June 16, 2025 • 58 mins
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On this week's episode of the Business of Biotech, Tom Wells, Director of Life Sciences at 4C Associates, reveals why -- and how -- smart procurement practices can make or break emerging biotech companies during critical growth stages. Tom shares insights into procurement tools and strategies that can deliver breakthrough solutions, how poor procurement practices can damage investor confidence, and why thinking about procurement as the front end of demand flow, not the back end of supply chain, can help drug developers avoid costly mistakes.
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Episode Transcript
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(00:44):
Welcome back to the Business ofBiotech.
I'm your host, Ben Comer, chiefeditor at Life Science Leader,
and today I'm thrilled to speakwith Tom Wells, director of Life
Sciences at 4C Associates,about procurement practices, an
issue that can stymie promisingbiotech companies during
critical growth and developmentstages if not done correctly.
(01:06):
Tom has worked in a variety ofprocurement roles at companies
including Novartis, Takeda and,most recently, BMS, before
joining 4C Associates, aLondon-based commercial supply
chain and operations consultancy.
Tom is passionate aboutprocurement and the ways it can
impact a growing biotechbusiness and I'm looking forward
(01:28):
to learning more, along withour Business of Biotech
listeners, about how procurementcan make or break biotech.
Tom, thank you so much forbeing here.
Pleasure to be here.
I mentioned in the introductionthat you are passionate about
procurement, an issue that canbe overlooked or under-managed
(01:48):
by growing companies, despiteits importance.
Why did you decide to spend thebulk of your career on
procurement issues and how didyou get started in it initially?
Tom Wells (02:00):
Well, I actually started from university.
I read bottom year atuniversity or plant science and
then went into marketing, firstof all for a wine and spirit
retail company in the UK, thenmoved back in-house with
electrolux, the white goodscompany, first of all as head of
(02:29):
corporate comms for westerneurope and then as head of brand
pr worldwide, and it was inthat job that I really came
across procurement for the firsttime and up to that point my
view probably would have beenthat procurement for those
annoying people who upsetagencies, get contracts wrong,
bungle payments and generallyget in the way and slow things
(02:50):
down.
But I was asked to help work onan internal campaign to
reposition procurement in theeyes of the business and help
people understand whatprocurement is and what it
actually does.
Ben Comer (03:02):
And which company was ?
I'm sorry, tell me whichcompany was that.
Tom Wells (03:05):
This was Electrolux, based in Sweden, and the program
was all about repositioningprocurement in the eyes of the
business, in the eyes ofsuppliers, trying to help people
understand that procurement isactually it's not the back end
of supply chain, but it's reallythe front end of demand flow.
It's the part of the businesswhich can bring in new ideas,
(03:26):
new suppliers, new ways ofworking and so on.
But it did also made me thinkwhen I was working on that
project why is it that marketingpeople such as me at the time,
and procurement people justweren't speaking, weren't really
working together?
And why were there so many ofthe the cliches that marketing
people thought of procurement asbeing a difficult process by
(03:47):
getting in the way, slowingthings down, whereas procurement
people probably thought ofmarketing people as being
spending three after threeschools and people who couldn't
be trusted with money, and thiswould go back a few years.
Um, and the whole process isintriguing and eventually I
decided it wouldn't it be greatif procurement people and
marketing people could work moreeffectively together?
(04:08):
And I eventually leftElectrolux to set up my own
marketing procurementconsultancy and it wasn't so
much working on sort ofcontracting and negotiations and
pricing and so on, but it wasmuch more helping the client
side of the relationshipunderstand how agencies work and
the best ways of working withthe suppliers they're working
(04:30):
with.
My view was then, and alwayshas been, that you make it a
little bit of extra value in theshort term if you try to
negotiate with your agencies orsuppliers financially in in on
financially.
But if you understand how theywork, how they make profit, what
(04:50):
engages and motivates theirpeople on what it takes to help
them develop their business as aresult of the good work they've
done for you, then you'll findthat that that agency will give
you infinitely greater valuethan we could possibly get by
trying to to the price.
So I spent a few years runningthat consultancy business.
I worked with Coca-Cola andPepsi in various different areas
(05:11):
, with McDonald's Europe, withGeneral Motors Europe, but bit
by bit I found myself workingmore and more with pharma
companies, and I guess that'sbecause, after the financial
crash in 2007, 2008, governments, particularly European
governments, had obviously put ahuge amount of money into
supporting their currencies andtheir markets.
(05:31):
They were looking to cut costselsewhere and so started putting
more pressure on pharmaceuticalcompanies always an easy target
for government which need money, especially the big nasty drugs
companies.
In the five years to 2008, theaverage price of pharmaceuticals
in Europe went up every year.
In the five years after 2008,it went down as a year.
(05:54):
So pharma companies,particularly in the marketing
area, needed to become much moredisciplined, much more savvy
about what they were spendingand how they were spending it.
And so I found myself workingmore and more for pharma
companies.
And then one day I had anapproach from Novartis in
Switzerland to go and work inthis global category for market
(06:16):
research and then for marketing.
So I moved to family toSwitzerland, spent about five
years with Novartis working inmarketing and marketing research
, and then moved from Novartisto Takeda as the global
procurement lead for travel,retail and events, and from
there to Bristol Myers Squibb,where I moved from having sort
(06:36):
of vertical global roles tohorizontal regional roles
covering pretty much everythingthat the company spent money on,
and then up until the end of2024, I was reaching the Canada,
(06:59):
latin America, turkey, israel,india and most of APAC, and from
there to 4C Associates andbeginning of March of this year.
Ben Comer (07:04):
I want to get your kind of broad definition of what
procurement is and what itmeans to you and maybe, as a way
to start that conversation,could you describe kind of that
transition from marketingservices into pharma and what
you know.
The procurement job entailedWere there and what you know the
(07:25):
procurement job entailed Werethere.
You know complete, I guess,analogous types of jobs that you
were doing with pharma versuswith a consumer packaged goods
company.
Were the issues similar or wasthere a kind of stark difference
in the kinds of procurementjobs that you were doing for
pharma versus your, your priorwork in consumer package goods?
Tom Wells (07:47):
yeah, it's a good question.
I mean, I think that when it'sbeing done probably when it when
it's being done well, um, Ithink that the the basics of
procurement are the same acrossevery industry.
Um, so again, procurement it'snot the back supply chain, but
it's very much the front-end ofdemand flow, it's the door to
(08:09):
the rest of the world, it's thefunction which can bring in new
ideas, and so on.
I think whichever industryyou're in, it starts with having
the knowledge and the insightto partner with the business.
In the case of life sciencesand this is different from
consumer goods or anything elseelse I think the key in the
pharma industry is to be able tounderstand the scientific and
(08:31):
the business objectives andstrategy and the priorities, and
that, I think, is it is thecore difference.
Um, the life sciences, um,across the piece not just pharma
, but the agri-pathic, likesciences does need a really good
understanding of how thebusiness works and how the
science works, because otherwiseit's difficult to know what
(08:54):
actually constitutes value foryour business.
So in my case, I've been inprocurement for quite some time.
When I was working at BMS, Irealized that maybe my
commercial understanding and mycross-functional understanding
wasn't everything that I wouldwant it to be.
First of all, squibb has awonderful system called a tool
(09:16):
of duty, which is spend threemonths or six months in a
completely difficult businessfunction, learning how things
work and just building your realperspective.
So I actually spent six monthsworking at a commercial in BMS
on a project to look atre-commercializing a drug which
had a problem that had passed,and I was able to work across
(09:38):
regulatory, vap, forecasting,finance, production and many,
many different functions.
That gave me a lot moreunderstanding of the business
and science, because I had toread myself into the Journal of
Transplantology, the BritishJournal of Nephrology and many
other publications in order tobe able to understand everything
(10:00):
else that's happening with thisparticular drug.
So yeah, in any industry it'sabout having the knowledge and
the insight to be a crediblebusiness partner and to
understand what the scientist istrying to do, what the business
is trying to do, what itsstrategy is and what its
priorities are.
And from that I think you canstart to identify the resources
(10:22):
and the services that thebusiness needs in order to
deliver that strategy andachieve those objectives.
