When It Makes Sense to Outsource in the Drug Development & Commercialization Process: The Value of External Project Management
The need for efficient “concept-to-market” strategies for product introduction in the biotech, pharmaceutical, medical device, and nanotechnology markets has never been greater. Companies in these markets operate within very tight timelines and face strict regulatory scrutiny, pressures to bring products to market ahead of competitors or potentially competitive products, and often top-level deadlines to meet funding (grants, venture capital) timeline requirements. In short, companies need to minimize expenditures and timelines in every way possible throughout the product development lifecycle.
In fact, to minimize fixed and capital costs related to production assets and physical infrastructure, many new drug development firms employ a virtual company model to develop concepts on paper and/or small- scale platforms, and then outsource all activity related to scale up and production. This allows them to take their conceptual ideas to market without large investments in human and physical capital, enabling more efficient product development and rapid scale-up to commercial product.
The overriding objective of any pharmaceutical company is to commercialize technology in the shortest amount of time. Lost time during the development and commercialization process represents potential revenue that can never be recouped, especially if time constraints on intellectual property protection exist. The advantage to outsourcing project management is getting things done more quickly, efficiently, and successfully.
The Independent Project Management Outsourcing Model
In the independent project management outsourcing model, project management services related to new
product development, scale-up, and commercialization are externalized. As such, the Independent Project Manager (IPM) identifies appropriate technical capabilities and capacity in the marketplace that mesh optimally with the requirements of the project in question and subsequently manages the placement and execution of the project at an appropriate technical site or manufacturing plant.
Years of experience, proprietary knowledge and well-established industry relationships enable the IPM to recommend capabilities and capacity at affiliate, partner contract laboratories and manufacturers based on in-depth knowledge of technical competencies, scope of capabilities, track record, niche technologies, business culture, available equipment, manufacturing capacity, scalability, and reliability. Searching for and researching all of the service providers necessary to commercialize a product can be an inefficient use of limited resources for any science-focused client, particularly for start-up and virtual firms. The Independent Project Manager possesses the in-depth knowledge that cannot be found elsewhere from a single source.
The benefits are clear: the client saves time (there is a significant opportunity cost to trying to locate optimal technical capabilities and manufacturing capacity on your own), money, gains greater efficiency, and the optimal service provider identified.
Yet, there can be internal reluctance to outsource project management. There is a fear of losing control of the project, slowing it down, or creating an additional layer of costs. In contrast--and given the significantly higher opportunity costs of researching and vetting appropriate capabilities and suitable capacity within the marketplace--using an expert IPM means the project will proceed significantly more quickly, smoothly, efficiently, and cost effectively than it would otherwise.
A project management firm functions as the client’s de facto outsourcing department--seamlessly and transparently--but without the significantly higher costs of having internal staff with this expertise. For instance, a drug development client can then focus time and labor exclusively on new technology development, clinical trial requirements, and sales/marketing efforts.
Additional Benefits of Outsourcing Project Management
Additional services and benefits often provided by a project management firm include:
- Provision of logistics coordination services and in-house regulatory expertise and filing services
- Majority of service payments after the project has been successfully completed (against
- deliverables) as opposed to up-front
- Additional credibility in the eyes of potential contract laboratories and manufacturers who seek to “pre-screen” projects more efficiently
- Single channel project management for multiple development product candidates and/or involving multiple contract manufacturing sites
- Expansive sourcing capabilities for critical raw materials
- Comprehensive contract analytical analysis capabilities for raw materials, intermediates, and final products