Out-sourcing models today extract minimum value (discounts rather than asset value enhancement) from vendors and emerging product development models. Today the majority of out-sourced solutions are procured in relative isolation without a view of the integrated product development pathway required to maximize asset value. Consequently risk share in the delivery of the solutions can be inequitable and skewed toward the provider of the solution who will typically be paid cost plus a margin % irrespective of outcomes. Asset value (NPV) is heavily impacted by speed to market, cost efficiency and risk and so any provider of clinical / commercial services should have levers to impact these considerations baked into their solution model and a commercial agreement to incentivize achieving NPV enhancement benefits.
Old product development models are being redefined by new market realities, transforming the way biopharmaceutical companies need to do business.
Companies are facing increasing costs, more complex regulatory pathways, a need for a broader evidentiary base to substantiate asset value, higher failure rates and pressure to speed new therapies to market. Asset value is under constant threat at a time when it takes an average of 10 or more years to develop a drug, nearly 80 percent of clinical studies fail to finish on time, and of those, 20 percent are delayed for six months or more. This creates significant risk for investors looking to generate an ROI and, more importantly, creates delay and uncertainty in bringing new treatments to patients.
The traditional “silo’d” approach to product development—with clinical teams on one side of a regulatory goalpost and commercial teams on the other—was built for a different era
of blockbusters and more straightforward runways to market. In today’s world this model is no longer sustainable. In fact, it’s not even a bit realistic, because the goalposts have changed.
Success today requires development programs that can satisfy regulators while also addressing the needs and expectations of an expanding list of stakeholders involved in treatment
selection and use, from patients to payers. Otherwise, an innovator’s options shrink and value gets left on the table.
To avoid that, companies should be taking a more fully integrated, end-to-end approach focused on reducing risk, speeding time to market and increasing operational efficiencies—the three levers of net present value (NPV).
In practice, this means that companies need the capabilities and resources to translate real-world, data-driven insights into clinical strategy for the design of high-performing studies and stronger evidence packages. It also requires integration of clinical learnings into the commercial model, strengthening the case for adoption earlier in the process and more precisely targeting launch strategies that speed peak brand performance.
An immediate advantage is the operational efficiencies gained in strategic partnership, allowing an immediate acceleration of the asset development program.
What It Takes
All this is easier said than done, especially for emerging, innovative biotech companies that may not have the strategic or operational resources to implement a comprehensive end-to-end product development methodology from the beginning.
Partnership with large pharma can fill some of the capability gaps but not necessarily provide the agile integrated approach and may result in a disproportionate transfer of future value and control away from the innovator and to the pharma partner. Furthermore, traditional approaches to outsourcing don’t necessarily meet the needs of emerging biopharma either. According to an analysis recently completed by the Tufts Center for the Study of Drug Development, while drug development outsourcing is growing to the extent that it now outpaces internal spending, outsourcing practices remain inconsistent, fragmented and highly tactical, inviting inefficiencies and unsystematic management practices.
What’s needed is a more fully-integrated, insights-driven product development outsourcing solution that moves beyond the transactional to provide companies of all sizes a powerful combination of asset strategy and execution to maximize NPV, from early concept through to commercialization.