And from there you can go outto the Borg external market to
look at all the best possibleproviders, humph for purposeful
innovation, innovation whichactually delivers for a business
.
Then obviously negotiate andcontract and onboard new
(10:44):
supplier, get together and maybemanage the risk and the
client's issues, but to do allof that in a way which means you
can build a mutually productiverelationship and lower TURK
value, and then obviously workwith the stakeholders and the
suppliers to maintain and toleverage those relationships for
(11:04):
the long term.
So most of those things areexactly the same for any
industry.
The part I think is key forlife sciences is that is, the
ability to understand thescience and the business of the
science, because that reallydoes dictate everything else we
should try and do.
Ben Comer (11:22):
When you say the back end procurement should not be
at the back end of the supplychain, Are you talking about the
kind of tactical, transactionalrole of procurement in you know
, negotiating contracts,managing, you know, technical
issues and compliance versus thefront end of demand flow, which
(11:44):
I think I'm hearing you say ismore relational, more holistic,
gives you a sense of the toppriorities of the business and
how to kind of meet thoserequirements through procurement
.
Is that correct?
What would you add to that?
Tom Wells (12:01):
So I think you need to have all of the end-to-end
steps and everything actually atthe back end.
Then the procurement processesof how do we write a contract,
how do we negotiate, how do wepay people, how do we manage
invoices, how do we manage cashflow.
All those things are fundamentalelements of procurements, but
(12:22):
they're far from value-less.
They are critical but theydon't necessarily add value.
I think for the procurementfunction to add value, you need
to put the answers very much atthe front end as well and to be
able to take that proactive rolein understanding not just what
is it that someone wants me tobuy, but what is it that the
(12:44):
business or this person, thisfunction, actually needs in
order to be able to operate andoperate better and add more
value for the business and,ultimately, more value for the
patient.
So I think you need thebackbone of procurement process
and discipline and rigor andmaking sure that everything is
done correctly, because there'sa lot of compliance, a lot of
(13:04):
compliance and recognition ofredeeming other people's money.
But you need to add to that thescientific and business
partnering to be able to drivereal value all the way through
the chain.
Ben Comer (13:18):
Right, right, and you know as you say.
You know money is kind of atthe root of procurement.
You're spending money forservices.
What are some of the ways thatearly stage biotechs can use
procurement as a strategic toolto create value?
And then you know we'll talkabout.
(13:39):
On the flip side of that.
You know where companies gowrong with procurement.
Tom Wells (13:43):
You know to bad ends of that where companies go wrong
with procurement to bad ends.
Yeah Well, I think if you lookat what actually is value for
early-stage biotech, it goes farbeyond cost and obviously the
money is important, but it's bybalancing price and the cost of
operation.
If you look at the money, thereare really four things which
you can do.
You can pay less, or you canpay smarter, or you can spend
(14:06):
less or you can spend smarter.
And in terms of procurement,managing how much do you spend
and what's to be spent on, youneed to balance each of those
four things.
If you focus solely on how muchdo we pay and how can we pay
less, you might get to asituation where you've managed
to persuade, bully, negotiate,whatever a supplier to doing
(14:29):
something for less.
But are they going to be aresilient supplier?
Are they going to really wantto do business with you?
Do you run the risk of pushingthe price you pay so low that
you begin to damage or to erodethe goodwill of that supplier
workload for you?
So, managing the money side,you've got to do it elastically
and think pay less, pay smarter,spend less, spend smarter,
(14:52):
balance those and you will getto a better financial outcome.
But where I think a problemwith functional dual team can
help is they can help anticipateand mitigate the risk in the
supply chain and they can bringmore operational efficiency.
They can help you get to themarket more quickly.
(15:13):
I think, in particular, theycan help you find innovative
solutions and the different waysof doing things Not just
different supplies, butcompletely different ways of
meeting opportunity and solvingproblems and I think you can
also help the business become acustomer who the most critical
suppliers most want to dobusiness with.
(15:34):
And I think in our you knowthis increasing VUCA world that
we're in, I do think that'sbecoming more and more important
.
The way I would look at it isthat as the world gets more I'll
(15:56):
take that for that the natureof new pharma products is
changing and we see there's abig shift towards smaller
systems, areas and morespecialist therapies, and that
means that the whole R&D processis getting much more complex
and much more expensive and thatin turn means that supply
chains are getting much morecomplicated and much more
(16:19):
expensive, including much morecomplicated both upstream and
downstream.
So if downstream, if a patienthas a wearable, they can
actually become part of oursupply chain because they can be
providing a Dixit which goes totheir HCP.
Their HCP might then pass itback to a Dixit, a Glomerator,
or to a pharma company, whatever, so the patient can actually
(16:42):
become part of the entire supplychain.
But what we see as a result ofall of that is that the industry
is becoming ever more relianton smaller and more specialist
suppliers, and so the resilienceof your supply chain,
particularly as a merchant,biotech, becomes ever more
critical.
Because the question is can yourely on your supplier still
(17:05):
being there in a year's timethan ever?
And as you're starting out downthe road using someone else's
money, you need to be able topick suppliers you're going to
last support and who are goingto want to continue working with
you.
So the power then starts toshift towards the supplier, and
(17:26):
you, as a customer, might beginto spend more on the supplier
than they depend on you.
That means that you need to bethe customer who they most want
to do business with.
You need to position yourselvesas the customer of choice.
Right, yeah, because you could.
I think you see some.
The customer of choice Right,yeah, because you could.
(17:47):
I think you see some greatexamples of this.
I think the whole area ofradiology is a great example
where there are many, manytherapies coming through which
have gravity into all theactinium isotopes as being.
It will be the ideal, I'd say,for many of these therapies.
Right, but there is still noreliable supply chain for the
(18:09):
key aesthetics of our tenure.
It is available, but many, manycompanies are fighting to get
their share of it.
If you're a customer who hashabitually tried to force your
supplier to take a lower price,or we keep changing your mind,
or messing up their workflow andtheir cash flow, or if you talk
(18:29):
about orders but then don'tplace them, whatever field it is
, if you're that kind ofcustomer, when your supplier is
under the same kind of economic,social, technological, whatever
stress that you are, yoursupplier will become more wary.
They want to concentrate onprotecting their workflow, their
(18:50):
cash flow, their profitability.
They will favor the customerswho they trust most and the
question moves away from it.
It it used to be who do I trustas a supplier.
Now I think it's become whotrusts me, and this is where
procurement can play a key role,for emerging projects is
(19:13):
because I think that companiesthat are better able to explore
new suppliers but then engagemore effectively with them and
enable those suppliers to buildtheir business.
As a result, are going to get acompetitive advantage because
they're going to be the ones,the customer with whom those
suppliers will be most willingand most able to help when we
(19:35):
are in conditions of realoperational stress.
Ben Comer (19:39):
How do companies position themselves as that
customer of choice, you know, ona kind of you know, a very
specific level?
I mean, is it the individualsthat are, you know, negotiating
the service orders and how youknow raise their profile with
their suppliers or endearthemselves to suppliers so that
(20:09):
you know that they are kind of,you know, reaping the benefits
of that kind of relationship?
Tom Wells (20:17):
There are a lot of things and they all come down to
as good as human decency.
They come down to behavior.
It's all about treat people asyou want to be treated, and it's
remember that even every one ofyour suppliers, they're people
too.
They're trying to run their ownbusinesses, and if you
understand what pressures yoursupplier is under, whether it's
(20:41):
the pressures that you're under,and try to think about what
would I want to do, what's goingto help us build a business
relationship which actually goesbeyond mere bonds or beyond
money, but actually helps usfocus on not just on cost but on
service, on innovation tocreate and it comes not just on
(21:03):
cost but on service, oninnovation, on to create mature
menus, and it comes down,ultimately, to looking at people
as people, and I think reallythat's it.
There's in what I could callless sophisticated procurement
operations, you will very oftenfind that there's an absolute
focus on cost.
(21:24):
Yeah, we've got to meet, we'vegot to get the price down, I
want 10 off everything.
Well, in a, in a vuca world and, as I say sometimes, in a world
which has gone from vuca to wtf, because that's the the
volatility of the times that wenow live in, um, is it more
important to have the lowestpossible price or is it better
(21:44):
to have a degree of sort ofaffordable confidence when, okay
, I probably could push thesupply to a lower price?
