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Outsourcing is about relationships; when managed properly, both clients and vendors win

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February 18, 2002
Volume 80, Number 7
CENEAR 80 7 pp. 80-82
ISSN 0009-2347

Outsourcing is about relationships; when managed properly, both clients and vendors win


SPOT CHECK Hovione technician visually inspects an ongoing reaction at a manufacturing plant in Portugal. HOVIONE PHOTO


Douglas G. Johnson is the senior director for manufacturing at Allos Therapeutics, a Denver-based pharmaceutical company founded to develop a compound called RSR 13 for therapeutic uses. The company has no labs, much less large-scale reactors. Its supply of RSR 13 comes from Hovione, a chemical company that manufactures the active pharmaceutical ingredient at its facilities in Loures, Portugal, on the outskirts of Lisbon.

Thousands of miles and several time zones separate Denver and Loures. But the relationship, which began in April 1997, when RSR 13 was only in Phase I clinical trials, remains strong and highly valued by both parties. RSR 13 is now in Phase III clinical trials for the treatment of cancers that have spread to the brain. The manufacturing aspects of drug development have been validated and are ready for submission to the U.S. Food & Drug Administration.

As the pace of drug discovery continues to quicken, more and more promising leads will fall by the wayside if the discoverers rely only on established pharmaceutical companies for development. With custom service providers for every conceivable aspect of drug development, anyone can develop a lead to a commercial product with minimal capital. The Allos-Hovione partnership for manufacturing is a success story, but both parties say there have been rough spots along the way.

Learning to minimize those rough spots in customer-vendor relationships was one of the goals of "Outsourcing Biopharmaceutical Manufacturing," a conference organized by the Center for Business Intelligence and held last December in Alexandria, Va. At a preconference workshop, Johnson and John D. Richards, vice president of manufacturing and product quality at Cambridge, Mass.-based Medicines Co. (MDCO), shared their experiences working in pharmaceutical companies without fixed assets--so-called virtual companies. Both described what they seek in outsourcing partners.

Beyond the right fit for chemistry, technology, regulatory compliance, and other special expertise, a vendor's readiness to collaborate ranks high with companies like MDCO, which specializes in taking drugs in advanced stages of development to full commercialization. Without any in-house labs or manufacturing, analytical, or development facilities, it took over the development of the anticoagulant Angiomax from Phase III clinical trials to commercialization. Angiomax had been discovered by Biogen, a Cambridge-based biopharmaceutical company.

But Biogen at the time was focused on pushing another biopharmaceutical product to commercialization, and Angiomax was shelved, Richards explained.

In 1997, MDCO licensed Angiomax from Biogen. MDCO stayed with Biogen's manufacturer of Angiomax, UCB-Bioproducts S.A., "because of their willingness to build a relationship," Richards tells C&EN. "Together we developed a new process for Angiomax."

DEVELOPMENT AT MDCO includes work on a biotherapeutic agent called CTV05, a live organism that can be used to help treat bacterial imbalance in the vaginal tract. MDCO licensed it from a small company with no infrastructure and had to find a manufacturer to produce it.

Richards couldn't divulge the manufacturer of CTV05. But about MDCO's approach in choosing outsourcing partners, he said, "We want contract manufacturers that are interested in building a relationship with us." Unlike the big pharmaceutical companies, he continued, "we don't have a big stick to make contract manufacturers want to work with us. A relationship ensures that we can achieve our goals through them."

Responsiveness or vendor care is a trait that Allos seeks in outsourcing partners. "It's a very subjective characteristic," Johnson said. "If you feel that a vendor will not care about your project, you might as well leave. You won't even have a honeymoon."

As an example of vendor care and responsiveness, Johnson described how Hovione diverted a piece of equipment headed for another facility to Loures after they determined--and Allos agreed--that it would improve the manufacture of RSR 13. "This happened just as we were about to start process validations," he said. "At [Hovione's] own initiative, they found a critical piece of equipment, installed it immediately, validated it, and got that all done in four weeks so that we could still do our process validation in time. And they didn't charge us for it."

"As a company, we would have been very foolish not to have done that for Allos," David Hoffman, president of Hovione's U.S. operations, tells C&EN.With worldwide annual sales of about $60 million, Hovione finds companies like Allos Therapeutics to be ideal clients. "That they were interested in the manufacture of an active pharmaceutical ingredient rather than just an intermediate put them on the front for us," Hoffman says. Allos also was willing to give Hovione a long-term commitment.

