For small biopharma companies entering clinical or manufacturing stages, it pays to go lean with a strategic approach to sourcing
By Tony Carita
Without specialized internal resources to oversee the business side of clinical outsourcing, smaller biopharma companies typically rely on clinical operations staff to manage the provider selection and contracting process. These contracts often involve nuanced negotiations of terms and budgets with CROs, contract drug manufacturers, and the many other providers who play an important role in sponsor companies‚Äô clinical programs. Smaller companies will often hire a sourcing ‚Äúgeneralist‚ÄĚ to manage wide-ranging outsourcing needs with a transactional rather than specialized, strategic approach. This typically results in missed opportunities and higher costs.
There is a better option: specialized, strategic sourcing. This approach differs from conventional procurement or purchasing in that it emphasizes the best value to achieve your objectives in a timely fashion. It starts with a sourcing strategy based on the desired outcomes and performance required to achieve those outcomes, setting the program up for success during the RFP stage ‚Äď before the contract is awarded. In larger organizations this is managed by category experts and alliance managers who have in-depth knowledge of CROs, drug manufacturing, labs and other providers. Smaller organizations can achieve the same benefits by engaging specialized sourcing professionals, negating the need to hire additional internal staff and yet still accomplishing the organization‚Äôs goals.
What qualifies a sourcing professional to get the job done well? The biopharma space is uniquely challenging. Clinical and CMC sourcing professionals must understand the clinical development process, supply chains and timelines, in addition to many other internal and external factors needing consideration in customizing a strategy on a sponsor‚Äôs behalf. These include the size, complexity, and capabilities of various providers in the global market, the organization‚Äôs ability to influence in that market, the composition of the organization‚Äôs in-house team and whether they need project-based support or management of the entire function ‚Äď from the RFP to closing out the contract.
Danforth created a team of strategic sourcing experts for this very purpose; to give lean organizations access to scale, expertise, and negotiating leverage on par with bigger companies ‚Äď but without the fixed costs of building a team in house.
The benefits of outsourcing your strategic sourcing activities can include:
- Volume or market leverage. Danforth actively serves more than 200 life science companies today. Our strategic sourcing consultants leverage this scale to negotiate better performance-based terms and prices ‚Äď particularly valuable when a company‚Äôs own spend is too small to secure preferable terms or prices. In 2021 our Clinical Business Operations group realized an average ROI of 520% across clients who invested in these services. Learn more here.
- Specialized expertise. Unlike sourcing generalists, we provide category expertise in areas critical to the client‚Äôs success. We help identify potential risks and develop sourcing plans designed to mitigate them. Longer term, implementing strategic sourcing can facilitate strong relationships between internal groups and providers, and also identify potential improvements throughout sourcing processes.
Whether preparing for a Phase 1 study or nearing manufacturing, a strategic, specialized approach to sourcing can achieve the two-fold advantage of reduced costs and improved performance.