But do I want to because if Ido I may get some small
short-term advantage?
Am I really giving myself alonger-term value?
So again, think of people aspeople and businesses are done
(22:14):
by people, and start from thatbasis, I think the basis of
everything successful,particularly in a world like the
Cuban is honesty, it'sintegrity and it's a its great
(22:39):
self-awareness.
Ben Comer (22:41):
Your description of this relationship between the
drug developer and suppliers itsounds like there really needs
to be a kind of give and takethere, a recognition of you know
to your point what the supplierneeds to succeed in addition to
what you know your own companyneeds to succeed, and it's
(23:02):
behavioral, it's peoplerelationships, is what you're
saying.
Is there anything else I guessthat you could say about, maybe,
what companies specificallyshould think about when they're
engaging a supplier?
Clearly they want to help thatsupplier accomplish its goals,
but how do you understand whatthose goals are?
(23:23):
How do you become that trustedpartner that is really aligned
with a dual set of objectives?
Tom Wells (23:33):
one of the great procurement acronyms is apusci,
which has security, assurance,quality, service, cost and
innovation.
So when you're starting to workwith a, when you're starting to
look for suppliers, you oughtto start with assurance, which
is, you know, I didn't want todo digits can I be sure that
this company exists?
(23:54):
Can I be sure about itsfinancial history?
Do any of its directors andofficers have criminal records
or all of those things?
So I say, right, first of all,I'm sure myself about the basic
operating credentials of thepotential supplier.
Then I might look at thequality.
Can they do what they say theywould?
How can I measure and managethe productivity?
(24:16):
What about output I'm lookingto buy, and so on.
Then I would look at theservice levels of what
constitutes good service to meand to my business.
What are the sensible minimum Ishould expect?
How quickly do I expect peopleto pull back if I have a problem
(24:38):
?
Those are basic hygiene factors.
Only then might I say, okay, ifI've looked at various
companies and I rigid them outso we can get assurance, ability
and service levels.
Then I might look at cost andso, okay, of the ones I wrote my
basic standards, which ones cangive me the best price or the
(24:58):
best value and then, as a finalleverage, it'll factor which
ones can give me something extrawhich maybe some of the other
ones can't.
So those are the basic thingswhich procurement should be
setting out to look for.
Procurement should be settingout to look for, but all of that
needs to be driven by a veryclear understanding of what is
(25:18):
it that my business actuallyneeds.
And that's where the partnershipstarts.
If you have a good, if theprocurement team and each
different business function,they have a good relationship,
it's based on mutual respect andunderstanding and the fact that
they might understand what itis as soon as in terms of
(25:40):
science and we can have anintelligent conversation about
the actual fund and maybe helpgive other suggestions, bring in
some new ideas.
If we can build thatpartnership, it's then much
easier to build the thirdpartnership, which is the
supplier, and then ideally youwould have your business
(26:03):
stakeholder and your personalsupplier working absolutely
together as a threesome.
It's not a different two-wayrelationship.
You really want to have itthere as a threesome because,
again, that's what helps buildthe familiarity.
It builds the build thefamiliarity, it builds the trust
and it builds the willingnessto go a little bit further or to
offer a little bit more, eitherwhen there's an opportunity or,
(26:26):
you know, when there's aparticular issue or stress
Ben Comer (26:30):
right, let's uh, let's talk about early stage
biopharma companies.
You know, as a company grows,naturally it needs to acquire
different and new resources,different kinds of services.
The platform technology is inthe very earliest, you know,
(26:59):
preclinical stages ofdevelopment.
But now is having to hire, youknow, in preparation for
clinical trials, is having toadd, you know, perhaps office
space is having to, you know,purchase a lot of things.
That perhaps is a first timekind of purchase for that
company, you know where.
What are some of those issuesyou know that you've encountered
(27:19):
, you know in your career or anykind of you know examples that
you can give where companies youknow should be careful about
how they are managing thatprocurement process.
Tom Wells (27:30):
Absolutely.
I mean, I think there are twobig inflection points in a
biopharmacologist's growth.
The first really is moving frompre-clinical to clinical and
then the second, further on downthe line, is moving from
clinical into commercial stage.
When you look at that jump frompre-clinical to clinical and
that's a broad term, like yousay you suddenly need to start
(27:52):
acquiring a whole load of newresources and services which may
be scientific so CROs, labspace, reagents, maybe data or
whatever but also non-scientific.
So suddenly you start needingemployees.
So you need office space, youmight need cars, you need
employee life assurance policies, you need primary market
research, you need law firms,you need marketing agencies, you
(28:15):
need a coffee machine, you needsomeone who's going to come and
change for flowers on thechef's desk once every.
You suddenly start needing allof these different things which,
um, first of all, you know alot of the complex um, most of
them tend to be expensive andalmost all of them because this
is flaminant um are very muchburdened by compliance and by
(28:35):
regulation, right, but theleadership team, like, say, the
sort of scientific drivers ofthe business, seldom have very
much expertise in planningspending in those areas.
But very few positions at thatstage of growth, have a
procurement team or aprocurement person who's got the
(28:56):
depth and breadth of skills andexperience by them.
So to negotiate for or to findsomeone who can change the plow
on section, that's going to takea couple of weeks, not so
difficult.
But to negotiate with the CRO,there you need not just tactical
expertise and negotiating withCrosic, but we need someone who
can take a step back and takethe strategic view of what we're
(29:17):
trying to do and how will wework with this plan over the
next two, three, four, whatevernumber it is.
And so, because the early stageorganizations seldom have that
experience or expertise, it isvery easy to start off by making
mistakes, to build inindisciplined spending habits or
(29:39):
to waste or maybe tie up fundsthat should actually be
supporting the clinical agenda.
And it's also easy to missopportunities for innovative
approaches or for suppliers whocan bring that X factor because
the overstressed e-shit teamthey reach for providers.
They know Lots of peoplethey've worked with in the past
(30:01):
because they feel they can trustthem.
That's not necessarily a badthing, but it can be limiting.
I was talking to a sort ofmid-trade, post-stage some weeks
back at an edit at a conferencewith a Swissman and they said,
oh no, we don't at a conferencewith Karlsruhe and Swissman, and
they said, oh no, we don't havea problem with Sheldon because
(30:21):
we've all done this before andwe know who we want to work with
.
I say, yes, but what about allthe ones which you don't know?
What could you be missing?
And again, in theseincreasingly lucid times and the
LTs don't have the bandwidtheither to be managing currency
(30:42):
fluctuations or worrying abouttheir fragile supply chain, or
dealing with flaky suppliers orchasing unpaid invoices, those
are all disciplines which theyneed to be concentrating on
building the business anddriving the science, not all
those sort of factors.
They need to be concentratingon building the business of
driving the science, not allthose sort of factors.
(31:03):
And so they are really at theirmost exposed.
Ben Comer (31:05):
You're absolutely right, people wear a lot of hats
.
You know, in early stagebiotech.
I could understand that.
You know a procurementspecialist may not be on staff,
especially in the early days.
Is it your recommendation,though, that a company that is,
say you know, moving intoclinical trials, scaling up
manufacturing, making a lot ofpurchases even if they're not
(31:29):
willing to pay, you know, afull-time salary to a
procurement person?
Should they consider, you know,a fractional kind of employee
relationship, or even you know,a part-time consultant, or is it
something you know that acompany can work through or
figure out itself?
I mean, I guess my question ishow do you go from this place of
(31:50):
not knowing what you don't knowto being successful, like you
know, as a procurement managerat a small company that's
rightly prioritizing theirscience?
You know, in data?
Tom Wells (32:03):
Well, I mean obviously as a procurement
consultancy.
I'm going to say they shoulddefinitely do a procurement
consultancy.
Yeah, that's not the onlyanswer.
I think there's a couple ofthings which every fund should
do when starting out, and thefirst is put in place some just
simple but effective procurementtools.
There are many, many differentprocurement digital solutions
(32:28):
out there.
They do tend to come and gopretty quickly.
It's not always easy to choosethe most appropriate one, but
it's not necessarily it.
