Maximal Outsourcing – Virtual Discovery and Development
As a bio/pharmaceutical company outsources what were once considered core competencies, the company reaches a point that could be characterized as being maximally outsourced, where the only competencies remaining are those that keep the company intact, such as Operations, Finance, Marketing, Legal, Project Management, and Portfolio Management. All the other competencies are outsourced: Biology, Chemistry, Toxicology, Clinical Sciences, Statistics, and Analytical Sciences. Such a company engages in Virtual Discovery and Development (VD&D). In another section we learned that such a company might be called a VIPCO.
Such companies may be difficult to distinguish from Contract Research Organizations (CROs), especially those that offer a wide variety of services, such as Quintiles and Covance.
We define a company that engages in Virtual Drug Discovery and/or Development as one that displays the following characteristics.
- The employees are limited to a small core group responsible for strategic (project & portfolio) management, intellectual property management, electronic data capture, regulatory strategy, and financial control.
- Project teams consist of a project manager that oversees the work of a collection of academic and nonprofit groups and CROs.
- The company maintains control over intellectual property, financing, electronic data capture and data submission to regulatory authorities.
The last characteristic is the one that most readily distinguishes a VD&D company from academic and nonprofit groups and CROs – it holds the reigns. It owns the patents. It is the financial conduit through which its collaborators get reimbursed for their services. It makes the final submission to regulatory authorities. Depending on the clout of its financial partners, a VD&D company may be less visible that its major partners.
A company that engages in Virtual Discovery in-licenses its assets from Discovery organizations. A company that engages in Virtual Development out-licenses or partners with companies that are capable of performing clinical trials.
A small VD&D company may simply be an extension of a venture capital company with office space shared with the VC. If the company has less than a dozen ongoing projects, it only needs a set of offices to house its set of project managers.
The following are companies that the author believes fit this definition of VD&D.
“Accellient offers an efficient and cost effective approach and strives to be the biopharmaceutical and investment industries’ virtual drug development partner of choice.”
- acquire ownership of, controlling stakes in, or license differentiated and commercially attractive pharmaceutical products in the in the early stages of development when the promise of the therapy becomes apparent.
- engage in the development and commercialization of innovative anti-cancer agents in the United States, Europe and other international markets.
- leverage virtual business model and expertise of partners to build out investments”
“Virtual drug development entails: (i) a small core group of employees responsible for strategic management, regulatory strategy, and financial control, (ii) outsourcing all non-core business functions, including preclinical and clinical drug development, and (iii) electronic data capture and data submission to regulatory authorities. By adopting this model, VDDI Pharmaceuticals believes it can reduce total drug development program costs by at least 25% and development times by up to 50%.”
“Vitae Pharmaceuticals has an internal staff of approximately 45 scientists representing diverse areas of expertise, complemented by a growing number of expert virtual team members and collaboration partners that extend the reach and capabilities of our own sophisticated in-house resources.”