Extending the Commercial Life of Mature Products with Strategic Outsourcing

With pharmaceutical companies constantly innovating in search of the next life-changing drug, it can be challenging to stay on top of the ones they already have on the market. It is a crucial part of business, however, as mature products by their very nature are well established as effective treatments for medical conditions and are still sold in substantial volumes.

These products have also often established the reputation of the companies concerned (think Aspirin for Bayer, or GSK and vaccines, for example), a reputation they can ill-afford to be dented by taking their eye off the ball.

The challenge for pharma is how to extend the commercial life of mature products while keeping maintenance costs low and ensuring they adhere to everchanging regulations across the globe — all while juggling the innovation for new products. While the high costs of bringing a new drug to market are well known, the pressures to support existing ones are not insignificant, either.

Companies must perform pharma-covigilance activities, maintain regulatory dossiers and labels, and conduct ongoing benefit-risk analyses to maintain licenses. Another significant impost is the need to uphold regulatory requirements. With unique rules and varied outcomes according to the market or region, the regulatory maze can be tough to navigate. But noncompliance can result in regulatory action and poses considerable financial risk if companies do not meet requirements. It is, therefore, imperative that pharmaceutical companies explore models that will safeguard mature products while enabling them to invest in new product innovation.

The Second Wave of Outsourcing

Marketing authorization holders (MAHs) should assess existing operating models for the maintenance and management of their mature products in light of a growing awareness of the benefits of integrated outsourcing. Rather than the lift-and-shift outsourcing model, which relied on low-cost, largely offshore staffing models to support mature products, companies are now seeking a more tailored approach with trusted third-party providers. This integrated model incorporates local support from expert teams in mature markets, as well as near and offshore capabilities.

The so-called second wave of outsourcing is notjust about reducing costs, either. The incremental benefit for companies that partner with external providers is the knowledge wealth at their disposal, with fully fledged specialists available across the safety, regulatory, and quality domains. When assessing current operating models, MAHs should consider the following:

• Location of target markets. Do you have the local expertise to undertake the work required in a cost-effective way? Even if you have teams in key target markets, you need to determine whether they have the capacity to manage mature products, as well as support new launches.

• Core versus noncore business. Identify where internal resources should be focused to deliver the greatest value to the company and, conversely, what you can outsource effectively.

• Team workload. Is your in-house team working at capacity? Will the maintenance of mature products overload them unnecessarily? Look for gaps in resources that would require you to employ different expertise and determine whether this work is best outsourced.

• The business case. Have you planned the tasks you should outsource and the reasons why these are best done externally? If not, it may be beneficial to engage an external operator to assist with building the business case and predicted return on investment.

Developing a Tailored Approach

Large pharmaceutical companies could have as many as 100 operating companies and affiliates around the world, with an ever-increasing burden to maintain mature products in myriad markets, therefore breaking down geographic silos to introduce new efficiencies becomes even more critical.

An integrated model that offers a flexible structure enables continual improvement and innovation, while strengthening all-important quality assurance. How it is structured depends on the needs of each organization. Under an umbrella model, headquarters determines the technology and processes and is responsible for coordinating efforts across the regions. A collaborative model involves a flow of information across headquarters and its local affiliates. A dispersed model makes affiliates responsible for maintaining products in a local market or region.

Whatever the structure, there will undoubtedly be challenges. These could include limited local resources, making it difficult to adapt to changes in workload; lack of expertise to navigate evolving and complex safety and quality requirements; limited technology and automation to streamline or optimize processes; and an ability to implement processes that mitigate risk and facilitate effective collaboration.

It is important to note, however, that these challenges are not peculiar to local affiliates. Company headquarters face similar constraints, which is why an integrated approach to maintaining mature products has significant benefits.

By gaining access to specialist expertise unavailable internally, this model accelerates innovation and ensures companies keep pace with digital advancements. The exposure to a wide range of knowledge and experience with industry standards also leads to greater innovation and efficiencies.

The integrated approach builds workplace flexibility without compromising quality or compliance, enabling internal teams to focus more on value-adding activities and less on routine tasks.

It helps streamline processes associated with regulatory, quality, safety, risk management and labeling, reducing costs, and increasing product value.

Local Solutions in Global Approach

Partnering with a global strategist can transform the way companies do business. With the external expert taking responsibility for the maintenance of the mature portfolio, internal experts can focus their energies on developing new drugs and income streams.

There are five trends that are reshaping portfolio outsourcing and reinforce the value of this integrated model.

1. Outsourcing enables companies to modernize processes and improve global collaboration. This is particularly important where there is a lack of global standards for foundational processes. Companies can close the loop across cross-functional teams and ensure better coordination and further optimization of business processes.
2. Pharma companies need partners to infuse expertise. Even in larger companies, it is difficult to ensure the right level of expertise internally to leverage information across the regulatory, safety, and quality continuum. Partners that bring specialized expertise enable companies to take advantage of new technology, better manage regulatory information, and adapt to global regulations. This, in turn, can result in productivity gains.
3. There is a shift in how companies get work done. Outsourcing enables a coordinated multi-functional approach that ensures product maintenance activities are managed on a continuum. This reduces the risk to established portfolios that comes with disparate functions and teams looking after separate activities in diverse markets.
4. Operational agility is critical. With the regulatory environment evolving rapidly, maintaining quality and compliance of mature products in regions where they are marketed is increasingly challenging. Pharmaceutical companies will need to accelerate outsourcing to stay on top of relevant regulations wherever they operate around the world.
5. There is a convergence of tech and health. With the move to advanced technologies, such as automation, it is also challenging to keep pace with the developments, requirements, and specifications integral to digital transformation. Outsourcing enables companies to do so without significant outlay in infrastructure.

While an integrated approach to outsourcing can work wonders — in terms of costs, efficiencies, and innovation — it must be handled like any other large change management program, or it is doomed to fail.

The best practice is to ramp up the responsibility and ownership of the outsourcing partner so that the pharmaceutical company’s oversight is gradually reduced. It is also important to note that the partnership, and any corresponding cost savings, is long term. Evidence shows an estimated 20 percent reduction in workload as a result of efficiency gains within two to three years of the arrangement.

The outsourcing program manager’s role is crucial, as the manager will be overseeing strategies and supporting the execution of the agreement. Effective communication across teams will help break down silos, ensure the cross-functional flow of information, and reduce regulatory headaches for the maintenance of mature products.

This, in turn, enables companies to focus on innovation and development of new products with the knowledge that their brand’s reputation for existing products is secure.

This article was written by Stephan Hütter, Director of Global Program Management at PharmaLex, Bern, Switzerland. For more information, visit here .

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