of ever-increasing data, senior management cannot get carried away “spending hours debating whose opinion on a frequency of hurricanes is better than somebody else’s.”

“’Is the entire risk-assessment model itself flawed?’ is the real question now.

“Do we in fact need a level of capabilities in-house? Would it have mattered? For one thing, it gives you that second source, in close proximity. It might mean you can keep some labs and at least small-scale facilities open longer. You could have maintained more control.

“I don't think we can answer these questions definitively right now.”

Likewise, I have not heard any voice considering a retrenchment at this point. Re-evaluations, though, are happening throughout the industry.

A Business Life-Cycle

Which circles us back to where we started:

Our outsourcing system, and the individual CDMOs that populate it, appear to have outperformed, when considering the breath of this historic pandemic.

“Fortunately, all the organizations supporting us under our development agreements, are in fact still open,” I was told the end of April by a project manager at a biotech.

“The CDMOs figured out how to protect their employees, help them care for their private needs and concerns outside of work, how to keep their labs and plants operational, and how to keep us and our patients supplied so we could do the same.

“We might even argue the CROs and CDMOs are, in a sense, always better prepared than the biotechs for even something like an outbreak of COVID-19.

“Their business model is based on implementing policies that allow for quick response and change. CDMOs are practiced in the art of alacrity. They are quicker to focus on what you need to do to keep your lab and factory running.

“If this is about ‘social distancing,’ well even somehow they’ll know what to do.”

Of course the final chapter on the Wuhan-coronavirus pandemic is yet to be written.  

But the risk reassessments regarding outsourcing, and people – the human lives at work, in their homes, and at your external partners as well – have begun.