"SOME CUSTOMERS prefer to be one-sided, wanting all the services, as well as the flexibility to take the project in-house or to retain manufacturing rights," Hoffman explains. Such customers are not there for the long haul.

Finally, Allos "values our services and recognizes and appreciates our value," Hoffman says. "With large pharmaceutical companies, we are just a provider of goods. With Allos, we are an active participant. It doesn't mean that we don't work with big pharma. We do. But the relationship is different."

At the conference proper, speakers addressed the nitty-gritty of outsourcing. Sean Sullivan, manager for Good Manufacturing Practices Quality Assurance at Alexion Pharmaceuticals, Cheshire, Conn., was one of the attendees. Alexion has biopharmaceutical products in clinical trials and currently contracts all the manufacturing for these trials. "My job has become primarily about interacting with these contractors," he told C&EN. "I was very interested in how other people are managing those relationships."

Although many speakers came from a biopharmaceutical manufacturing perspective, the principles they emphasized could be applied to any work to be outsourced. For example, before any work can be outsourced, a company must first evaluate the soundness of such a decision.

Susan Dexter, vice president of business development for biopharmaceutical contract manufacturing services at Dow Chemical, noted that biopharmaceutical manufacturing is more complex than chemical manufacturing. Therefore, scaling up biopharmaceutical production is a bigger undertaking. Nevertheless, the same steps for decision-making apply: Evaluate the resources needed to scale up in-house versus outsourcing production, carry out cost-benefit analysis, and compare the scenarios.

ONCE THE DECISION to outsource is made, the next step is to find the right partner. On this subject, James A. Wilkins, president of BioLogic LLC, a consulting firm based in Woodbridge, Conn., emphasized that the right partner depends on the development stage of the product. At the preclinical stage, the manufacture is open to a lot of flexibility. But as the product moves along in development, regulatory restrictions and production costs kick in. Close to launch, the ability of the contract manufacturer to produce the projected demand becomes critical. "Virtual" pharmaceutical companies may be best served by full-service providers, Wilkins said. But companies with more in-house capabilities might be better off picking and choosing specific partners for specific projects.

On top of these considerations, the customer must carefully consider other issues that come up with outsourcing. For example, David E. Shuey, CEO and president of Willis of Maryland, a provider of insurance and risk management services, pointed out that outsourcing creates new exposure to risks to a company's human, financial, operational, integrity, and intellectual capital, and he suggested ways to protect these assets.

And of course, there's the manufacturing contract. Full conferences are held on this topic alone. Joseph E. Tyler, vice president for operations at Salix Pharmaceuticals, Raleigh, N.C., emphasized the need for any contract to stand the test of time and to be flexible enough to accommodate changes. The contract should clearly indicate how the process will be managed, he said.

For any contract manufacturing arrangement, be sure to have a quality-control agreement, said Martin Van Trieste, vice president for quality assurance at Abbott Laboratories Hospital Products Division. Among other points, the agreement includes a list of key contacts and defines who will be responsible for tasks that affect product quality, quality systems pertaining to the product, and regulatory compliance related to the product. For best results, he said, keep the language simple and straightforward, and update the agreement annually.

Once all the paperwork is in place, the real work begins. When the contract is for manufacturing, a transfer of technology usually takes place between the customer and the manufacturer. "That's when the pedal hits the metal," said Cathy Smith, manager of manufacturing business development for Chiron Corp., Emeryville, Calif.

Smith offered contractors several tricks to ease technology transfer: Observe the process at the client's facility, clearly define product and process sensitivities up front, scale up from similar process equipment with known scale factors, and check all sources of process information.

When it's time to do full-scale test runs, make sure the client is on-site for rapid troubleshooting. And finally, Smith said, when the technology transfer has been certified a success, be sure to get the client and contractor teams together to celebrate.



When You Depend On Others, Be Good

Being a good client is a win-win situation, says Douglas G. Johnson, senior director of manufacturing for Allos Therapeutics, Denver. Good clients ensure that their work is more likely to get done by making the vendor's life easy. At a conference last December, Johnson offered the following tips for being a good client:

  • Recognize and respect your vendor's expertise.
  • Compliment people when they do a good job.
  • Make decisions based on the data and not on your biases about how experiments should turn out.
  • Send tokens of appreciation, such as cookies during holidays.
  • Keep people posted on the project's status.
  • Pay your bills.
  • Prioritize your concerns appropriately; not every issue is of high importance.
  • Understand the workload of your vendor.


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