Rewriting the Outsourcing Playbook

Macroeconomic headwinds, compressed regulatory pathways, and an influx of asset-light virtual innovators are leading to an evolution in outsourcing service delivery models.

The global bio/pharmaceutical outsourcing industry is experiencing a paradigm shift driven by macroeconomic pressures, changing regulatory paradigms, and the rise of asset-light virtual biotechnology firms. As a result of these drivers, bio/pharma innovators are changing the way they evaluate and select CDMOs. Once characterized by tactical, transactional fee-for-service arrangements, the focus is now moving toward deeply integrated, phase-specific, and regionally resilient partnerships.

In the latest From Stem to Stern episode, Mark Santos, Vice President of Commercial Development at FUJIFILM Biotechnologies, Mike Shearer, Chief Commercial Officer at Wilmington PharmaTech, and Mark Macdonald, Technical Sales Director at Codis, sat down with The Pharma Navigator to map out the structural evolution required to bring the next generation of life-saving therapeutics from discovery to patients.

Click above to view the video panel discussion or read on for more…

Re-evaluating Partnership Strategies

“In today's landscape, our partners are seeing economic challenges such as inflation and geopolitical uncertainty, which is forcing them to reevaluate manufacturing strategies and specifically CDMO partnerships,” Santos explains. “This shift has led sponsors to focus on ways to de-risk, such as finding CDMO partners that can offer local for local supply chain capacity.”

Compared with how partnerships had previously worked, sponsors are increasingly seeking strategic and integrated relationships with CDMOs, Santos continues. “We're seeing the market shift from a, ‘let's look at this finished and let's do this’, to, ‘we want an extension of our own capacity, we want to have a more long-term agreement, a portfolio-based approach to how we do business’,” he reveals. 

“We're also recognizing that depending on the molecule and the phase that the customer is in with that program, we are seeing a much more phase-specific needs and focus,” Santos remarks. “There are different needs for customers in a Phase I program versus a Phase III. And with the geopolitical climates that we're seeing today, those programs have different risk profiles associated with them.”

This systemic re-evaluation is closely tied to operational efficiency and fiscal discipline. In an environment where capital is constrained, hitting milestones on schedule is a prerequisite for a molecule’s commercial viability and, ultimately, corporate survival.

“In this environment, efficiency becomes especially important,” Shearer points out. “Your ability to deliver on budget and keeping costs down not only through operational efficiencies, but also with the ability to do things right the first time and meet development milestones becomes absolutely critical. Any delay on delivery dates or any blown budgets could result in the death of a promising future medicine and significant trouble for the innovator.”

Capturing Regional Demand

For early-stage synthesis and rapid capacity scale-up, Western developers have previously relied heavily on centralized, global manufacturing networks. However, the modern supply chain is increasingly defined by localized, regional strategies to hedge against potential systemic disruption.

“Historically, innovators were launching primarily lower volume specialty and orphan medicines, which were often from a single manufacturing location, before possibly adding another one after launch,” Shearer notes. “Now with the geopolitical and supply chain challenges in abundance, most innovators are looking at regional manufacturing strategies with U.S. for U.S., Europe for Europe, and Asia for Asia supply chains.”

To capture this demand, suppliers are deploying versatile footprint models that allow developers to establish local footholds, Shearer emphasizes. However, by offering regional reshoring options for clients alongside a flexible, hybrid dual sourcing strategy, such as that provided by Wilmington PharmaTech through the Delaware campus and Suzhou China research site, CDMOs can gain a competitive advantage, he asserts. 

“The world is certainly evolving very fast in a much more dynamic way than I think a lot of us predicted 20 years ago,” Santos states. “We're seeing a much more globalized approach to not only manufacturing, but also process development and innovation.”

However, as a program moves through its lifecycle, the strategic priorities must evolve accordingly. “Phase I customers are still thinking about speed and budget to get through an IND,” Santos observes. “Phase III is about considering BLA, your supply chain security and confidence in the timeline, that still hasn’t changed. And we're still seeing most of the customers look for a Phase III strategy that is very focused on certain markets and regions they plan to launch out of first.”

