Managing Outsourcing

It’s a grim reality for many U.S.-based chemists: Over the past five years most drug and biotech firms have been outsourcing more and more chemistry work, including synthesis and discovery research, to contract research organizations (CROs) in the U.S., Europe, and Asia. Due in large part to this trend, thousands of chemists have been laid off; many have been out of work for years.

Consequently, chemists who aspire to enter, reenter, or simply remain in biotech and drug companies may have to come to terms with the increasingly popular outsourcing business model.

And they will need to gain the experience and develop the skills necessary to support, nurture, or manage relationships with CROs or to work in roles aimed at streamlining their employers’ overall outsourcing programs.

“Given the way that the industry is evolving, having experience working with CROs or managing outsourcing efforts is going to be important to career development,” says Kerry L. Spear, vice president of medicinal chemistry at Marlborough, Mass.-based Sunovion Pharmaceuticals (formerly Sep­racor). “When we hire, we actively look for evidence of that kind of experience. If I see it on the résumé, I consider it a plus.”

It is increasingly important “to find people who can tighten up communications, make sure that projects end on time, and take some of the transactional work off of the scientists who are trying to drive the science of the program,” says Richard D. Connell, vice president and worldwide head of Pfizer’s External Research Solutions Center of Emphasis based in Groton, Conn. “If you’ve got a million-dollar collaboration, but it is poorly run or poorly managed, you are effectively wasting money. Putting the right people in the right assignments is critical to the bottom line.”

Right now, the number of job opportunities for those who directly manage chemistry outsourcing at drug or biotech firms is still small. In Pfizer’s center, which manages preclinical sourcing at the company, there are six to eight people located at four major Pfizer campuses “who might define themselves as card-carrying chemistry outsourcing specialists,” says Connell.

In the medicinal chemistry group at Sunovion Pharmaceuticals, one person spends about two-thirds of his time acting as the point person for the company’s CRO partners in China, allocating resources, optimizing productivity, and troubleshooting both scientific and logistical problems. “Beyond that, every one of my 11 chemists spends some time managing the work done by our CRO partners,” Spear says. “So they are all outsourcing managers to some degree.”

Although the number of chemistry outsourcing jobs in drug and biotech companies is limited, they represent a career niche that did not exist five years ago—and that’s significant in an industry where U.S. job prospects for chemists have been slim, says Josh Albert, managing partner of life sciences executive search firm Klein Hersh International.

Demand for chemists who can effectively manage outsourcing relationships is only expected to rise as companies entrust more of their chemical synthesis and R&D work to CROs, Albert says.

Bruce F. Molino, senior director of medicinal chemistry at Albany-based CRO Albany Molecular Research Inc. (AMRI) makes the same observation. Through the firm’s work with a range of pharma and biotech companies, “we have seen an increase in the need for good outsourcing managers over the past decade and believe this trend will continue,” he says.

Outsourcing managers tend to have broad experience, says Molino, who works directly with many people in these roles. They typically have M.S. or Ph.D. degrees with postdoctoral experience in chemistry or biology and also considerable experience in pharmaceutical R&D, he observes. They are often experienced pharmaceutical R&D middle managers or therapeutic area team leaders, he adds.

Business development professionals with educational and industrial scientific experience also serve effectively in managing outsourcing relationships, he says, adding that they often have M.B.A. degrees in addition to degrees in biology or chemistry.

“Regardless of background,” Molino says, “successful outsourcing managers must possess good management, communication, and organizational skills and function effectively within their own company and with the CRO.”

When orchestrating a corporate outsourcing effort, leaders must have a clear understanding of the company’s strategic outsourcing goals and how the drivers—quality, speed, and cost—impact those goals, Spear says. They also need “to recognize what chemistry is best to keep in-house and what could be outsourced,” he adds. For example, “all the things a classical medicinal chemist does we consider core, at least for now, which means we keep them in-house,” he says. “However, we consider synthetic chemistry to be very outsourceable. Frankly, we don’t do any of it in-house anymore.”

Core skills are “those skills that fundamentally determine whether a project will be successful,” he says. “A poorly made or executed medicinal chemistry decision can lead directly to the failure of a project. A poorly designed or executed synthesis can delay progress, but will probably not lead to a project’s failure.”

In some companies, outsourcing managers also need to stay abreast of the company’s internal project needs as well as have a strategic sense of how those needs should be prioritized, says Spear. “They have to help ensure that the resources are optimally allocated.”

