Trends in Outsourcing: Interview with Circa Pharmaceutical's Steven Martinez

Introduction

The trend in pharmaceutical manufacturing today continues to be defined by a steady push towards outsourcing contract services. Several developments in the last decade have contributed to this trend: price regulation due to managed care, increased competition from manufacturers of generics, and a series of strategic mergers and acquisitions that have left some companies with expanded facilities, while leaving others scaled back. No matter what the cause, the future of contract manufacturing seems to be promising, and the industry as a whole is gearing up for the boom, particularly organizations with strong or emerging international ties.

Example of European Markets

The paradigms of the US domestic pharmaceutical industry have been paralleled throughout the world, but most especially in European markets. There, too, increasing regulation in pharmaceutical pricing has steadily defined the evolving healthcare scene. Pharmaceutical companies based in Europe, and their domestic counterparts with facilities abroad, are reassessing their current positions, vis-a-vis, expanding manufacturing capabilities. In light of such increased competition worldwide, outsourcing all or specific development and manufacturing processes seems to provide a more cost-effective solution.

"Just consider the impact of the European Community on the pharmaceutical industry," says Steve Martinez, vice president and general manager of Circa Pharmaceuticals (Copiague, NY). "Getting approval in one EC country will soon simplify the process of getting approved in another. As a result, it makes less sense for these large manufacturers to open large and expensive plants in sister countries, when they can farm out services for a lot less capital." But what's the catch? According to Martinez, "These companies must seek out knowledgeable contract manufacturers with the integrated expertise to orchestrate development, application, and production processes to speed international EC approvals."

Industry analysts believe that as cross-country barriers continue to drop, contract manufacturing will continue to expand. The EC is just one example. Additional worldwide markets offer excellent opportunities for the intrepid and capable contract manufacturer to serve as a strategic development and production resource. "With multiple sets of Research and Development approaches, regulatory agencies and practices, as well as diverse market sensibilities," advises Martinez, "only a company with the experience and expertise to integrate it all will be able to provide worthwhile solutions." Such a company, he believes, would be able to assist even the most established international pharmaceutical companies to forge new inroads into untapped markets, without the associated start-up expense.

"In this fascinating time of strategic alliances, industries have seen some unique corporate marriages: telecommunications and cable, cars and satellites, Microsoft and everyone else. Healthcare has especially espoused more than its share of strange, and often dubious, bedfellows: doctors and accountants come immediately to mind. However, not to be outdone, the pharmaceutical industry is also experimenting with alternative development arrangements. But one in particular bodes well for our industry: the partnership of pharmaceutical companies and the healthcare providers who prescribe their products. Key development dialogues are taking place that have resulted in more specific and efficacious clinical products, combined with more relevant marketplace positioning. The patient is the party who ultimately benefits."

Healthcare Partnerships

Here, too, the opportunity for full-service contract manufacturing or strategic process outsourcing is great. As these two formidable forces in healthcare unite, pharmaceutical companies and clinical providers, to join minds in the development of new formulations, contract manufacturers are being called upon to fulfill actual production. By freeing these pharmaceutical companies of the resource-draining burden of application, approval and production, they can more readily concentrate on new drug concepts, innovations that are literally changing our lives. Doctors can concentrate on application strategies; pharmaceutical companies can perfect delivery systems; and contract manufacturers can tie it all together, speeding the product to market.

"Modern times call for modern partnerships," Martinez stated, "and the linking of these three healthcare forces seems like a healthy proposition. A win-win-win for all involved, especially the end consumer.

"Outsourcing gives you the ability to approach clinical and commercial manufacturing without extensive outlays of capital expenditures. For companies interested in producing a particular formulation for which they aren't ideally configured, outsourcing can present a viable alternative.

"Finding the right outsourcing partner, first and foremost, is about finding someone who understands your needs. They may have the right capabilities and the right personnel, but if they fail to demonstrate a clear understanding of what the customer truly needs, that partnership is destined to fail."

Open Door Access

The keys are access, according to Martinez, and open dialogue. "One of the advantages Circa brings to the table is our open door access policy. When you call someone at Circa, we answer your call—and we also answer your questions. This kind of accessibility promotes the level of dialogue that dispels misinformation and promotes understanding. It's what being responsive is all about."

Martinez named speed to market as the principle benefit of outsourcing. "It all comes down to reaching the end customer. With a contract manufacturer working on your behalf, you can get your product through trials a lot faster, through approvals more readily, and into the consumer's medicine chest more rapidly. And the right contract manufacturer can generally save its clients a bundle along the way.

"Contract manufacturing is a fast growing business, and drug companies have accepted, and appreciated, our role in the cycle. Circa stands out as a premium choice because we understand the role of a service organization- which is what contract manufacturing truly reflects. Some competitors, I believe, haven't gotten this message. They're so caught up in the manufacturing and production process, that they have missed the boat on service. Facilitating development, streamlining approval, speeding product to market—these are clearly service imperatives, and Circa understands its role."

For more information: Steven J. Martinez, vice president, general manager, Circa Pharmaceuticals, Inc., 33 Ralph Ave., PO Box 30, Copiague, NY 11726-0030. Tel: 516-842-8383, ext. 605.