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Outsourcing in the pharmaceuticals sector: the pros and cons

2 Apr 2008 12:00 AM | Anonymous
Outsourcing non-critical processes constitutes normal day-to-day business and best practice in industries such as aerospace, the automotive sector and telecommunications. Losing the non-value add stuff so that more time and budget is available to spend on the critical? A no-brainer, surely? But this is not yet the case in pharmaceuticals, an industry that transforms our lives with modern science, but whose approach to business processes can sometimes seem lacklustre by comparison.

Outsourcing is not a new concept to pharma per se. Manufacturing capacity and clinical trials are frequently outsourced; and truck loads of documents and paperwork are shipped to clinical research organisations (CROs) on a regular basis. But outsourcing an actual compliance-critical process? No way.

Take for example pharmacovigilance; the terror of being sued over incorrect reporting of an adverse event, or putting the business reputation at risk has led the pharma industry to clutch these processes fearfully to their chest. The processes themselves are needed for compliance reasons and add little in terms of value, but plenty in terms of cost and added stress to the business.

So is it plain foolishness, stubbornness, the fear factor or all three that make pharma companies ignore the benefits that outsourcing can bring? Well, intense scrutiny and regulatory pressures mean that a culture of extreme caution has developed when it comes to new ways of working.

Many processes in pharmacovigilance are a burden to Pharma and ripe for outsourcing. In a business making drugs based on, for example, acetylsalicylic acid, a product that has been on the market for well over 100 years, the chances are there is often no new knowledge to be gained from PSURs and single case handling, yet the dogged reporting and analysis still has to take place in order to maintain compliance.

The drugs do not contain intellectual property, do not tell the company anything useful and could easily be managed outside of the business. Forward thinking Pharma companies are beginning to wake up to this fact.

Of course if a drug company fully owns a proprietary product that accounts for a significant proportion of its annual revenue, then chances are that they will want to keep every process concerning its safety in-house, because any margin for error puts the business at huge risk.

However, for the larger pharma and generics companies with huge portfolios of non-proprietary products, there are several non-critical processes that it makes sense to outsource, even if they are needed from a compliance perspective, so that they can focus on the critical ones free from any distraction.

So, how is Pharma going to cleanse the bad taste in its mouth about outsourcing process? They view it as high risk and highly complex: how do they ensure that they outsource only the right processes and cases? How do they ensure a compliance risk never slips in between them and the provider?

It can be done. First, pharma companies should work with an outsourcing expert who knows their business intimately, and undertake a full risk assessment of their processes to decide which they can outsource and which they cannot risk. They then need to work with the provider to ensure that their understanding of risk priority and process is shared. They need to be crystal clear on who is responsible and who is accountable for what. They should create a triage process to be followed so that, should a risk be spotted, it can be mitigated in good time.

Then there are the practicalities; do their technologies enable them to share both information and data on cases in real time? Technology around transferring data and sharing case information is now advanced and safe, with applications like Microsoft SharePoint making it secure and easy to share information with a provider straight away.

Basically, Pharma companies should be setting up a partnership where the potential for the unexpected to happen is reduced to almost nil. Pharma companies do not like surprises!

Finally, European pharmacovigilance legislation is also changing to open the door for both outsourcing and collaboration. Volume 9a states that drug companies may now collectively submit their PSURs, for example for generic products, rather than individually.

The authorities like it because they read one report instead of many. As for the pharmacos, the change in law means they can collaborate which other generics manufacturers and outsource their long-winded PSUR process and, at the same time, share the cost with other companies yet still remain fully compliant. That is one surprise that pharma companies might find that they like.

It is expected that, within the next three years, life science companies will have completed a full assessment on which compliance driven, non-value adding processes they can outsource, and will be using drug safety experts and CROs to help them focus on the value add, patient critical areas.

• Marty Boom is a principal with WCI and has been with the organisation for the past 10 years. In his role, Marty has managed and led global business improvement assignments in the life science industry. Marty is an expert manager of change in strictly regulated environments. He holds a degree in Mechanical Engineering and Manufacturing Automation from the Technical Institute of Arnhem and a degree in Business Administration.

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