In his former role in the central nervous system drug discovery group at AstraZeneca in Wilmington, Del., Glen Ernst helped to referee the flow of synthesis requests from the entire Wilmington medicinal chemistry department to the CRO Syngene in Bangalore, India, while also leading a chemistry design team focused on a psychiatric drug project. He kept track of a list of target compounds that colleagues wanted Syngene to make, along with a priority level designated by the requesting scientist.

“Of course, sometimes too many people would designate their targets as being of highest priority, which required me to negotiate with them to be sure that the targets that were most important to the company were being made first,” adds Ernst, who left AstraZeneca in January as one of some 550 researchers affected by last year’s decision to close the Wilmington site (C&EN, March 8, 2010, page 19). As he searches for a job, he is co­writing the Just Another Electron Pusher blog on C&EN’s CENtral Science network.

Maximizing the efficiency of corporate outsourcing efforts is the ultimate goal of chemistry outsourcing managers. That’s been Connell’s passion since 2005 when he was asked to leave his role in research operations “to focus on building a chemistry-sourcing strategy across all the various Pfizer sites and create a vision for the future of chemistry outsourcing at the company.”

In that effort, Connell developed an organizational framework that allows groups across Pfizer to share best practices and feedback on the best vendors. He also helped set up a Web-based information technology system for efficient exchange of data between Pfizer and its external chemistry partners.

In addition to reducing costs and errors, Connell created an outsourcing infrastructure that will support Pfizer’s medicinal chemists, who are under increased pressure to produce clinical drug candidates using resources that today, he says, are “extended across the globe.”

“We really press our own internal staff to keep innovating and asking how they can streamline the process for our medicinal chemists and project teams,” Connell says, so that scientists can focus on design and data analysis rather than logistics and supply chain issues. Whenever possible, for example, compounds coming in from CROs are registered externally and sent directly to biologists for testing, Connell explains. “We are huge enablers, but there is a cost to having us on the payroll. Therefore, we have to be sure that we press ourselves to innovate and ensure that we add value to the project teams that rely on us.”

Outsourcing managers also must shop around for the best service providers to meet the company’s needs. “It’s often important to travel to different sites and find out which CROs really have the chops,” says David Kimball, chief scientific officer at Cambridge, Mass.-based Hydra Biosciences. “Everybody has a great PowerPoint presentation, but that’s not enough. You have to look at what each vendor has on the ground in terms of equipment, and even more important, you have to size up their employees,” he says. “You need to be sure they have the wherewithal to really interact in a creative way.”

It’s important to check whether the CRO scientists “have a fundamental understanding of synthetic and mechanistic chemistry so that they are able to solve problems in chemical synthesis,” Kimball adds. Further, they need to demonstrate that they can “combine molecular characteristics of active compounds with biological data to come up with new hypotheses that can be tested. These are the hallmarks of truly effective research collaborations.”

Scrutiny of service providers does not end when a company signs on with a CRO. “The outsourcing world is changing so fast that quality and many other parameters can potentially deteriorate very rapidly,” Kimball says. “You have to stay on top of the chemistry and keep evaluating the people with whom you are working.”

In addition, outsourcing managers need to be able to evaluate compounds as they come in, says Daniel E. Levy, who provides drug discovery consulting services through his San Mateo, Calif.-based firm DEL BioPharma. He recently helped a client in a small biotech firm determine why a compound synthesized by its CRO partner “was not performing anywhere near what was expected,” he says.

Although the client asked the CRO to follow a synthetic route outlined in the literature, Levy explains, “the contract organization took the liberty of modifying the chemistry to increase the efficiency of the synthesis by minimizing the number of steps and, in the process, ended up reversing where substituents were attached to the structural core.” The CRO made a molecule with exactly the same molecular weight as the desired product and a similar nuclear magnetic resonance spectrum. “That’s the kind of problem that an outsourcing manager without a strong chemistry background will miss,” he warns.

Problems can also arise if companies are not careful to establish clear lines of communication with their vendors or service providers. “It is not a trivial process,” says Brian S. Bronk, vice president of chemistry at Satori Pharmaceuticals in Cambridge, Mass. “Those who have direct frontline responsibility of managing the CRO need to be able to very clearly articulate goals, objectives, and timelines,” which can often change rapidly, he says.

