Pharmaceutical Outsourcing Magazine July -August 2009.

1. OutsOurcing r&D
Outsourcing Screening is
Neither a Panacea or Debacle
Brian Bissett
Staff Scientist
Structural Sciences Group of the Analytical
Chemistry and Sample Logistics Dept.
Pfizer Global Research and Development*
I
n recent years, expenditures for in-house pharmaceutical research results were known, the compounds would not need to be measured. This
and development at major drug companies has dramatically poor scientist might as well have been handed a paper full of unknowns
increased, but despite increased budgets, precious few internally and been told, “Tell me the proper value for these unknowns!”
discovered breakthrough products are on the horizon at any of the major As a result of dealing with the reality of uncertainty present in
pharmaceutical companies. While the pharmaceutical industry’s research measuring the value of physico-chemical properties, some pharmaceutical
and development expenditures have doubled over the past decade, the companies are using computational chemistry calculation tools to
number of new molecular entity approvals has plummeted by more than “double check” the screening results of outsourcing firms. The problems
50% [1]. Clearly, this is not a sustainable business model for any industry, of utilizing such an approach are numerous. To begin with, computational
let alone one with high barriers to entry and regulatory hurdles which chemistry calculators from differing vendors will often be more accurate
increase each year as new products are expected to far outperform existing on certain structural classes than other structural classes. This is due to
products for any given therapeutic area. the fact that every computational chemistry calculator is “trained” on a
As a result of the changing landscape in the pharmaceutical industry, different dataset, and that the underlying algorithms in every calculator are
there will continue to be considerable consolidation and restructuring different, and as such often biased toward certain structural classes.
within the industry [2]. As a result of market pressures from the global A second problem with the computational chemistry validation
economy, declining revenues (and thus research and development approach is that computational chemistry calculators work best on
budgets) due to generic competition and expiring patents, and a shortage structural classes for which there is a great amount of test data. In other
of talent of certain specific skills profiles, pharmaceutical companies are words, they work better on molecules that have already been measured, or
embracing outsourcing as one means of coping with changing the business derivatives of molecules that have already been measured. This only makes
environment. Unfortunately, those lacking a strong scientific background sense, they work best on the data they were built utilizing. However, it is
often look at outsourcing as a panacea to the ills which currently plague often said that, “the low-hanging fruit of drug discovery has already been
the industry as opposed to what it really is, a resource which must be picked.” Meaning, the chemistry space in which efficacious medicines
carefully managed in order to be effective. have been traditionally discovered has already been very well searched.
In some industries outsourcing is a panacea. The company derives As a result, what is being screened now is often much more complex and
the benefits of paying vastly lower labor rates, benefit packages, and taxes structurally diverse, because the likelihood of finding a drug in older, more
while maintaining the ability to produce a product of comparable quality well-studied chemical spaces is growing smaller every day. As a result,
which can be delivered into the existing market at a considerably lower computational chemistry calculators are often fed unique structures for
cost. When uncomplicated items are manufactured abroad such as floor which little modeled data exists, which makes the results suspect at best.
tiles and hand tools, quality is readily measurable and discernable. (We For example, in the world of molecular properties, LogP calculation (as
all know a bad paint job or finish when we see one.) The point here is that well as many other molecular property calculations such as pKa, solubility,
quality is easy to measure when the desired results are known. When the etc.) is commonly and erroneously viewed as simple. However, most analyses
results of a quality job are unknown however, measurement of a quality of the LogP calculation process showed low prediction accuracy for most of
job becomes problematic at best. I myself witnessed a lab supervisor hand the existing calculation methods [3]. The consequence of inaccurate LogP
the results from an outsourcing firm to a chemist and say, “Take a quick prediction is that it can mislead a scientist’s selection of chemical series to
look at these results and tell me if they are ok.” This of course led to a follow up on. This, in turn, can result in the unintentional discarding of many
heated debate as the scientist tried to explain to the supervisor that if the potentially promising structures due to “poor” physico-chemical properties.
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2. OutsOurcing r&D
At this point, many readers may be thinking why not simply submit a definite starting point. If a Monte Carlo analysis has been done of in-
a set of well- known published standards for screening to the outsourcing house screening costs for a particular screen, this will provide a good
company for screening at various intervals to determine quality. The idea of what pricing point target must hit in order to make outsourcing
problem here is twofold. First, most well- known standards are well worthwhile. Also, depending on the structure of quantity discounting, it
known for a reason, the results are easy to reproduce even when the may be cost effective to send “test” compounds to reach a certain quantity
best methods and laboratory techniques are not utilized. Second, most level to achieve the discount. It can also be interesting to see what result
well- known standards are neither structurally diverse nor “exceptions to returns when vials full of only DMSO or some other known substance or
rules” in terms of what would be expected. Yet it is exactly these types of standard are sent. It is also important to know how quickly samples will
compounds one would want to have in a quality control program which be screened, especially for samples in solvent where crystallization may
would have a chance of providing the confidence one would like to have become an issue. Lastly, it is important to have a data handling plan in
in a screening process. place with the IT department before operations begin.