Supporting Speedy Development

There has also been an increase in fast-track and breakthrough designations from global regulatory bodies to help address serious unmet medical needs for patients around the world. While beneficial for patients, these accelerated pathways introduce other challenges for innovators and CDMOs, who are required to adopt flexible, phase-appropriate technical strategies to maintain sufficient project momentum.

“Speed is often of the essence in terms of bringing new compounds through the development pathway,” Macdonald specifies. “Regulators, like CDMOs, are continually driving to improve processes and supporting the delivery of new therapies to the market.”

Within the amorphous solid dispersion spray drying space, where Codis predominantly operates, Macdonald reveals that it is becoming apparent that a growing number of therapies are coming through with such designations, meaning that they need to be progressed through regulatory pathways more quickly. “In this type of scenario, it's really critical to work closely with our clients and their CMC [chemistry, manufacturing, and controls] teams or consultants to fully understand the regulatory approach that is being proposed and adopted and is right for the particular compound,” he says.  

To navigate this, Macdonald emphasizes balancing model-based simulation against empirical testing to optimize data packages without wasting precious resources. “On a practical level, what this could mean is looking at aspects around phase appropriate analytical method development and verification. So, we're only expending efforts to get analytical methods to the states they need to be and also balancing model-based versus empirical data generation,” he explains

Development timelines have become somewhat of a headline within the industry where many companies advertise this aspect front and center, specifies Santos; however, the science is still critical. “The science is what we produce to give to the regulatory agencies that backs the data, that these products have the required information and confidence to be safe and robust to get you through a launch,” he says.

The level of diversity being seen within industry, from the drug programs to the regions where development is happening, is driving innovation, but it is still imperative to deliver the same, high level of robustness and confidence in a product, Santos continues. “Fast track programs still need to hit all of the regulatory milestones for success, and companies need to find ways to work with their CDMO partner to talk about how that data will be delivered,” he adds.

Shearer sums up the objective of these accelerated programs as a deliberate effort to mitigate early program vulnerabilities. “The priority is reducing development and funding risk by accelerating the timelines and delivering key data milestones faster,” he asserts. “That precedence requires partners who are responsive, can mobilize resources quickly, and bring the technical expertise to execute right the first time while addressing issues in real time.”

Embracing the Asset-Light Virtual Ecosystem

A notable trend within industry has been the rise of asset-light, virtual biotech companies. Driven by advanced computational biology, machine learning, and decentralized discovery tools, these lean organizations often possess high-quality science but zero physical manufacturing or laboratory infrastructure.  As such, CDMOs must step up to provide comprehensive end-to-end service delivery models.

“We are now seeing more and more companies come out as almost virtual teams where they're able to bring products from the IND stage potentially all the way through approval stage using a much leaner approach,” Santos reveals. Given the rise of technological advances, such as artificial intelligence, it is entirely plausible that a lean team can design numerous products with a novel approach and then would need assistance to tactically execute the hands-on science, production, and testing, he notes.

“Therefore, these lean companies are going to be coming to solution providers and looking for a true end-to-end solution,” Santos continues. “As a CDMO or CRO, it’s going to be important that you can support the diversity of products, the global footprint that’s coming, and that you can understand the needs of different analytical capabilities, process development capabilities, and regulatory needs. “Including that full solution package into the day-to-day for the CDMO and the CRO as part of the core offering is going to be instrumental to supporting these companies and ultimately will help more of these companies be successful in bringing their products to market and patients.”

With more biotechs advancing these increasingly complex molecules without building their own infrastructure, it is important for CDMOs to provide “flexible assets, strong financial backing, and partnership models that deliver tailored solutions,” Shearer concurs. Discussions around custom suites in plant set ups and dedicated facilities should be explored with innovative companies who are seeking out partners with the footprint, speed, and technical expertise to execute all necessary tasks, he asserts.

“In recent years, we've seen that the smaller asset-like virtual biotechs have really occupied an increasingly important space in advancing new therapies, and often they can adopt a more agile and fast-paced approach to progressing lead candidates to the clinic,” Macdonald reflects. “Being able to work with a partner that has that full capability available, so not just the manufacturing process, but also storage and distribution, analytical testing and release, stability study and management, among other things, that broad capability helps to cover off the key aspects of client requirements and minimize some of the burden.” 

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