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Contract Sourcing Don't "Second-Class" Suppliers By Wayne Koberstein, executive editor search for innovation, more often than not you find it on the so-called supplier side. Regular readers of my articles and blogs will likely hear an echo of my previous piece on the issue of suppliers vs. partners. But here I am concerned instead with the positive role of vendors, whether or not they claim partnership status with their clients. Perhaps you have seen the cable series ÒLife After PeopleÓ; imagine this industry without its suppliers. How innovative, in any respect, could it be? A fellow writer for this magazine, Eric Langer, recently delivered a wealth of examples that illustrate my central theme, in ÒCMOs Leading The Way In Biopharma Innovation Ñ No Herd Mentality,Ó (June 2013). LangerÕs main point was that the bioprocessing suppliers he cited offer a wide diversity of new technological approaches, thus maximizing their innovative value. If not for their inventiveness, biopharma plants would still look and function pretty much like traditional breweries, perhaps with less charm. Similar CMO-led innovation is operating, though perhaps not as effectively, on the small-molecule side. CMOs make good examples of innovation, but they cannot by themselves represent the entire universe of suppliers in this industry. Their closest reflection is the CROs, but in the precommercial space so many other, often tiny, suppliers and supplier types exist. For many of the smaller vendors, their entire purpose amounts to innovation Ñ pushing clients to adopt entirely new technologies, 20 The CMO Leadership Awards 2013 W hen is a supplier more than a supplier? When it goes beyond simply supplying a needed product or service and leads its clients toward a more innovative future. In the life sciences industry today, if you methods, and even organizational structures. They offer leaps forward in critical areas such as predictive toxicology, clinical trial design, patient segmentation, and, yes, new production tools. Renaissance CapitalÕs Linda Killian, in a conversation partly shared in my latest editorÕs blog, commented on a company that deserves, but has not received, the kind of financial support currently going into ÒhotÓ sectors such as cancer and liver disease. Cellular Dynamics is developing a possible advancement in preclinical, in vitro testing using its human stem-cell technology. ÒThe company is certainly not as sexy as the life sciences companies that are developing treatments, but it may be one of the companies that is developing tools that will allow better predictive ability for clinical trials,Ó she said. Though the Òmedical needÓ for better prediction of trial outcomes is significant, in this case lack of respect for a so-called supplier has apparently translated into a less-than-stellar IPO; as of press time, Cellular DynamicsÕ stock price has remained nearly flat. Where and when did this stratification of industry players begin? I mean Òindustry playersÓ in the sense of what drug sponsors and their suppliers have in common: They are all enterprises contributing to the development of new medicines, diagnostics, and devices designed to treat and, if possible, cure every disease known to humans. Then what is the critical factor that distinguishes one from another? Sales. That is the factor. If your company is selling goods or services to another, your company is the otherÕs supplier. You may be bigger or smaller, older or younger, more or less advanced in experience and technology, but the other company is your customer, and you must sell to it. Ask any salesperson, ÒWho holds the dominant position in such a conversation? Which one is always right?Ó CHANGE THE VIEW, CHANGE THE GAME I love to state the obvious, because it is precisely the obvious that people like to ignore. Here, again, is an echo of the supplier-partner dichotomy: Who handles your account on the other side Ñ business development or procurement? At best, say when the procurement officer has enormous respect and consideration for you, your relative positions are unalterable inside such a structure. Only a miraculous conversion by the sponsor could change things. Face it. But if suppliers sometimes chafe at the bit, effectively stifled from sharing Ñ okay, selling Ñ their best stuff while stuck in an obsequious posture toward clients, is it any better for the clients? The answer is clearly no; in fact, it may be worse. When the client is a drug sponsor, the lost-opportunity stakes are much higher. The supplier stands to lose some business, perhaps only in its most avant-garde wing, but the client could lose everything by forfeiting a critical advantage that might have made all the difference to its success or failure in development. No company or supplier is likely to share