As if the preceding information were not enough to complicate the If the above questions can be answered satisfactorily, then the process
process of trying outsource screening processes, there is yet another can begin with regard to qualifying vendors to do the screening. As an
factor to consider and that is different screening processes for the same initial step, submit a set of well-known published standards for screening
property will exhibit different biases of their own. It is not uncommon to the outsourcing company. If the vendor cannot provide the right values
to have a screen which works well with bases and abysmal with acids. for “gold standard” compounds then they no longer merit consideration.
Some screens are dependant on a compound having a good solubility For the remaining vendors it is important to pick a structurally diverse set
profile. Others may require a chromophore, or lack of a chromophore. of compounds which have already been screened in house. It is worth
For reasons that may be poorly understood, some may work better with the time spent to talk with some knowledgeable chemists and create a set
certain structural classes than others. Worst of all, biases may exist but not of standards which includes “problem” compounds that posed difficulty
be known due to a lack of analyses of the existing data or from the lack of in determining a correct measurement. It is the results returned from
enough data to determine the bias. these compounds which will be of the most value when trying to pick a
The inherent variability in pharmaceutical screening outlined above screening partner because (1) these compounds are truly representative of
make a strong case for using a single supplier for each type of screen compounds which are formulated in house and (2) the difficult cases are
to be outsourced. Toyota has long known the advantage of working being tested, of which determination is neither simple nor obvious.
with a single supplier in that a partnership can be established where the For the final remaining vendors, it is important to run the selected
purchaser can work with the supplier to continually improve quality. compound sets several times (a minimum of three.) Both the gold standard
While such a partnership can be established with multiple suppliers of well-published compounds should be submitted as well as the in-house
the same product, with multiple suppliers multiple variabilities must be selected “problem” compounds. It is also a good idea to throw in plates
identified and corrected which can prove to be quite resource intensive. of “test” compounds, as if the vendor is trying to win your business and is
While it is true that a single supplier eliminates redundancy, it is also only given a few plates, you can be rest assured they will be given “special”
true that redundancy has costs associated with it in terms of duplication attention. The results desired in testing the suitability of a vendor are those
of efforts and analysis of variability. As previously discussed, variability which can be expected to be received during normal high throughput
between screens may be unknown or not yet determined, so if multiple operations as opposed to those where an inordinate amount of care has
outsourcing partners are utilized for an identical screening parameter, been given to produce superior results.
results returned from different suppliers should be easily segregated by When the results have been compiled it is time to consult an on
means of a database parameter such as a unique screen number for each staff statistician (or consultant) to make some determinations as to the
supplier. This allows the customer to return results from a single partner variability that can be expected from each vendor in terms of both process
or selected partners by a simple SQL query using the Where clause. variability and compound variability. Once the results of such a study are
(Ex. SELECT LOGD FROM LOGD_TABLE WHERE SCREEN_NUMBER = in, a vendor which fulfills the needs and requirements of the organization
‘SCREEN_FROM_COMPANY_X’) can be chosen. While accuracy is certainly a paramount consideration
Chances are the parameter to be outsourced will have a small number in selecting a screening partner, it certainly is not the only consideration
of outsourcing firms that are capable of supplying the data. Before any when picking a vendor. The vendors’ approach to problem resolution and
testing is to be done with a potential outsourcing client, the following support are also extremely important considerations, especially when the
questions need to be answered: choice comes down to two or more vendors who are in a statistical dead
heat in terms of quality.
1. What turnaround time can the company guarantee?
2. How many samples per week can the company handle?
3. How many times per week will samples be screened? Figure 1. Year-over-Year Growth China R&D Outsourcing Labs
4. How much will each sample cost? Quantity discounts?
5. How will our samples be sent to the outsourcing firm?
6. How will our data be transmitted to us? What IT issues exist?
7. Is a confidentiality agreement currently in place
with this company?
8. How many clients does this firm currently have?
9. Can this firm provide the level of attention we require?
10. How solid are the financials for this company?
With respect to the above questions, numbers 9 and 10 are
somewhat subjective in nature, but must be considered. Turnaround
time is of the utmost importance, as if customers have come to expect a
certain turnaround time for in-house measurements they will be unlikely
to embrace (or utilize) an outsourcing partner who delivers what they
consider to be “late” measurements. If the firm cannot process the
number of samples required then obviously they cannot be considered,
unless the firm is willing to make a capital investment to bring them up
to level required. Cost should not be looked at as the bottom line but
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3. OutsOurcing r&D
In real estate the catch phrase has always been, “location, location, page, the inevitable hit taken to performance and productivity periods
location” and perhaps it should be adopted by those involved in can be minimized. While it may be impossible to foresee every potential
outsourcing as well. Many purchasing managers find themselves under problem and pitfall, it will only be by the solicitation of input from
pressure over the “China price.” It is important, however, to understand everyone involved in the process that a robust method of outsourcing can
that over the past three years the once-formidable China price edge has be achieved with a minimal disruption to the existing internal processes.
all but evaporated for most goods and services [4]. While China has
*The opinions expressed within this article are solely those of the
remained viable for pharmaceutical R&D outsourcing, the year over
author, and should in no way, shape or form be taken as the position of
year growth rate for laboratory outsourcing in China has declined from
his employer, Pfizer, Inc.