Ben Comer (32:38):
Yeah, what's your favorite tool?
Tom Wells (32:41):
Oh, very good question.
I'm pretty much agnosticoverall because different tools
are right for differentbusinesses.
I guess the one which I havemost experience of is Zip, which
is a great procuringorchestration tool with a very
fast-growing company.
There are many others, I wouldsay, for full disclosure.
But what you want is somethingwhich is no more complicated
(33:04):
than you need it to be, and sosomething that just means that
when you're onboarding asupplier, when you're processing
invoices and payments, whenyou're looking at contracts and
so on, you just want everythingto be as simple as possible, to
be in bond plates and to beorganized, because you do not
want that Friday meeting at fiveo'clock.
(33:24):
Something has gone wrong andnow we've got to source it.
So just basic systems whichdon't have to be expensive,
don't have to be complicated andwhich can be scales to match
the size of your business, togrow.
I'd say that's an absolutefundamental.
So anyone like Zip or any ofthe other companies, they will
(33:45):
help you with a detectionpackage so you don't have to do
that work yourself.
That, I think, will save you inso many other ways.
I mean.
The other thing is just I meanthere are many areas where you
could simply do need aspecialist person.
Again, office space you couldprobably negotiate that, but
(34:06):
it's easy to tie yourself in forvery long leases without quite
understanding the small breakwalk, and it's easy to leasing
company vehicles for longer orfor more money.
So you just need to takecareful steps and always try to
get someone to you know.
(34:26):
If it's no, you're wellfamiliar with, find someone
who's going to check it for youand, yes, that could be
consulted.
It could be a part-time or not,but that could be helping.
At a more tactical level, whereI think the biggest area of
expense and complexity forearly-stage biotechs is the CRO
(34:46):
relationship, and we all knowhow complex, how sensitive, how
happy those relationships can be, and that's where it is
critical to understand what am Iactually procuring within this?
So, as the sponsor, someone inthe LTM growing biotech I'd say,
(35:11):
well, I've actually sufferedseveral clinical trials.
Yeah, I know what I'm doing, Iknow how the biotech protocol, I
know how to, yeah, and we knowwhat sort of sites we're looking
for, what sort of patientswe're looking for and all of
those things.
And they will then go and talkto a CRO.
There are many different typesof CRO relationships.
They all have their differentroles and talents and so on.
(35:31):
So as a sponsor, you've got tofind the right CRO and then come
to the right sort of agreementwith them.
But I just think it's essentialthat you have someone with a
strategic procurement backgroundbehind.
(35:51):
That might drive cost and valuefor both partners in this, and
it needs to be someone who isnot afraid to probe and to
chariot both their owncolleagues and the supplier
until everyone fully understandseverybody else's priorities and
needs and perspectives.
(36:12):
And that means you need a lotof what-ifs in there as well.
What if we don't manage to hitthe recruitment targets?
What if we have to maybe changethe protocol for some reason to
the thing?
What additional cost is thatgoing to add?
I think without a seasoned andexperienced procurement person
(36:34):
to look at it through thatdispassionate lens and more
scientific and non-physicist,what do you need to really
appreciate?
Without that, it is very easyto focus too much on price, not
off on value, and to get lockedinto long-term agreements that
consume money without actuallyactivating value.
(36:57):
And ultimately I'd say I meanmy parents were sheep farmers,
sheep cattle farmers.
One of my father's phrases wasstrong fences meet good
neighbors.
So you really need to make surethat everything is clarified,
even if people go.
It's all right, I know this,I've done it before.
(37:25):
Okay, let's write it downanyway, because without that
it's it's too easy to to notlate in stakes but maybe not
quite consider everything in thedetail which it needs to be
considered in.
And you're talking aboutmulti-year relationships, um,
with with many, many millions ofdollars behind them.
You've got to get it right, andthat does need a degree of
expertise and experience.
Ben Comer (37:44):
You mentioned earlier in our conversation the
potential for locking in poorprocurement practices at an
early stage biotech company andI wonder you know clearly you is
such a critical piece ofoperations.
But what kind of impact canthat have, I guess, from an
(38:13):
investor's point of view, youknow?
Is that, do you risk, you know,compounding failure, you know
on failure, by making some poorprocurement decisions early on
when it comes to futurefundraising?
Tom Wells (38:29):
Yeah, totally.
That can definitely happen,assuming you've got some funding
.
It could be.
I won't embrace it.
Your current funders want tosee evidence that their funds
are being used professionallyand efficiently to drive the
science and build a soundbusiness, and they don't want to
(38:50):
see the funds being spent onwhich is unnecessary or a little
bit for true.
And in the same way, futureinvestors want to see the
company's been an effectivesteward of its previous funding
and that it's likely to do sowith future funding.
Because I think, particularly inan environment where X has got
(39:10):
more discourse and interestrates are well higher, lower,
just more vonis high.
And then operation efficiency.
If you go back a few years tomore stable times, then
investors would say, well, if Iinvest now, I'll sell out in
five years' time I will.
It's the science right,everything with profit and value
(39:31):
.
That's no longer the case.
So I think investors more andmore are looking at the
operational efficiency of theirinvestees because that can have
a big impact on futurevaluations, particularly in this
very volatile world valuations,particularly in this very
volatile world.
Some of the bigger privateequity funds have something
(39:53):
quite large in value creationteams which is there to help
their investors improveoperation effectiveness.
They build their supply chains,maybe down their work on
procurement, but they have thoseteams to help their investors
because they see it as being animportant contributor to grow to
(40:15):
higher future valuations.
That sort of value creationteam approach is unfortunately
much less commonly available,actually at the early stages of
drugs.
But I think every companyreally needs to think how am I
spending this much dollar?
Because could this be, orshould this be gained through my
clinical trials?
(40:36):
Or shouldn't this be gained bymyself at BMW or Silver Fox?
Right, right.
Ben Comer (40:45):
I wanted to ask too about sourcing.
If you're looking for Actiniumfor a radiopharmaceutical, you
know you're fairly limited, asyou said you know to a couple of
providers.
They're expanding right now butthere are a number of different
.
You know sources that differentkinds of biotech companies need
(41:05):
and I wonder you know what youmight say about the kind of
cutting edge of procurement asit relates to sourcing.
Are there different models,different innovative approaches
to sourcing that you'veexperienced in your career or
that you see emerging at thispoint?
Tom Wells (41:26):
see emerging at this point.
Yeah, I mean, I think there aretwo really interesting areas
there.
One is what I'd call innovativeinnovation and the other,
actually, which is always worththinking about, is supplier
diversity.
So if we look at the firstpoint, how do you look for
innovation?
If you always choose suppliersby going through the traditional
RFI, rfp approach to thetraditional suppliers, don't be
(41:51):
surprised if you only get thetraditional answers.
But there are a whole range oftechniques which you can use to
go far beyond the traditionalsupply base and solutions that
can bring you.
So, instead of an RFI requestfor information, rfp request for
proposal, what are they getting?
An RFO, which is a request foroutcome.
(42:11):
I guess a way that you can thinkof it is sometimes you know
exactly what your solution isgoing to look like.
You know really what it lookslike.
Sometimes you don't know whatthe solution is going to look
like and you don't necessarilycare what it looks like either.
Equally, sometimes you knowexactly where your solution is
going to come from and sometimesyou don't know or care where
(42:33):
it's going to come from.
So if you know exactly whatyou're looking for and you know
pretty much what sort of companyit's going to come from, then
just go to RFP.
I like to be able to say thisis what I want.
Please give me your best priceand your leverage helps.
If I know pretty much whereit's going to, what I'm looking
for, I don't know every motor tocome from, okay, rfi.
(42:55):
So I go out to a wider group ofcompanies and I say this is
what I'm looking for.
How much can you out in thisarea?
Send me your outline, yourcapabilities.
Now we're going to decide whichone to go for.
If I know where, what sort ofsupplier I'm going to be looking
at, which part of the supplybase and idea might come from,
(43:17):
what solution might come from,but if I'm open to what that
solution actually looks like,then let's go for an RFO.
Explain your circumstances tothe future supplier to say, help
me solve this problem, but I'mnot giving you any specific
direction on what that solutionmight look like.
