Life Sciences Consulting - Where Relationships Count
Life Sciences Consulting - Where Relationships Count
A relatively new development in the life sciences industry is the growing use of contract manufacturing organizations (CMOs). In response to decreasing profit margins, continuing patent expirations, and the concomitant diminishing product pipelines, companies are turning to CMOs as a way to reduce costs and still invest in R&D. This new development also opens the door much wider for life sciences consulting.
In the 2009 Annual Outsourcing Survey conducted by Contract Pharma, 29% of the respondents indicated that they use CMOs for more than 50% of their commercial (or final dosage) manufacturing. CMOs have become, then, a vital component in the value chain for life sciences. They help in reducing costs because they offer valuable flexibility, provide additional expertise, and reduce internal requirements for manufacturing support.
The use of CMOs is a cost-optimization strategy that allows life sciences companies, especially pharmaceutical companies, to jettison certain internal practices and procedures. The flipside is that this practice also requires companies to manage multiple external relationships, which often runs into communication and quality issues, sometimes compromising scheduling and supply-chain security. A 2008 study, for example, found that 91% of the participants that relied heavily on outsourcing had experienced what was termed a "significant incident" (one that resulted in a loss of $10,000 or more), as opposed to only 59% of those that kept their operations mostly in-house.
Maintaining manufacturing excellence, then, is one of the bigger challenges for life sciences companies that contract with CMOs. This challenge comprises a host of sub-challenges, including ensuring supply-chain security, handling tight scheduling, managing multiple contracts, managing efficient and accurate data exchange, and protecting exposed intellectual property. The whole affair can grow so complex and unwieldy that outside help sometimes becomes a necessity.
Perhaps the greatest challenge involved in outsourcing to CMOs, however, lies in the fact that the CMO-sponsor relationship and, as a result, management methods are still evolving. And this sometimes means, especially for complex processes like those in the manufacture of biological products, evolving relationships with and management of 10 or more participant sites. There is an opportunity to benefit from life sciences consulting here.
While utilization of CMOs is growing, the management methods often remain the same as they were 10 or 20 years ago. Consequently, this strategy very often falls short of achieving the maximum potential value for life sciences companies. Initially, the CMO-sponsor relationship was entered into chiefly as a tactical, ad hoc solution. Later, owing mostly to quality issues that began to crop up, central governance was created. And more recently, in the effort to build global networks, emphasis has been on the supply chain. The point is things are changing and will continue to change.
Life sciences consulting firms, therefore, can be a huge asset for companies seeking to maximize the value of their use of CMOs. But managers have to realize that, because of the evolving nature of CMO use, the consultants they call in must be willing to establish long-term relationships. If the consulting relationship is to work, those consultants should possess and demonstrate the willingness, the personnel, and the knowledge and expertise to commit to the long haul.
The cost-cutting strategy of using CMOs certainly has its place-and so does the use of life sciences consulting as way to ensure the results-producing effectiveness of that still evolving strategy.
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