19.8% in 2003 to 11.4% in 2008 [5] (see Figure 1). The labor rate in
China is currently about 64 cents an hour [6], and while that figure may
seem extrodinarily low, the Chinese labor rate his risen to the point where References
Central American countries are now competitive with China. When 1. Source: Cutting Edge Information.
the costs associated with quality, logistics, and engineering changes are 2. Transformational Disruption in the Pharmaceutical Industry – Jeffrey
factored in, Chinese goods and services may not be the bargains they Leiden, M.D., Ph.D. Clarus Ventures.
appear to be. There are significant hidden costs in having supply lines that 3. Igor V. Tetko, Gennadiy I. Poda, Claude Ostermann, Raimund
extend to China, as opposed to having supply lines that run across the Mannhold. Are Log P Calculators Accurate? Benchmarking on
North American Continent. 96,000 CompoundS.
For example, if a factory runs behind schedule because a screening 4. Study by Southfield (Mich.) consulting firm AlixPartners.
component has failed in a robotic system, the items must be shipped by 5. Global Outsourcing: Defining China’s Leading Edge, Frank L.
air at huge cost rather than by boat. While Thomas Friedman argues that Douglas, Ph.D., MD and Gigi Hirsch, MD, MIT.
“the world is flat,” he fails to mention that the world can only be flat 6. U.S. Bureau of Labor Statistics
under certain conditions, principally if: (1) energy is cheap (2) intellectual
property laws are enforced. When oil is $40 a barrel it is very easy for
the world to be considered flat. When oil hits triple digits that paradigm Brian Bissett holds graduate degrees in Business (MBA) and
begins to evaporate. It is very easy for the world to be considered flat when Electrical Engineering (MSEE) from Rensselaer Polytechnic
a Chinese company makes software CD-ROMs and keeps an accurate Institute in Troy, NY and is employed as a Staff Scientist in
inventory for their client. When the same company makes extra copies of the Structural Sciences Group of the Analytical Chemistry and
those CD-ROMs and sells them at a fraction of the cost illegally however, Sample Logistics department at Pfizer Global Research and
it is hard to convince anyone that the world is flat. It can become very Development in Groton, CT. He started working at Pfizer nearly
easy to end up chasing nickels at the expense of huge supply chain costs
fifeen years ago for Dr. Christopher Lipinski who is best known
without realizing it.
for his discovery of the Rule of 5, and continued to work for
The single largest advantage in outsourcing pharmaceutical
Chris until his retirement from Pfizer in 2002. He then reported
screening is that no product needs to be shipped back to the client. A
to Dr. Franco Lombardo, who is well known for his development
secure electronic transmission with the screening results is usually all that
is required. Keep in mind however, that the samples must be shipped to of an outstanding experimental LogD method (ElogD), until
the outsourcing company, often at enormous costs. (It is often necessary Franco’s recent departure to work at Novartis Pharmaceuticals
to ship compounds in solvent on dry ice by overnight mail to prevent in Cambridge, MA. Presently, he reports to George Perkins,
degradation or crystallization.) Associate Research Fellow, constructing assays and automating
measurements and data analysis routines for parameters such
Figure 2. Performance vs. Time as ElogD/P, pKa, Solubility, Permeability, and Stability. He is a
member of both the national chapter of The Institute of Electrical
and Electronics Engineers (IEEE) and the IEEE’s Consultants
Network of Connecticut. He is the author of two textbooks
Practical Pharmaceutical Laboratory Automation (May 2003
CRC Press) and Automated Data Analysis with Excel (May 2007
Chapman & Hall), as well as numerous technical articles, and
co-author of several book chapters. He has also been credited
in many papers for creating automated data analysis routines
to automate the analysis of pharmaceutical drug discovery
parameters such as ElogD/P, pKa, Solubility, and Stability. Many
of these routines are utilized worldwide across numerous Pfizer
sites.
Prior to working at Pfizer, he worked as a contract engineer at
the Naval Undersea Warfare Center (NUWC) on projects ranging
from digital design on the New Sonar Intercept System (NSIS)
When setting up a successful outsourcing project, it is important
for Robert J. White, to analog preamplifier testing and fabrication
to bring together many different groups in the company to achieve the
for towed arrays for Thomas A. Freehill, technical director of the
desired results. Typically, an outsourcing project would require the
involvement of R&D scientists and chemists, legal, procurement, finance, Hybrid Microelectronics Laboratory.
strategic alliances, materials management, shipping, and sample logistics.
It is very important to have meetings with everyone involved in the internal
supply chain to prevent unforeseen problems. As Figure 2 shows, an
outsourcing project will typically have four phases: preparation, transition,
adjustment, and benefit. By having everyone onboard and on the same
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Pharmaceutical Outsourcing July | August 2009