Right, so you'll start gettingbroader ideas, but from the same
(43:40):
group of suppliers.
But sometimes you say I'mtrying to solve the problem, I
don't know what my solution is,I don't know where it's going to
come from, and so the sort ofapproach you can take is OECD
limitations.
I'll give you an example.
I'll say this this is from alarge US pharma company.
I won't name the name, but Iwas talking to one of the brand
(44:05):
teams and it's the classicconversation but what keeps you
awake, what business problem doyou really love to solve?
And they said we have amildness neurosis drug.
One of the things we would loveto be able to do is to assess
cognitive performance moreeffectively, because cognitive
performance can actually be anearlier, better indicator of
(44:26):
progression, or what would havebeen that of the disease, than
the usual tests of physicalperformance.
But the problem is there havebeen no advances in the way that
we measure cognitiveperformance for 20, 30, maybe 40
years and the current teststhat were passed so patients can
actually learn how to do it, sowe get artificially high score.
(44:49):
They take 14 words to be done,you have to do a more clinical
set of words, so on.
So you know they're not great.
And so the brand begins to saywouldn't it be great if there
was a way of assessing cognitiveperformance which could be done
by the patient themselves ormaybe by their carer Every day
(45:10):
at home?
Take very little time to do itin a format which cannot be
learned so they can't get betterat the tests by repeating them,
and which would produce datawhich is reasonably clinically
robust and can be shared withtheir HOP or with their
specialists.
And of course, there is no suchsolution.
(45:30):
So we said, okay, let's seewhat we can do.
We put that, we wrote up thatproblem statement, put it on an
open innovation platform or wasit in the center of the world?
And we put that challenge outthere to five or 600,000 people
around the world who hadpre-registered as solvers on the
(45:52):
open innovation platform andwithin three months we had about
135 responses, of which 120plus were completely useless and
within varying degrees.
Many of them were quite bad,but there were a handful which
you looked at.
But actually that's apotentially useful idea and we
(46:13):
eventually drilled it down tothree.
So it's three submissions, allof which were workable.
One of the winning one and we'renot buying that $10,000, buying
teams the winning one, as Iremember, came from a
25-year-old grad student workingin a real estate firm in the US
.
Another came from a retiredmural consultant in Canada and
(46:36):
the third one was an 18-year-oldSpanish student based in London
.
Each of these three solutionswas completely workable.
In fact, they've been developedfurther since, but they all
came from people who were so faroutside any traditional supply
base that you couldn't imaginebeing further.
(47:00):
Quite a structured butdeliberately wide-ranging
approach.
We were able to put a problemor an issue that had not been
solved or developed in decadesand come up with radical,
workable solutions within threemonths.
That's just one example of how,if you plan it carefully, then
(47:29):
you really can come up withgenuinely distinctive and
purposeful innovative solutions.
Ben Comer (47:38):
That's a great example.
I had one follow-up I wanted toask you on requests for outcome
.
Is that a kind of tool thatyou're seeing more companies?
I mean, is it a novelty at thispoint to send out a request for
outcome, or are more companiesactually doing that at this
point?
Tom Wells (47:58):
So I guess it's more common in some areas than other
In, I guess, in areas likeclinical trials, for example,
it's not that common.
I'm sure there are ways that itcould be used, but if you look
at something like marketing,then when you talk to your
agency and say that I want toincrease sales by 10% or I want
(48:21):
to increase my market share bywhatever and I'm not really sure
what sort of program orcampaign I'm looking at Go away
and brainstorm something andcome back to it.
That effectively is an RFO.
I could say I want a 30-secondTV ad which is going to cover
the following information andwill be broadcast on these
(48:43):
channels at this time.
That's pretty specific If I saythat my target audience are 35
to 45-year-old men who driveblue cars, wear yellow shirts
and make historically smoke tonsof red.
Today, I want to get them tochange their.
I want to sell more of thatproduct.
(49:06):
These are my buyers and I wantto.
The message I want to sell moreof that product.
These are my buyers and I wantto.
The message I want to give themis so what is the message which
I need to give them in order tomake that change in behavior?
How can I get that message tothem?
I don't know.
You're the kind of marketingagency you tell me.
Matter of fact, that isn't anRFO.
(49:27):
The skill is, then is an RFO.
The skill is then taking thatRFO idea and then applying it in
other areas of what you do.
It's never going to work foreverything and you need to know
that you're working withsuppliers who you to some extent
already know trust.
Another approach is more sortof co-development goal or
(49:54):
collaboration.
But again, if I've got asupplier who I know well and I
trust them and have an existingrelationship with them and I
might work with them on aparticular product or service, I
say let's build this togetherand if it's successful, you will
obviously get paid for for, forinfinitely delivering it and
obviously and I'll get therevenue whatever it is Then
(50:15):
let's actually trust each otherand work together to create
something new.
So it's an extension of the RFOIn.
It's not always going to besuitable, it won't be suitable
for every supplier, but it can.
When the partnership is there,when the trust is there, it can
really pay dividends.
Ben Comer (50:34):
How far can you go, I wonder, in that direction.
And when you were just talking,it reminded me of value-based
contracts, which some companieshave started to work that
essentially pay for outcomes.
Companies have started to workthat essentially pay for
outcomes.
Like you know, the healthinsurer will pay, you know, a
certain amount if the drug takesthe patient to the desired
(50:55):
outcome and will get rebated ifthe drug does not take the
patients out.
And I wonder to what extent thatis happening, if at all, in
kind of other aspects of pharmaoperations.
For example, you know going toa CRO and saying you know our
outcome, our expected outcome is, you know, full recruitment by
(51:17):
this date, this number ofpatients, and we're going to pay
you this amount of money.
But if you don't reach that,you know, if we have to delay
the trial start or you haveproblems with recruitment, you
know then we get down to thisnext payment.
Similarly, with marketingservices.
I don't know what the metricswould be, but it could be.
You know a certain number ofdoctors are prescribing within a
(51:38):
certain amount, whatever it is.
Have you seen any of that?
Has it gone to kind of thatextent in procurement in terms
of the supplier having some skinin the game?
Tom Wells (51:51):
Yeah, sure, and it's more common in some areas than
others and it's known as PaymentShare, game Share or Bonus as
Malice.
Okay, the problems are.
This is where I think it's aticker problem in life sciences,
biotech.
That's because there are somany potential variables.
(52:11):
So if you can link the outcomedirectly to the supplier's
performance, then great, theyperformed super well, they get
bonus.
They fail to perform, then theyget some kind of clawback.
But there are so many potentialfactors that could have an
(52:31):
impact.
So the supplier could performwonderfully, but the drug sales
aren't what you want.
Because a competitor came out,because there was a new piece of
data from another company.
It could mean that there was asupply chain problem which meant
that there wasn't enoughproduct available.
It could be that the salesforce didn't get adequate reach,
(52:53):
and there are any.
One of many, many differentfactors could either genuinely
or just by claim, enable thesupplier to say well, I took my
part, and the reason that theperformance wasn't what was
expected, it wasn't my fault, itwas due to whatever other
factors.
So where you can genuinely cutout all these other factors and
(53:17):
say there is a causativerelationship between input and
the faults yeah sure, that's apiece of cake.
It's perfectly workable and youcan see it.
If there are other factorswhich are just uncontrollable or
unpredictable variables, it'sgoing to be.
It will be more difficult and Ithink that you see, above that,
(53:41):
drug pricing, we can now lookat some examples of drug pricing
.
We get that take your drug, weget better.
We're more prices, we getbetter, all away.
Or even say prescribe the drug.
If you reimburse the drug andthe patient gets better, pay me
at the end.
Or pay me not six months if thepatient is still alive or
whatever it might be.
It was the patient's kidneyfunction continues to do this.
(54:07):
You pay me the interest changes.
You stop paying it, whateverthe rate might be.
If you can really pin downabsolutely clear links, of
course, in fact great, but it isjust so difficult to do that.
Ben Comer (54:20):
Yeah, yeah, and I think that's why there was
initially a lot of excitementabout these value-based
contracts, risk-based contracts,and they didn't become as
popular as, I think, you know,people initially expected
because of that complexity.