Crystal-clear communication is especially critical when someone “is 12 time zones away,” Kimball says. “When you are in the lab next door, you can walk in and talk to people, and you can touch and feel the process and better understand why a reaction doesn’t work, but when that work is being done remotely, it is much more difficult. Many of the assumptions that we make, having been trained in the U.S., may not be valid. The quality of reagents, laboratory conditions, and the care with which reactions are carried out may not be the same.”

Kimball recalls an instance when a straightforward Friedel-Crafts acylation reaction following a literature procedure failed repeatedly as it was being carried out by a CRO partner. “Finally, it was determined that the high humidity in the lab and poor storage conditions of the aluminum chloride reagent were at fault. Once those were corrected, the chemistry worked as planned.”

Given the global nature of contract research today, “cultural awareness and the ability to speak a second language are valuable assets to alliance leaders or project managers,” AMRI’s Molino adds.

Recognizing this, Spear began studying the Chinese language three years ago, aiming to better communicate with the 57 chemistry “full-time equivalents” working for Sunovion in Asia. He also relies on Q. Kevin Fang, a senior director at Sunovion who is fluent in Mandarin, to handle the day-to-day management of the company’s Chinese CRO partners.

Breaking down language barriers and building personal relationships with individuals in CROs can be critical to a successful partnership, Spear observes. Particularly in Asia, “our partners like to see the same faces each time we visit,” he says, adding that he travels to China three or four times a year accompanied by the same Sunovion colleagues. Staff at the CROs “want that consistency,” he says, so they know whom to approach with any questions or issues.

CRO partners are also more motivated “when their scientists are treated as equals” rather than as outside vendors, Spear says. “By investing in those relationships, we get an enormous amount of loyalty in return, and frankly, we get access to their best scientists.”

That’s important to Sunovion, “because we don’t want to simply hire scientists to blindly follow our instructions,” Spear says. “Our CRO partners have superb synthetic chemists, and when we give them opportunities to troubleshoot, they frequently come up with ideas and solutions that are better than ours.”

Satori’s Bronk makes the same point. The scientists who work for his company’s CRO partners have enabled “significant improvements to our synthetic processes by modifying our initial schemes,” he says, and they are viewed as “integral team members” rather than “full-time equivalents.”

Given the many skills necessary to work as a chemistry outsourcing manager, breaking into this career niche is not easy. Kimball advises candidates to try to gain relevant experience by managing scientists in a role such as group leader at a drug or biotech company. Chemists who have worked in a scientific relationship with an external vendor or who have done work, even on a small group level, with people overseas also have an edge, he adds.

Levy recommends that aspiring outsourcing specialists look for ways to build relationships with people within CROs. “Go to conferences, meet these people, talk to them, and get to know them,” he says.

Work experience in chemistry outsourcing can also serve as a stepping-stone to other career opportunities. Some managers are able to move from drug or biotech firms into management roles within CROs, observes Bingidimi (J. P.) Mobele, who worked as a senior research scientist and group leader for AMRI for 12 years before being laid off a year ago (C&EN, May 31, 2010, page 33). “The best managers have a good understanding and perspective of inherent constraints in the drug discovery and development process and are capable of assigning project teams with the right mix of skills, knowledge, and practical experience to tackle the projects at hand,” he says. “They are able to better coordinate and streamline the delivery of services for multifaceted programs, ensuring effective communication and a coherent flow of information between all parties.”

Outsourcing specialists are also in a position to start their own chemistry services companies, something Mobele did in July. His company, OKAPI Chemtech, provides preclinical chemistry services from laboratory space he leases from Eastman Business Park in Rochester, N.Y.

“Having learned the business side of science” and having gained exposure to logistics, data management, contracts, and audits of vendors, outsourcing specialists may also go on to jobs in procurement or business development, Connell observes.

For his part, Connell is moving into a new role as Pfizer’s interim head of research in Asia. He will spend a year in China helping to build an anti-infectives research unit in Shanghai. For this next stage of his career, Connell will be drawing on his background in drug discovery, his experience working within all the research units at Pfizer, and his knowledge of how both the internal operations and external operations run. He will also rely on his relationships with some companies in China—many of which he developed over his last few years in preclinical outsourcing.

Unlike some jobs for chemists right now, working in chemistry outsourcing seems to be anything but a dead end. Five years ago, “people wondered if there would be any future in this kind of work,” Connell recalls. But given the fact that outsourcing is now an integral and growing part of companies’ business plans, “people who can bring together drug discovery knowledge, business principles, and partnering expertise will continue to be in high demand in the industry.”