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LIFESCIENCELEADER.COM THE CMO LEADERSHIP AWARDS 2017 76 By L. Garguilo OUTSOURCING 2017: COUNTRIES, COSTS, & SOME CONCERNS BEST PRACTICES Outsourcing capacity in the area of gene therapy?" She too wonders about new or expanded CMO facili- ties — and the expertise to operate them. "Are we in a buyer's or seller's market? What is the business environment? Are CMOs at capacity in certain areas of technology? Will those of us who wish to outsource more have to negotiate differently to come to terms for IP, expenses, and scheduling? If CMOs are indeed at capacity, will this cause companies to invest internally in cGMP facilities capable of manufacturing clinical trial material and commercial supply?" Creative ways to incentivize CDMOs to improve processes and drive for lower cost of goods is a top priority for many companies. P E T E R B I G E L O W President, xCell Strategic Consulting INTERNAL VERSUS EXTERNAL CAPACITY I told you we'd get back to this topic of future internal versus external capacity buildout. And we get a very straight reply on this from another Outsourced Pharma board member, Darren Dasburg, VP BioVentures — Biologics at MedImmune/AstraZeneca. "Topic one for me during 2016 was the rather sudden realization that CMOs will not be able to carry us forward in the near term, and if we continued to push it, could cost a com- mitment to batches in future years," Dasburg explains. "This caused us to look deeply at what we could do ourselves, as well as got us in the acquisition game on the bio-drug substance side." He continues: "Additionally, like many others we have a reliance on drug-product filling; we're learning that not everyone approaches quality and regulatory quite like we do. Our near-decade focus internally has us vis- iting the idea that we are paired with a certain external group of providers, but there's a growing demand for our time and attention." Clearly, some countervailing winds in the seas of out- sourcing are certain to blow in 2017. Happy sailing. L Bigelow restates a mantra of 2016, "Together, drug owners, service providers, consultants, and regulatory bodies need to identify ways to bring drugs to market as efficiently as possible." He believes innovative com- panies now fully understand that product pricing will incur intensifying visibility and public pressures mov- ing forward. Unfortunately, says Bigelow, "Many of the new products under development require expensive ingredients and complicated manufacturing processes. Creative ways to incentivize CDMOs to improve pro- cesses and drive for lower cost of goods is a top priority for many companies." Bigelow says that, as the CDMO industry consoli- dates and matures, pharmaceutical companies will have greater expectations for partnering. He believes that out of necessity, they'll establish fully integrated relationships with solutions providers. "I expect 2017 to be a breakout year in terms of the types of contracts that are signed," he says. "Traditional pharmaceutical companies continue to increase their strategic interactions with partners and look for ways to effectively manage risks by integrating with CDMOs." From this integrating, an important consequence arises: It will ensure that less capacity will be built internally by Big Pharma, and more CDMO capacity will need to be leveraged. This will put more stress on spe- cialty capacity, such as biologicals, but will also create efficiency opportunities for more traditional capacity. Hold that thought. CONCERNS CASCADING FROM YEAR TO YEAR When I asked about outsourcing in 2017, I expect- ed Carol Sherako, director program management at Sanofi Genzyme, to focus on project management. After all, articles we worked together on in 2016 on this subject became some of the most widely read on OutsourcedPharma.com. She didn't let us down: Both internal and external project management, she says, continue to grow in importance to her and her company and, she believes, most of the outsourcing arena. Sherako agrees with Olsson's comments that in 2017 it'll be important to look at utilizing more global CDMOs. She feels this may play a key role "in helping us learn how to form better partnerships, those needed in all our sponsor-provider relationships." As she takes a wider survey of the business environ- ment and competitive landscape, Sherako also sees a growing need for services directed at more focused and specific science and technologies. "People won't just need capacity; they'll need specific capacity," she says. She uses her own field as an example: "Will there be