You know, comorbidities,lifestyle, all sorts of inputs
(54:40):
into the outcome that a drug candeliver that may not be able to
be easily accounted for, youknow, in a contract.
Tom Wells (54:49):
Yeah.
I do believe that, as I meandata is always going to get
bigger, but as our ability toprocess and, first of all, to
accumulate and analyze data andthen disaggregate it, that is
growing and growing every day,and I do think that we will get
to the point when it does becomeincreasingly possible to link
(55:11):
cause and effects, despite themany variables in the background
.
Ben Comer (55:17):
Great.
Well, we are running short ontime here, tom, but I want to
give you just a chance before wewrap up if there's any last
kind of final thoughts that youhave on this topic that maybe
you think are important that wehaven't discussed.
You know, perhaps any adviceyou might have to biotech
builders you know, working in aWTF world at the moment where
(55:41):
there's a lot of uncertainty,just you know, in terms of
global economic policy, in termsof global economic policy,
various conflicts around theworld what are your final
thoughts in terms of whatearly-stage and mid-stage
biotech companies can do to kindof stay on the right foot with
(56:02):
procurement or even use it totheir advantage?
Tom Wells (56:06):
There are some letters I would highlight and
they're not VUCA and they're notWTF.
What I would always try andhighlight is that in the middle
of the word procurement are thefour letters C-U-R-E, and I
always do highlight them.
I have them on my emailsignature, picked out in a
(56:27):
different font color.
So, because I think the message, both for procurement people
but also for early stagebiotechs is remember that if you
enable and encourage yourprocurement team or procurement
partner to be the best they canand to do the job that they can
do when the source andprocurement functions is
(56:50):
operating at its best, we reallycan have as direct an impact on
the patient as any other partof the function.
And so I believe that the cureor cure is, or should all this
be, a part of what procurementdoes.
So engage us, ernie, engage usdeeply, trust us, let us be part
(57:11):
of your business, trust that wedo have.
Hopefully, we have thescientific understanding and the
business savvy to be able tocontribute as your strategic
partner as well as yourcommercial backbones.
Involve us in that way and wewill genuinely help you deliver
a level of lasting value.
Commercial backbodies.
Involve us in that way and wewill genuinely help you deliver
a level of lasting value whichyou won't be able to find from
(57:33):
any other way.
Ben Comer (57:35):
Excellent, Tom.
Thank you so much for beinghere today.
It was an education for me andI expect it will be for many of
our listeners.
I really appreciate it.
Yes, peter, thanks Pete.
We've been speaking with TomWells, director of Life Sciences
at 4C Associates.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
(57:55):
Find us and subscribe anywhereyou listen to podcasts, and be
sure to check out new weeklyvideocasts of these
conversations every Monday underthe Business of Biotech tab at
Life Science Leader.
We'll see you next week andthanks for listening.
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(00:44):
Welcome back to the Business ofBiotech.
I'm your host, Ben Comer, chiefeditor at Life Science Leader,
and today I'm thrilled to speakwith Tom Wells, director of Life
Sciences at 4C Associates,about procurement practices, an
issue that can stymie promisingbiotech companies during
critical growth and developmentstages if not done correctly.
(01:06):
Tom has worked in a variety ofprocurement roles at companies
including Novartis, Takeda and,most recently, BMS, before
joining 4C Associates, aLondon-based commercial supply
chain and operations consultancy.
Tom is passionate aboutprocurement and the ways it can
impact a growing biotechbusiness and I'm looking forward
(01:28):
to learning more, along withour Business of Biotech
listeners, about how procurementcan make or break biotech.
Tom, thank you so much forbeing here.
Pleasure to be here.
I mentioned in the introductionthat you are passionate about
procurement, an issue that canbe overlooked or under-managed
(01:48):
by growing companies, despiteits importance.
Why did you decide to spend thebulk of your career on
procurement issues and how didyou get started in it initially?
Tom Wells (02:00):
Well, I actually started from university.
I read bottom year atuniversity or plant science and
then went into marketing, firstof all for a wine and spirit
retail company in the UK, thenmoved back in-house with
electrolux, the white goodscompany, first of all as head of
(02:29):
corporate comms for westerneurope and then as head of brand
pr worldwide, and it was inthat job that I really came
across procurement for the firsttime and up to that point my
view probably would have beenthat procurement for those
annoying people who upsetagencies, get contracts wrong,
bungle payments and generallyget in the way and slow things
(02:50):
down.
But I was asked to help work onan internal campaign to
reposition procurement in theeyes of the business and help
people understand whatprocurement is and what it
actually does.
Ben Comer (03:02):
And which company was ?
I'm sorry, tell me whichcompany was that.
Tom Wells (03:05):
This was Electrolux, based in Sweden, and the program
was all about repositioningprocurement in the eyes of the
business, in the eyes ofsuppliers, trying to help people
understand that procurement isactually it's not the back end
of supply chain, but it's reallythe front end of demand flow.
It's the part of the businesswhich can bring in new ideas,
(03:26):
new suppliers, new ways ofworking and so on.
But it did also made me thinkwhen I was working on that
project why is it that marketingpeople such as me at the time,
and procurement people justweren't speaking, weren't really
working together?
And why were there so many ofthe the cliches that marketing
people thought of procurement asbeing a difficult process by
(03:47):
getting in the way, slowingthings down, whereas procurement
people probably thought ofmarketing people as being
spending three after threeschools and people who couldn't
be trusted with money, and thiswould go back a few years.
Um, and the whole process isintriguing and eventually I
decided it wouldn't it be greatif procurement people and
marketing people could work moreeffectively together?
(04:08):
And I eventually leftElectrolux to set up my own
marketing procurementconsultancy and it wasn't so
much working on sort ofcontracting and negotiations and
pricing and so on, but it wasmuch more helping the client
side of the relationshipunderstand how agencies work and
the best ways of working withthe suppliers they're working
(04:30):
with.
My view was then, and alwayshas been, that you make it a
little bit of extra value in theshort term if you try to
negotiate with your agencies orsuppliers financially in in on
financially.
But if you understand how theywork, how they make profit, what
(04:50):
engages and motivates theirpeople on what it takes to help
them develop their business as aresult of the good work they've
done for you, then you'll findthat that that agency will give
you infinitely greater valuethan we could possibly get by
trying to to the price.
So I spent a few years runningthat consultancy business.
I worked with Coca-Cola andPepsi in various different areas
(05:11):
, with McDonald's Europe, withGeneral Motors Europe, but bit
by bit I found myself workingmore and more with pharma
companies, and I guess that'sbecause, after the financial
crash in 2007, 2008, governments, particularly European
governments, had obviously put ahuge amount of money into
supporting their currencies andtheir markets.
(05:31):
They were looking to cut costselsewhere and so started putting
more pressure on pharmaceuticalcompanies always an easy target
for government which need money, especially the big nasty drugs
companies.
In the five years to 2008, theaverage price of pharmaceuticals
in Europe went up every year.
In the five years after 2008,it went down as a year.
(05:54):
So pharma companies,particularly in the marketing
area, needed to become much moredisciplined, much more savvy
about what they were spendingand how they were spending it.
And so I found myself workingmore and more for pharma
companies.
And then one day I had anapproach from Novartis in
Switzerland to go and work inthis global category for market
(06:16):
research and then for marketing.
So I moved to family toSwitzerland, spent about five
years with Novartis working inmarketing and marketing research
, and then moved from Novartisto Takeda as the global
procurement lead for travel,retail and events, and from
there to Bristol Myers Squibb,where I moved from having sort
(06:36):
of vertical global roles tohorizontal regional roles
covering pretty much everythingthat the company spent money on,
and then up until the end of2024, I was reaching the Canada,
(06:59):
latin America, turkey, israel,india and most of APAC, and from
there to 4C Associates andbeginning of March of this year.
Ben Comer (07:04):
I want to get your kind of broad definition of what
procurement is and what itmeans to you and maybe, as a way
to start that conversation,could you describe kind of that
transition from marketingservices into pharma and what
you know.
The procurement job entailedWere there and what you know the
(07:25):
procurement job entailed Werethere.
You know complete, I guess,analogous types of jobs that you
were doing with pharma versuswith a consumer packaged goods
company.
