The Big Business of Boosting Performance

Apr 01, 2011

For today's C-suite, "revolution" is the driving sentiment that will set the future of Big Pharma. However, the basis for strategy has changed, from maximizing prices among a stable network of passive customers to one built on continuous, disruptive innovation against all manner of competition worldwide. Navigating this transition in an industry as conservative as Big Pharma is difficult.

In evaluating the prospects, one issue that has garnered little attention is the quality of Big Pharma's service partnerships, particularly among that second tier of providers who bestow a critical layer of support to the C-suite through their expertise in the specialized skills required to execute strategy and fill gaps in a fast-moving competitive environment. Can this key link in the industry's value chain keep pace with the restructuring going on around them, generating a continuous cycle of innovation adapted to serve Big Pharma's evolving business model?

It's a central question, and Pharm Exec went looking for some answers from a major player in a largely unexamined segment of the biopharmaceuticals business: manufacturing excellence via contract manufacturing organizations (CMOs). DSM N.V. is our target, a Dutch-based company with over $10 billion in revenues and a large but little-noticed global footprint as a key supplier of technologies that support the processing and manufacture of compounds ranging from traditional small molecules to the most complex next-generation biologics.

The DSM franchise is highly technical—but the very future of biopharma depends on it, because without complementary advances in materials management and manufacture, a novel treatment cannot successfully navigate the passage from bench to the bedside. It falls to organizations like DSM to help Big Pharma match the science of discovery and development to the mechanics of ensuring a new compound is formulated, manufactured, and dispatched to the patient for its intended use—safely and expeditiously, across functions and geographies, and at the lowest possible cost.

As many of these compounds contain active biologic material with a minimal shelf life, there is little room for improvisation. Extensive new investments are required to customize the manufacturing process, and the consequences of a false start or high error rates in batch production can be devastating. "Supply chain complications are an increasing challenge for an industry that depends heavily on reliability against a drug or vaccine's clinical profile," Karen King, president of DSM's Biologics division, tells Pharm Exec. "Product lifecycles are shorter, and payer uncertainties mean that manufacturing has to adapt to more fluctuations in demand. Failure to address these can hurt the bottom line through waste, or, in the case of a product shortage, force companies to take a huge reputational hit." Product shortages due to flaws in the processing stage have been defined in recent surveys as a $200 million problem, just in the US.

Paul Sidhu, vice president, marketing and strategy; Karen King, president, Biologics; and Patrick Weinberg, chief financial officer at DSM.
Precisely because of the high risk of failure, the strategies and tools applied to manage production often need to be more innovative than the pill itself. What DSM provides is expertise that delivers certainty against everything from drugs not being properly absorbed in the patient's bloodstream to the uncontrolled release of toxic chemicals and other hazards at the manufacturing stage.

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