Biogen's Outsourcing Trifold For Joint Value Creation

By Louis Garguilo, Chief Editor, Outsourced Pharma

“A lot of people throw around the word ‘strategic’ and the acronym ‘SRM’ when they discuss their suppliers,’ says Thomas Holmes, senior director for Global External Manufacturing, Biogen. “But we strongly believe in ‘strategic relationship management’ as a way to govern and manage all aspects of CMO engagement. It helps us maintain a network of complimentary suppliers in each area of their specialty, and clarity of our overall network.”

As Holmes suggests, there are times when the more a business term becomes the subject of discussion, the less meaning it holds in practical application. Everything can become SRM. Or nothing. We can’t fault managers today, dealing with various CRO and CMO relationships, products and pipelines of both small molecules and biologics – often delivered via new technology platforms – for a bit of, shall we say, SRM slippage.

That is until parts of the supply chain start to slip along with management.

Segments, Matrixes, And Governance

Holmes says there’s none of that at Biogen. Any CMO working with his company – or hoping to – better be prepared for stringent measurement and oversight.

“Basically, I can describe our approach as starting with a segmentation model for CMOs, with the primary suppliers at the top and getting more of the overall volume,” says Holmes, who spends time divided between overseeing Biogen’s SRM resources in Switzerland and those here in the U.S.

According to Holmes, for a CMO to climb into that top tier first requires a certain amount of time and experience working with Biogen. “There’s a set process by which we make use of a scorecard to assess everything from the CMOs total quality management to an understanding of its financial situation. We look at their inspection records, plans for redundancy, skillset and specialty, and flexible capability and capacity for unforeseen events.”

Add to the scorecard “an on-time and matrix measurement of how well the CMOs compare in areas such as adhering to our production schedules, accurate invoicing, cycle times of the financial relationship and contracts. This data also helps further drive the segmentation of our suppliers mentioned earlier.”

Wait … there’s more. Next is what Holmes calls “the governing structure.” At the minimal, and no matter at what level of segmentation a CMO finds itself, Biogen meets face-to-face with its suppliers at least twice a year. “This keeps the dialogue open on performance, and ensures the CMO understands where they fit in terms of our overall network.”

After a pause, and as if Holmes starts to feel this sounds like a bit too much, he adds: “However, we accomplish all this without being overly descriptive or prescriptive on our part.” The goal is to establish proscribed and open lanes for both sides to provide feedback on areas of concern. As an example, Holmes mentions Biogen may concentrate on certain services offered at a “tower CMO” that aren’t considered best in class, compared to its competitors; in turn, the CMO might voice concerns that could be addressed at Biogen. This dialogue helps the managers on both sides to put together a plan for remediation and continuous improvement activities.

Taken all together, purposeful segmentation, descriptive scorecards and matrixes, and CMO governance, form a trifold of strategic relationship management for Biogen’s supply chain. 

 Elevating To “Joint Value Creation”

Service providers can attain an ultimate level of relationship with Biogen. This can only occur, though, if and when each of the three parts of the trifold have been well established by a CMO. Holmes calls this the stage of “joint value creation.”

He explains this as a proven and mature relationship now open to the full sharing of internal ideas, concepts and pipelines, and even financial relationships. Biogen encourages these value-creation partners to bring thoughts on projects, new capabilities they are working on, and topics that might be considered “outside of normal business.”

“We look for matches where we can do something a bit more strategic and innovative,” explains Holmes. Sometimes, this dialogue leads to what he calls “bilateral manufacturing arrangements.” For example, he describes a relationship where Biogen produces drug substance for a supply partner’s products, while utilizing and receiving the right of first refusal to that CMO’s capacity in oral solid dose and sterile fill.

“Whether it’s API, sterile, oral solid-dose, device or packaging suppliers, we do this for a couple of reasons,” says Holmes.  “One is simply that it’s nice to know the leading and competitive landscape. Another is it helps us build redundancies and synergies into our supply chain network.” This calculation “certainly has an overall element of finance imbedded in it,” and takes in considerations of geography, with Holmes noting that Biogen itself manufacturers both in Europe and the U.S.

Core Competency Stays In; Small Molecules Out

As we mentioned in our earlier article with Holmes, Biogen has ample, and continues to add to, internal capacity and capabilities for the production of biologics drug substance. This includes building a new state-of-the-art facility in Solothurn, Switzerland. This new investment, with a groundbreaking earlier this year, tops $1 billion for biologics production.  

“This core competency around the production of biologics, quite frankly, is not something we’ve outsourced in the past,” says Holmes. He adds – perhaps hoping not to fully crush the hopes of biologics CMOs: “We have looked at it, but just haven’t done it yet.”

So at least for the foreseeable future, or perhaps until a biologics-focused CMO can somehow convince Biogen to work with them, Biogen will stick with outsourcing specifically for its small-molecule projects and products. Currently, Biogen has no small-molecule capability in-house, nor plans to build it at this time.

Which raises an interesting point: Why does a Big Bio like Biogen even bother with small-molecules? Big Pharma, to a degree, had no choice but to move into biologics, the new science of drug development. For Biogen, both a pioneer and still very much on the cutting-edge of biologics, does it make sense to go the other way (i.e., from biologics to small molecule), and introduce a fully outsourced model to do so?

“It’s a good question, with what I believe is an easy answer,” says Holmes. “What drives us is providing our patients with best in class alternatives, agnostic to pharmaceutical formulation, in dedicated disease areas like Multiple Sclerosis. We continue to look for different mechanisms of action, and different medical or pharmaceutical solutions. I believe if there is an opportunity out there in a disease indication where we have expertise, a sales force, and where we know the medical community, then regardless of small molecule or large molecule, we should be experts in it and help to bring those products to the market.”

CMOs should prepare well if they’d like an opportunity to provide assistance.