Were the issues similar or wasthere a kind of stark difference
in the kinds of procurementjobs that you were doing for
pharma versus your, your priorwork in consumer package goods?
Tom Wells (07:47):
yeah, it's a good question.
I mean, I think that when it'sbeing done probably when it when
it's being done well, um, Ithink that the the basics of
procurement are the same acrossevery industry.
Um, so again, procurement it'snot the back supply chain, but
it's very much the front-end ofdemand flow, it's the door to
(08:09):
the rest of the world, it's thefunction which can bring in new
ideas, and so on.
I think whichever industryyou're in, it starts with having
the knowledge and the insightto partner with the business.
In the case of life sciencesand this is different from
consumer goods or anything elseelse I think the key in the
pharma industry is to be able tounderstand the scientific and
(08:31):
the business objectives andstrategy and the priorities, and
that, I think, is it is thecore difference.
Um, the life sciences, um,across the piece not just pharma
, but the agri-pathic, likesciences does need a really good
understanding of how thebusiness works and how the
science works, because otherwiseit's difficult to know what
(08:54):
actually constitutes value foryour business.
So in my case, I've been inprocurement for quite some time.
When I was working at BMS, Irealized that maybe my
commercial understanding and mycross-functional understanding
wasn't everything that I wouldwant it to be.
First of all, squibb has awonderful system called a tool
(09:16):
of duty, which is spend threemonths or six months in a
completely difficult businessfunction, learning how things
work and just building your realperspective.
So I actually spent six monthsworking at a commercial in BMS
on a project to look atre-commercializing a drug which
had a problem that had passed,and I was able to work across
(09:38):
regulatory, vap, forecasting,finance, production and many,
many different functions.
That gave me a lot moreunderstanding of the business
and science, because I had toread myself into the Journal of
Transplantology, the BritishJournal of Nephrology and many
other publications in order tobe able to understand everything
(10:00):
else that's happening with thisparticular drug.
So yeah, in any industry it'sabout having the knowledge and
the insight to be a crediblebusiness partner and to
understand what the scientist istrying to do, what the business
is trying to do, what itsstrategy is and what its
priorities are.
And from that I think you canstart to identify the resources
(10:22):
and the services that thebusiness needs in order to
deliver that strategy andachieve those objectives.
And from there you can go outto the Borg external market to
look at all the best possibleproviders, humph for purposeful
innovation, innovation whichactually delivers for a business
.
Then obviously negotiate andcontract and onboard new
(10:44):
supplier, get together and maybemanage the risk and the
client's issues, but to do allof that in a way which means you
can build a mutually productiverelationship and lower TURK
value, and then obviously workwith the stakeholders and the
suppliers to maintain and toleverage those relationships for
(11:04):
the long term.
So most of those things areexactly the same for any
industry.
The part I think is key forlife sciences is that is, the
ability to understand thescience and the business of the
science, because that reallydoes dictate everything else we
should try and do.
Ben Comer (11:22):
When you say the back end procurement should not be
at the back end of the supplychain, Are you talking about the
kind of tactical, transactionalrole of procurement in you know
, negotiating contracts,managing, you know, technical
issues and compliance versus thefront end of demand flow, which
(11:44):
I think I'm hearing you say ismore relational, more holistic,
gives you a sense of the toppriorities of the business and
how to kind of meet thoserequirements through procurement
.
Is that correct?
What would you add to that?
Tom Wells (12:01):
So I think you need to have all of the end-to-end
steps and everything actually atthe back end.
Then the procurement processesof how do we write a contract,
how do we negotiate, how do wepay people, how do we manage
invoices, how do we manage cashflow.
All those things are fundamentalelements of procurements, but
(12:22):
they're far from value-less.
They are critical but theydon't necessarily add value.
I think for the procurementfunction to add value, you need
to put the answers very much atthe front end as well and to be
able to take that proactive rolein understanding not just what
is it that someone wants me tobuy, but what is it that the
(12:44):
business or this person, thisfunction, actually needs in
order to be able to operate andoperate better and add more
value for the business and,ultimately, more value for the
patient.
So I think you need thebackbone of procurement process
and discipline and rigor andmaking sure that everything is
done correctly, because there'sa lot of compliance, a lot of
(13:04):
compliance and recognition ofredeeming other people's money.
But you need to add to that thescientific and business
partnering to be able to drivereal value all the way through
the chain.
Ben Comer (13:18):
Right, right, and you know as you say.
You know money is kind of atthe root of procurement.
You're spending money forservices.
What are some of the ways thatearly stage biotechs can use
procurement as a strategic toolto create value?
And then you know we'll talkabout.
(13:39):
On the flip side of that.
You know where companies gowrong with procurement.
Tom Wells (13:43):
You know to bad ends of that where companies go wrong
with procurement to bad ends.
Yeah Well, I think if you lookat what actually is value for
early-stage biotech, it goes farbeyond cost and obviously the
money is important, but it's bybalancing price and the cost of
operation.
If you look at the money, thereare really four things which
you can do.
You can pay less, or you canpay smarter, or you can spend
(14:06):
less or you can spend smarter.
And in terms of procurement,managing how much do you spend
and what's to be spent on, youneed to balance each of those
four things.
If you focus solely on how muchdo we pay and how can we pay
less, you might get to asituation where you've managed
to persuade, bully, negotiate,whatever a supplier to doing
(14:29):
something for less.
But are they going to be aresilient supplier?
Are they going to really wantto do business with you?
Do you run the risk of pushingthe price you pay so low that
you begin to damage or to erodethe goodwill of that supplier
workload for you?
So, managing the money side,you've got to do it elastically
and think pay less, pay smarter,spend less, spend smarter,
(14:52):
balance those and you will getto a better financial outcome.
But where I think a problemwith functional dual team can
help is they can help anticipateand mitigate the risk in the
supply chain and they can bringmore operational efficiency.
They can help you get to themarket more quickly.
(15:13):
I think, in particular, theycan help you find innovative
solutions and the different waysof doing things Not just
different supplies, butcompletely different ways of
meeting opportunity and solvingproblems and I think you can
also help the business become acustomer who the most critical
suppliers most want to dobusiness with.
(15:34):
And I think in our you knowthis increasing VUCA world that
we're in, I do think that'sbecoming more and more important
.
The way I would look at it isthat as the world gets more I'll
(15:56):
take that for that the natureof new pharma products is
changing and we see there's abig shift towards smaller
systems, areas and morespecialist therapies, and that
means that the whole R&D processis getting much more complex
and much more expensive and thatin turn means that supply
chains are getting much morecomplicated and much more
(16:19):
expensive, including much morecomplicated both upstream and
downstream.
So if downstream, if a patienthas a wearable, they can
actually become part of oursupply chain because they can be
providing a Dixit which goes totheir HCP.
Their HCP might then pass itback to a Dixit, a Glomerator,
or to a pharma company, whatever, so the patient can actually
(16:42):
become part of the entire supplychain.
But what we see as a result ofall of that is that the industry
is becoming ever more relianton smaller and more specialist
suppliers, and so the resilienceof your supply chain,
particularly as a merchant,biotech, becomes ever more
critical.
Because the question is can yourely on your supplier still
(17:05):
being there in a year's timethan ever?
And as you're starting out downthe road using someone else's
money, you need to be able topick suppliers you're going to
last support and who are goingto want to continue working with
you.
So the power then starts toshift towards the supplier, and
(17:26):
you, as a customer, might beginto spend more on the supplier
than they depend on you.
That means that you need to bethe customer who they most want
to do business with.
You need to position yourselvesas the customer of choice.
Right, yeah, because you could.
I think you see some.
The customer of choice Right,yeah, because you could.
(17:47):
I think you see some greatexamples of this.
I think the whole area ofradiology is a great example
where there are many, manytherapies coming through which
have gravity into all theactinium isotopes as being.
It will be the ideal, I'd say,for many of these therapies.
Right, but there is still noreliable supply chain for the
(18:09):
key aesthetics of our tenure.
It is available, but many, manycompanies are fighting to get
their share of it.
If you're a customer who hashabitually tried to force your
supplier to take a lower price,or we keep changing your mind,
or messing up their workflow andtheir cash flow, or if you talk
(18:29):
about orders but then don'tplace them, whatever field it is
, if you're that kind ofcustomer, when your supplier is
under the same kind of economic,social, technological, whatever
stress that you are, yoursupplier will become more wary.
