Economics

When Is a Virtual Business Model Suitable for Biopharmaceutical Companies?

Virtual companies are based on the model that all activities are outsourced. Such companies have no (or few) employees, occupy no laboratory space, and use contract service organizations for all activities. Over the past decade, several virtual biopharmaceutical companies have formed (1–4). They are primarily start-up ventures that use contract research organizations (CROs) for R&D and contract manufacturing organizations (CMOs) for product manufacturing. By contrast, a fully integrated biopharmaceutical company is based on the model that all activities are internal to…

A Quick Guide for Sourcing Biopharmaceutical Raw Materials

Before the ratification of regulatory guidelines from The International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH) Q8–Q11 (1–4) — whose scope includes raw materials for biopharmaceutical production — many drug manufacturers chose the most cost-effective and readily available raw materials sourcing options without specifically considering the provenance of those materials. Depending on the chosen supply chain, such materials could be of widely varying quality and not necessarily suitable for a destined application. Raw-material…

A Case for Biopharmaceutical Operations in Low-Cost Countries to Maximize Return on Investment

A company’s success is associated with its growth. An expanding company hires more employees (full-time equivalents, FTEs) to support its commercial products, to develop new products, and to provide administrative services. As it grows, an organization can become more complex and its operations less efficient. Analysis of 2013 financial data showed that revenue of US biopharmaceutical companies increases with a growing number of FTEs at a slower rate than does cost (1). That study assumed that all US biopharmaceutical companies…

Special Report: The Path to Vaccine Profitability

Managing vaccine supply chain improvements involves a complex interaction of laboratories, other facilities, CMOs, and suppliers. Since the business of making vaccines became a commercial proposition, profitability has often been elusive. The economics are difficult: Costs of development and production, already high, are rising. Profit margins historically have been lower than those of other pharmaceutical products, in part because of the complexities of manufacturing and distributing vaccines as well as their stringent safety, testing, and quality requirements.

Revenue per FTE and Cost per FTE: Metrics of Operational Efficiency and Performance

www.graphicstock.com Revenue from operations (herein referred to as revenue) and operating cost (herein referred to as cost) are two independent sentinels of a corporation’s performance and return on investment (ROI), which is defined as the ratio of revenue to cost (revenue/cost). Although a company can actively manage cost by controlling its number of full-time employees (FTEs) and the number or type of activities, it cannot directly manage revenue. Revenue is entirely driven by market forces. So if a company experiences…

The US Biosimilars Future Is Hard to Predict: Global Health Policy, Innovation, Prices, and Profits Are All at Stake

Enthusiasm in the United States over opportunities for biosimilars has waned since such products were first launched in Europe. The hesitation stems from confusion and uncertainty surrounding regulations. Manufacturers and suppliers are looking for guidance from the US Food and Drug Administration (FDA), which has promised guidelines that are still in process after five years. Even naming protocols for biosimilars are clogging the works. And in the absence of coherent FDA guidelines, many US states are haphazardly implementing laws concerning…

Entrepreneurship, Lessons Learned, and Bioindustry Perspectives: An Interview with Roger-Marc Nicoud

Roger-Marc Nicoud received his PhD from the University of Lorraine in process simulation for the nuclear industry. He joined Separex in 1987, first as a technical director and then as a managing director until 1995. Between 1993 and 1995, he also worked as professor and headed a research laboratory involved in thermodynamics at the University of Lorraine. Nicoud founded Novasep in 1995 with the objective of developing comprehensive solutions for producing biologic and synthetic molecules. Novasep became a leading life-sciences…

Build, Buy . . . or “Rent” Capacity? A New GMP Biomanufacturing Business Model

When it’s time to move from preclinical to clinical-phase product testing, many biopharmaceutical companies face a difficult decision: whether to build or buy a biomanufacturing facility for in-house production or outsource the work to a contract manufacturing organization (CMO). Accinov is a new company that straddles the line between those concepts. Its new biomanufacturing center supports client companies toward clinical development in an innovative way. We propose a groundbreaking model for running good manufacturing practice (GMP) biomanufacturing. Our company’s approach…

Shrink Your Inventory Costs And Make Your Staff Happier

Shire’s process development department recently overhauled its inventory control system. The result was a projected five-year net benefit of over US$1.5 million and an immediate increase in its scientists’ productivity and satisfaction. Hiding in Plain Sight We asked one of our scientists why he kept 12 cases of gloves on his laboratory bench. “I use a lot of them,” he told us. “I don’t want to run out.” When asked how long his supply would last, he replied, “I don’t know.…

Bridging Innovation and Partnerships in Mission Bay: Bayer’s CoLaborator Program

Looking at the landscape today, it’s hard to believe that in 2004 the Mission Bay neighborhood of San Francisco, CA, was home to only two biotechnology companies. Over the past decade, industry-leading organizations across academia, clinical care, and research have settled in the area, creating a thriving ecosystem of more than 100 life science companies. Prestigious academic and research institutions such as The Gladstone Institutes and University of California San Francisco as well as life science accelerators such as QB3…