Only the best will do

To capitalise on the opportunities presented by the changing complexion of the global pharmaceutical market, contract services companies must invest time, money and effort into every aspect of their business, says John Bath, ceo of Brecon Pharmaceuticals

The character of the global pharmaceutical industry has undergone radical change in the past decade and as a result contract services organisations are having to rethink the way they do business. Traditionally services such as packaging might have been outsourced for products perceived as being of lesser importance or lower value to the brand owner, or to supplement in-house packaging capabilities on an ad hoc, short-term basis.

Although this model certainly serves a purpose, it is not necessarily the most satisfactory solution for either party. Short-term, short-notice requirements do not allow the contractor to develop an optimum process, while for the customer, additional costs might be incurred or certain compromises may have to be made. In this scenario, neither party is able to optimise cost savings, efficiencies or performance.

There will always be some demand for such contingency operations, but the trend now is for companies to outsource as part of a strategic plan. As the contract sector matures, it is increasingly apparent that in many instances, the decision to outsource provides access to facilities, expertise and cost savings not readily available in-house. Outsourcing is now an added value rather than a stopgap service.

With efficiency and profit maximisation driving recent M&A activity in the pharmaceutical sector, the role of the outsourcing community has become more prominent. If each partner in a merger has a production or packaging facility operating significantly below capacity, there will undoubtedly be consolidation. A single unit operating close to capacity is ostensibly more efficient and carries fewer overheads. However, the flipside is that the manufacturer's ability to react to sudden peaks in demand is considerably diminished.

There is a laudable trend in all areas of business towards focusing on core competencies. For big pharma these are r&d and capitalising on market presence and brand identity to maximise sales. Critical mass is therefore concentrated in these areas, with intermediate activities often regarded as peripheral. Nowhere is this more starkly illustrated than in the case of virtual pharmaceutical companies, which have never had and never intend to have anything other than r&d and marketing functions.

To a greater degree than ever before, pharmaceutical companies now stand or fall by the perceived strength of their drug pipeline. It used to be the common perception that once marketing approval for a new drug had been obtained, its developer could relax and reap the fruits of his labour in the form of fat profits during several years of exclusivity. But this is certainly not an accurate depiction of the current situation.

spiralling costs

The already huge costs of drug development continue on an ever-upward spiral, against a background of sustained pressure on healthcare costs from governments around the world. Nor is it any longer the case that the quest is necessarily over when one company patents a treatment for a particular condition. Recent court actions have shown that patents for competing products are valid, provided that the therapeutic action is demonstrably different. So the race for an effective treatment for 'lucrative' conditions continues, even after one or more companies have crossed the finishing line.

With the value of companies so closely allied to the health of their respective pipelines, it is not surprising that no stone is left unturned in the search for a new blockbuster. This has extended to the revival of projects previously shelved. Scientific advances such as the genome project may rejuvenate the prospects for some, while others may be shown to be applicable to different medical conditions from those for which they were originally intended. The aim here is to avoid the daunting costs associated with developing a new drug ab initio and, crucially, to maximise sales under patent by cutting development time.

Typically seven out of 17 years of patent protection are spent in researching and developing a new drug; any reduction in this time equates to increased profits through greater sales during the period of exclusivity. One initiative is concurrent multi-market launches, as opposed to the sequential territory launches seen previously. The involvement of a range of contract organisations can make a significant contribution towards achieving this.

confidence is vital

So what does the contract sector need to do to earn its place in this exciting scenario? Whatever service we offer, from formulation development through study management to commercial packaging, there is one commodity in which we must trade above all other - confidence. We must inspire confidence in our expertise, so that customers knowing the job is being handled by the best in the business and that the results will be delivered on time and in a professional manner.

In practice, customer involvement is usually extensive. Close lines of communication and a partnership approach are the key ingredients for a successful and enduring relationship. Much like a marriage, the relationship works best when each party needs the other in equal measure.

The issue of core competencies is significant here. The contract organisation must invest time and money in developing expertise complementary to that of its customers. Brecon, for example, has built up a business based on excellence in packaging for solid dose products. We can offer experience in packing thousands of products into blisters, sachets and bottles that few of our customers can match in-house because their product range is limited.

business partner

We have invested in people and infrastructure, while our range of equipment gives us the flexibility to respond to any requirement quickly and efficiently. In this way we graduate from simply the contract packer supplying extra capacity on an ad hoc basis to the status of valuable business partner.

Training is at the heart of Brecon's business strategy. We believe that each member of every team must take responsibility for his or her part of the process to ensure the quality of the end result. This commitment to training carries considerable costs but the rewards are tangible. In our case, it has been a significant factor in winning contracts packing product for the Japanese market, acknowledged as the most demanding in the world.

This is a highly regulated industry and as such, the outsourcing community must always remain abreast of changes in the regulatory environment. One issue currently taxing all those involved in the clinical studies sector is the impending implementation of the EU Clinical Trials Directive 2001/20/EC. Member States must adopt and publish laws, regulations and administrative provisions to comply with the Directive by May 2003 and must have applied these provisions by May 2004. The objective of the legislation is to ensure the application of GxPs to all clinical trials involving human subjects and it will have particular impact on studies whose sponsor is based outside the EU area, since release of study materials by a European QP will be mandatory.

With just eight months to go before the due date for publication of laws, some of the detail is still to be resolved. A major issue is the appropriate training of QPs: article 23 of Council Directive 75/319/EEC (2001/83/EC) sets out the threefold requirement of formal training, practical experience and professional assessment. However, with the legal issues not yet finalised, there are clearly difficulties in determining what constitutes appropriate training, experience and assessment. In these circumstances, the GxP protocols will certainly need to be formulated in close consultation with the authorities and the study sponsors; on-going in-house training to the highest standards will be of paramount importance.

One effect of the Directive is the recognition of the globalisation of the pharmaceutical outsourcing community, reflecting that of the industry it serves. Contract organisations based outside the EU must have access to the services of a European QP if they are to continue to offer a comprehensive international clinical trials service. The Directive notwithstanding, this requirement is one which all service providers should be addressing.

joint venture

With this in mind, Brecon established a joint venture in 1998 with US company ProClinical Pharmaceutical Services, of Philadelphia. ProClinical's services include formulation development of Phase I-IV clinical supplies in various dosage forms, analytical testing, packaging, labelling, storage and distribution. ProClinical gains access to a European QP release facility via Brecon, while Brecon gains a point of entry to the North American market.

Most importantly, however, the relationship benefits the customers of both parties, putting at their disposal a broader portfolio of services in a wider geographical area.

But however large we grow and whatever services we add to our portfolio, maintaining our reputation for quality, service and dependability must be our foremost objective.