Advice You - Business

Outsourcing could be seen as a contemporary product of the network economy where an organization should focus on its strengths and leave its weaknesses to others. This is only possible as long the productivity is not at da

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

nger.

The term ‘productivity’ does not only origin from (self) ‘production’ but also depends on three other economic functions; supply (by others), exchange (with third parties) and sales (to customers). This patte

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

n is both present on a country level and within companies (and even on a personal level – imagine yourself what productive element you excel in). Companies are dependent of some main supplies by others (main infrastructura

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

support), they purchase (raw) materials from third parties with which they produce their own product they finally sell to customers.

If we examine the productivity of a company that is in the process of outsourcing (or i

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

-sourcing in which the same applies) the distribution and the internal balance between these four main business functions will alter. Where you give up a part of the self-production, you will receive a new exchange-proces

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

in return. This is what managers sometimes forget.

First you need to know how your business productivity will increase. This will only be the case when the new situation is more profitable than the old one; where the thi

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

d-party-production (that part of the production that is outsourced) added with the new exchange function is more economical than the old situation where you where the only producer.

Companies that have no experienc

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

in outsourcing will have difficulties in mastering the exchange-part. They must all of a sudden manage others that are also outside their own company and that requires new skills. Where in the old situation the communicat

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

on was merely implicit, in the new situation you must make all the communication explicit. That is when you realize how complex the process is. To untangle that specific part from you business and pass it to a third party

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

s not easy. Less is the management of this disentanglement process and the management of the new situation. All at once.

It also requires a new culture. One element of self-producing companies is the ‘not-invented-

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ere’-rule. This rules conflicts with a new approach where you make yourself highly dependent of others. Management of this cultural change takes time and coincides with the moment when you experience new issues.

One of th

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ese issues is that what you have been (self) producing will never be the same when the job will be done by others. The part that will be outsourced is to be done market-conform. This means that the supplier (the in-sourcin

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

company) of the process will determine the standard of the output. This must be done otherwise both companies will lose productivity. The in-sourcing company will provide a service that is based on what they provide to th

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

market. As long as the in-sourcing is in conformity with this standard they can increase their scale. If the outsourcing company will demand changes, this economies-of-scale will not be achieved because of this tailor-mad

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

approach and the process will be more expensive than before.

The interaction between the two companies will also experience cultural challenges in the beginning. Both parties have there own culture. The in-sourcer is nor

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ally focused on efficiency rather than on flexibility and the outsourcing company does not only require efficiency but also time-to-market for new developments.

An intermediary step before the current situation and outsou

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

cing could be to start treating the organization that is subject to outsourcing as such (an island within your company).

More important, I think, is that a feasibility study (focused on outsourcing) should be preceded by

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

thorough strategic analysis. In this analysis and the implementation plan the budget rule should be presented. You should ask yourself whether the budget you spend on outsourcing could not spend better otherwise. T

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

is is where the outsourcing discussion started. If you address a part of the budget to the relatively weaker parts (and decide to outsource) you should also address a significant amount to the relatively stronger parts. If

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

these two elements are not known you are dealing with an unbalanced situation. Outsourcing will not help you other than it cumulates the focus problems you are dealing with. Solve them first.

© 2005 Hans Bool / Astor Whit

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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