Outsourcing and Biotechnology

By September 15, 2014Biotechnology, Featured

by: Negin Vatanian

Biotech industry is taking advantage of outsourcing and delegating some aspects of the operation to other CMO and CRO companies rather than having proper and qualified staff and completing the work internally. Outsourcing allows companies to use their specialty and focus on a specific area where their capabilities exist and using what they are good at to increase their market. Outsourcing also allows them using other companies’expertise and services to expand their operation without investing on additional space, equipment, and labor and ultimately leading to cost savings. Other benefits of outsourcing include increasing quality of work and speed of development and operation by using qualified contractors and avoiding learning curves as well as having access to local and other markets and also larger patient population.

The key in outsourcing is to take advantage of other companies specialties which allows them to develop in depth knowledge, skills, innovative capabilities and infrastructures for their segment of the business. Outsourcing can be done at any stage and step of the business: basic research, early-stage development, animal studies, advance development, clinical studies, kit management, clinical testing, process development and design, manufacturing, regulatory framework and submissions. Any of these steps can be outsourced to universities, government laboratories and industries in the US or overseas.

However, outsourcing is not an easy process and has several pitfalls and risks like loss of their technology. It also prevents them from developing their own capabilities and technologies, and rely on others which creates the risk of becoming obsolete. Saving money and transferring the responsibilities and risks to someone else seem appealing but at the end they are the ones who are accountable and responsible against steak-holders and regulatory bodies. However, proper understanding of the process helps companies with their decision whether to go with outsourcing or not and also what to expect and how to manage the work. Basically strategic and proper management of outsourced work is the main element to success.

It is critical that the outsourcer knows what they want to accomplish, and what is expected to be done by the contractor. For example, the project could be studying the effect of a compound on a specific gene or be more specific like the apoptotic effect of a gene on a pathway. How it is done might be or might not be important. The important thing is that both parties would be aware of what is needed to be done and develop protocols, assays and procedures together so it is clear what is expected to be accomplished. Without a defined and clear goal and objective, both parties would end up getting nothing but hassle.

Next is to choose the right and best contractor who can do the job in the best possible manner with most reasonable price and possible time. It is important to look at the contractors’service and technology, expertise, work ethics, reputation and their previous work history and other projects they have done. The bottom-line is that the contractor should be expert in what the outsourcer wants to be done. So when looking at their track record, similar projects should be looked at in addition to their general management and reliability. Developing and having a checklist would help the outsourcers to stay on track with what is important and required in choosing their contractor. If the project is about developing an upstream manufacturing process, having a huge animal facility would be impressive but is not relevant to the project.

The next step is to develop a contract so their rights are protected and it is clear that what is expected form both sides. To ensure quality of work and protect outsourcers’technology, it is critical that not only project management issues such as proper scope of work, clear deliverables and communication routs, management and key personnel are being addressed in the contract, also confidentiality and non-disclosure agreements, data and material transfer agreements as well as quality and regulatory systems are being addressed as safe guards to protect their technology and market. If the contract is not clear and well-developed, the outsourcer could end up paying more and not getting anything in return and the contractor would end up doing a work that was not required and not getting paid properly for the spent time, material and labor.

Monitoring the job and making sure it follows the required and applicable regulations and polices is the next step, and ongoing which lasts until the end of the project. Having regular meetings and status reports would help them to stay on track and be aware of what is happening. Periodic audits and site visits would ensure them that contractor is following the established and required policies and quality systems. However, there is no regulation for early stages of drug development but if the contractor is manufacturing a compound or run a clinical trial, it is important that proper guidelines such as GMP and GLP regulations are being followed.

And the last is to ensure the project is done properly and is closed out. It is better to develop a checklist to make sure everything required on the contract is done, all the data and material have been transferred and all invoices are paid. It is also essential that outsourcer develops a contractor performance review document to capture a snapshot of the contractors’performance, responsiveness, scheduling and quality for future reference.

Outsourcing can be beneficial to biotech companies and allows them to use new and state of the art technologies but it doesn’t remove them from the responsibilities and risks of the project. However understanding the process and following proper project management practices would help them to increase the possibility of their success.

 

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