Outsource? Yes - Outsource Offshore? Think Again

I will be the first to concede that offshore outsourcing sounds attractive. China, Eastern Europe, and especially India have scientists of very high caliber who work for very low wages. The infrastructure support for these professionals is becoming quite decent, and attitudes toward IP rights are not as shabby as they used to be.

How does offshore outsourcing work out in practice? What I can tell you is what my clients tell me. For example, not too long ago the VP, Product Development for a top 20 pharma company said to me, "We have stopped using overseas contractors for time-sensitive projects." A high level decision-maker for another large pharma company commented, "We are going back to North American suppliers". "What we were gaining in price we were more than losing in other ways."

A big part of the problem, from what I gather, stems from disconnects in communication and a fundamental lack of true appreciation of the pressure to bring drugs to market faster and faster.

The basic advice I can offer any company in any sector is to negotiate offshore contracts on value, not price. This is critically important for our industry, where performance risks and relationship risks can lead to consequences that are catastrophic.

Over the years I have been refining the service offering of Dalton to meet the demanding requirements set by our clients. I have never regretted positioning my company as a premium vendor with best practices in all of the key areas that really matter to leading biopharma and pharma companies: clear and open communication; strict confidentiality; and results from high performance teams.

I also know that timelines are often compromised when companies use multiple vendors over the product development cycle. Fragmented outsourcing usually does not serve a company well. I have long been convinced of the importance of being able to offer clients a full range of services - research, analytical, process development, scale up, cGMP clinical and API manufacturing, sterile fill, and regulatory support - for small molecules, peptides, and oligonucleotides.

I am continuing to invest in enhancement of our client service capabilities. Our latest GMP expansion program has three carefully thought out phases. Highlights include a larger autoclave, four new filling suites, formulation scale increase to 1000 liters, and lyophilization batch scale increase to 15,000 vials. Thanks to another investment - a long period of meticulous preparation for a Health Canada audit in late 2006 - we will receive an Establishment License in the next couple of months.

People often ask me if premium North American development support companies like ours are fighting a losing battle against offshore vendors. I always begin my answer by quoting a simple statistic: "40% of Dalton’s clients are offshore companies."

Dalton Pharma Services
contract research organization, contract manufacturing organization