Biotech companies are outsourcing more research - nothing to do with BIOI directly but sort of interesting:
chicago.tribune.com
Joe
If link expires here is the article:
TAKE-OUT RESEARCH FINDS NICHE IN BIOTECH MARKET
By Jon Van
Tribune Staff Writer
July 1, 1998
Jobs once done by factory hands and bank tellers are routinely handled these days by computer-controlled machines, and automation is now reaching for ever-more-sophisticated tasks, including the chores of lab chemists who develop new drugs.
When a human measures, mixes, heats and stirs chemicals used in pharmaceutical research, he might complete a dozen or so tasks a day. But now a robot can perform thousands of such operations in a few hours--a good thing because of the exponentially increasing demand for such work spawned by the explosion in scientific knowledge.
Indeed, the pace of new drug discovery has quickened so much in recent years that even the largest pharmaceutical firms find they can no longer do everything in their own labs. They now routinely farm out pieces of research to contractors, much as Chrysler Corp. might order up a few hundred thousand mufflers.
The notion of outsourcing basic research might seem odd, but it's quickly become a fact of life, said Robert Thong, a pharmaceutical industry consultant based in London for Renaissance Worldwide Inc.
"There've been a lot of advances in the understanding of human genetics in the last five years, and that's brought scores of new ideas for products," said Thong. "Each of the big companies today has more leads for solid new products than the whole industry had 10 years ago. What comes of that is the need for new scientists, new technology to even research this stuff."
A typical entrepreneur exploiting this opportunity is Michael Flavin, whose firm, MediChem Research Inc., based in suburban Lemont, is a willing supplier of chemical work. With a staff of about 60 chemists and a raft of new automated equipment, MediChem does research to order for outside drug companies and biotechnology innovators.
When there's time and capacity left over, MediChem's staff does in-house work looking for its own marketable innovations.
"We capture the creativity of a small organization, and market that to major pharmaceutical companies," said Flavin, president of MediChem, who founded the company 11 years ago on the premise that outsourcing would become an important factor in new drug research.
One service MediChem supplies clients is something called combinatorial chemistry, which means combining chemicals in hundreds of different ways to look for the optimal recipe to produce large quantities of the desired product in the shortest time at the lowest cost.
Doing lots of chemistry quickly and accurately is MediChem's specialty, said David Zembower, MediChem's director of combinatorial chemistry. The firm's robotic systems are masters at mixing and measuring different liquids, handling dozens of mixtures at a time and keeping track of results in a computer.
"The robot puts exact amounts of liquid in every reaction vessel every time," said Zembower. "These operations just lend themselves to automation."
The privately held firm had about $8 million in revenues last year, said John Flavin, vice president of contractural operations and brother of the firm's president.
"We've been growing revenues at the rate of about 45 percent a year since we started," he said.
Robots may have taken much of the drudgery out of chemistry, but Michael Flavin stresses that human expertise and other qualities like integrity and trust are still paramount to MediChem's future success.
Biotech research is enormously competitive, and pharmaceutical houses jealously guard the insights their scientists obtain. It can take months or years to build the kind of trust necessary for them to share those secrets with an outside firm like MediChem.
A case in point is one of MediChem's customers, Pfizer Inc., the pharmaceutical giant based in New York.
Kelvin Cooper, a Pfizer manager in drug discovery, first met MediChem staffers four years ago at a meeting of the American Chemical Society. He decided to give the firm a contract to do some fairly straightforward chemistry.
"They did a fantastic job," said Cooper, who gave the firm more work until after 15 months or so the small firm was sharing closely guarded Pfizer knowledge in a mutual quest to create new drugs.
"We now have a high level of trust," Cooper said.
Another Pfizer manager, Julie Olson, said that Pfizer has assembled a list of preferred vendors that includes MediChem, and Pfizer now spends about one-quarter of its drug discovery research budget with outside firms.
"We really can't grow fast enough ourselves to keep up with demand," she said.
In many cases, big biotech firms can't even do research in-house as cheaply as they can buy it from others, said Roland J. Andersson, a health-care specialist with the Arthur D. Little consultancy.
"Drug discovery had been very much a trial-and-error affair," he said, "but now that computer modeling has speeded up the process, a firm's R&D pipeline may fluctuate tremendously. One global client I have that's concerned with earnings wants to get more products into that pipeline quickly, and the CEO wants 50 percent of their R&D to come from third parties."
Accounting practices can also push drug firms to do more outsourcing, said Fredrick Belmont, a principal at OmniTech Consulting Group based in Chicago.
"One measure investors look at in assessing a bio-tech firm is revenue per R&D employee," said Belmont. "The more you can push these expenses to the outside, the better your numbers will look with higher revenues and fewer R&D staff." |
