There is a hidden cost to outsourcing.
Its hard to measure in the Excel sheets, its inevitable, and we all do it whenever we pay for a service.
When we outsource- we use someone else’s infrastructure and experience, in return for an immediate benefit.
It’s usually a win-win situation, especially for the things we would NEVER want to do (Taxes anyone? Sorry all CPAs out there).
But what about the activities that ARE in our core business, and we can’t afford to do in-house?
Building infrastructure can be expensive and learning new skills (or hiring new team members) costs time and money... Even if we could do it ourselves, we don’t always have the capacity and must move fast.
The struggle is real, and it is more painful the smaller you are (will attest all Solopreneurs out there, me included!). Outsourcing is NEVER exactly what we want, and we must learn to play along with others.
The hidden cost is the lost knowledge and experience, which remains in the hands of the service providers and can sometimes be HUGE and go unnoticed.
In Pharma, as always, this is multiplied by millions.
Building in-house manufacturing capacity is an adventure only deep pockets can afford, and at early stages this is not even a real dilemma. Even if it were somehow within the budget, it simply doesn't make sense from a business perspective to put away such budgets on a dream. The earlier the project is in clinical development, the higher the risks, and those millions could certainly have been used differently if it turns out that the product doesn’t work.
As projects advance, alongside the overall reduction of risk, and the the marketing approval just around the corner- the operational costs and reliance on third parties suddenly becomes the bigger risk.
This is when many companies suddenly realize that their entire knowledge and know-how is all over the place. With Contract Manufacturers, we could hope that agreements were set in advance for commercial supply or some way to share the IP (not for granted at all!).
But what about all the other services? The regulatory teams, Quality, Service labs and on and on….
As an “outsourced resource” myself, I do my best to keep my client’s knowledge assets in their hands. I usually care more than them. I work under the assumption that one day they’ll realize how much was handed over to me, and they will need all this data back.
No matter which side of the Outsourcing coin you are at- be mindful of the knowledge assets. You will be thankful for this habit when the project grows, and insources back all those long-lost capabilities.
Ironically enough, one of the services I provide is helping companies get a grip of their CMC knowledge, and I know I did a good job when they no longer need me…