OutsOurcing r&D

Outsourcing Screening is
Neither a Panacea or Debacle

OutsOurcing r&D

      At this point, many readers may be thinking why not simply submit          a definite starting p...
OutsOurcing r&D

       In real estate the catch phrase has always been, “location, location,     page, the inevitable ...
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Outsourcing Screening is Neither a Panacea or Debacle


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Pharmaceutical Outsourcing Magazine July -August 2009.

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Outsourcing Screening is Neither a Panacea or Debacle

  1. 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. 28 Pharmaceutical Outsourcing July | August 2009
  2. 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 29 Pharmaceutical Outsourcing July | August 2009
  3. 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 30 Pharmaceutical Outsourcing July | August 2009