They want to concentrate onprotecting their workflow, their
(18:50):
cash flow, their profitability.
They will favor the customerswho they trust most and the
question moves away from it.
It it used to be who do I trustas a supplier.
Now I think it's become whotrusts me, and this is where
procurement can play a key role,for emerging projects is
(19:13):
because I think that companiesthat are better able to explore
new suppliers but then engagemore effectively with them and
enable those suppliers to buildtheir business.
As a result, are going to get acompetitive advantage because
they're going to be the ones,the customer with whom those
suppliers will be most willingand most able to help when we
(19:35):
are in conditions of realoperational stress.
Ben Comer (19:39):
How do companies position themselves as that
customer of choice, you know, ona kind of you know, a very
specific level?
I mean, is it the individualsthat are, you know, negotiating
the service orders and how youknow raise their profile with
their suppliers or endearthemselves to suppliers so that
(20:09):
you know that they are kind of,you know, reaping the benefits
of that kind of relationship?
Tom Wells (20:17):
There are a lot of things and they all come down to
as good as human decency.
They come down to behavior.
It's all about treat people asyou want to be treated, and it's
remember that even every one ofyour suppliers, they're people
too.
They're trying to run their ownbusinesses, and if you
understand what pressures yoursupplier is under, whether it's
(20:41):
the pressures that you're under,and try to think about what
would I want to do, what's goingto help us build a business
relationship which actually goesbeyond mere bonds or beyond
money, but actually helps usfocus on not just on cost but on
service, on innovation tocreate and it comes not just on
(21:03):
cost but on service, oninnovation, on to create mature
menus, and it comes down,ultimately, to looking at people
as people, and I think reallythat's it.
There's in what I could callless sophisticated procurement
operations, you will very oftenfind that there's an absolute
focus on cost.
(21:24):
Yeah, we've got to meet, we'vegot to get the price down, I
want 10 off everything.
Well, in a, in a vuca world and, as I say sometimes, in a world
which has gone from vuca to wtf, because that's the the
volatility of the times that wenow live in, um, is it more
important to have the lowestpossible price or is it better
(21:44):
to have a degree of sort ofaffordable confidence when, okay
, I probably could push thesupply to a lower price?
But do I want to because if Ido I may get some small
short-term advantage?
Am I really giving myself alonger-term value?
So again, think of people aspeople and businesses are done
(22:14):
by people, and start from thatbasis, I think the basis of
everything successful,particularly in a world like the
Cuban is honesty, it'sintegrity and it's a its great
(22:39):
self-awareness.
Ben Comer (22:41):
Your description of this relationship between the
drug developer and suppliers itsounds like there really needs
to be a kind of give and takethere, a recognition of you know
to your point what the supplierneeds to succeed in addition to
what you know your own companyneeds to succeed, and it's
(23:02):
behavioral, it's peoplerelationships, is what you're
saying.
Is there anything else I guessthat you could say about, maybe,
what companies specificallyshould think about when they're
engaging a supplier?
Clearly they want to help thatsupplier accomplish its goals,
but how do you understand whatthose goals are?
(23:23):
How do you become that trustedpartner that is really aligned
with a dual set of objectives?
Tom Wells (23:33):
one of the great procurement acronyms is apusci,
which has security, assurance,quality, service, cost and
innovation.
So when you're starting to workwith a, when you're starting to
look for suppliers, you oughtto start with assurance, which
is, you know, I didn't want todo digits can I be sure that
this company exists?
(23:54):
Can I be sure about itsfinancial history?
Do any of its directors andofficers have criminal records
or all of those things?
So I say, right, first of all,I'm sure myself about the basic
operating credentials of thepotential supplier.
Then I might look at thequality.
Can they do what they say theywould?
How can I measure and managethe productivity?
(24:16):
What about output I'm lookingto buy, and so on.
Then I would look at theservice levels of what
constitutes good service to meand to my business.
What are the sensible minimum Ishould expect?
How quickly do I expect peopleto pull back if I have a problem
(24:38):
?
Those are basic hygiene factors.
Only then might I say, okay, ifI've looked at various
companies and I rigid them outso we can get assurance, ability
and service levels.
Then I might look at cost andso, okay, of the ones I wrote my
basic standards, which ones cangive me the best price or the
(24:58):
best value and then, as a finalleverage, it'll factor which
ones can give me something extrawhich maybe some of the other
ones can't.
So those are the basic thingswhich procurement should be
setting out to look for.
Procurement should be settingout to look for, but all of that
needs to be driven by a veryclear understanding of what is
(25:18):
it that my business actuallyneeds.
And that's where the partnershipstarts.
If you have a good, if theprocurement team and each
different business function,they have a good relationship,
it's based on mutual respect andunderstanding and the fact that
they might understand what itis as soon as in terms of
(25:40):
science and we can have anintelligent conversation about
the actual fund and maybe helpgive other suggestions, bring in
some new ideas.
If we can build thatpartnership, it's then much
easier to build the thirdpartnership, which is the
supplier, and then ideally youwould have your business
(26:03):
stakeholder and your personalsupplier working absolutely
together as a threesome.
It's not a different two-wayrelationship.
You really want to have itthere as a threesome because,
again, that's what helps buildthe familiarity.
It builds the build thefamiliarity, it builds the trust
and it builds the willingnessto go a little bit further or to
offer a little bit more, eitherwhen there's an opportunity or,
(26:26):
you know, when there's aparticular issue or stress
Ben Comer (26:30):
right, let's uh, let's talk about early stage
biopharma companies.
You know, as a company grows,naturally it needs to acquire
different and new resources,different kinds of services.
The platform technology is inthe very earliest, you know,
(26:59):
preclinical stages ofdevelopment.
But now is having to hire, youknow, in preparation for
clinical trials, is having toadd, you know, perhaps office
space is having to, you know,purchase a lot of things.
That perhaps is a first timekind of purchase for that
company, you know where.
What are some of those issuesyou know that you've encountered
(27:19):
, you know in your career or anykind of you know examples that
you can give where companies youknow should be careful about
how they are managing thatprocurement process.
Tom Wells (27:30):
Absolutely.
I mean, I think there are twobig inflection points in a
biopharmacologist's growth.
The first really is moving frompre-clinical to clinical and
then the second, further on downthe line, is moving from
clinical into commercial stage.
When you look at that jump frompre-clinical to clinical and
that's a broad term, like yousay you suddenly need to start
(27:52):
acquiring a whole load of newresources and services which may
be scientific so CROs, labspace, reagents, maybe data or
whatever but also non-scientific.
So suddenly you start needingemployees.
So you need office space, youmight need cars, you need
employee life assurance policies, you need primary market
research, you need law firms,you need marketing agencies, you
(28:15):
need a coffee machine, you needsomeone who's going to come and
change for flowers on thechef's desk once every.
You suddenly start needing allof these different things which,
um, first of all, you know alot of the complex um, most of
them tend to be expensive andalmost all of them because this
is flaminant um are very muchburdened by compliance and by
(28:35):
regulation, right, but theleadership team, like, say, the
sort of scientific drivers ofthe business, seldom have very
much expertise in planningspending in those areas.
But very few positions at thatstage of growth, have a
procurement team or aprocurement person who's got the
(28:56):
depth and breadth of skills andexperience by them.
So to negotiate for or to findsomeone who can change the plow
on section, that's going to takea couple of weeks, not so
difficult.
But to negotiate with the CRO,there you need not just tactical
expertise and negotiating withCrosic, but we need someone who
can take a step back and takethe strategic view of what we're
(29:17):
trying to do and how will wework with this plan over the
next two, three, four, whatevernumber it is.
And so, because the early stageorganizations seldom have that
experience or expertise, it isvery easy to start off by making
mistakes, to build inindisciplined spending habits or
(29:39):
to waste or maybe tie up fundsthat should actually be
supporting the clinical agenda.
And it's also easy to missopportunities for innovative
approaches or for suppliers whocan bring that X factor because
the overstressed e-shit teamthey reach for providers.
They know Lots of peoplethey've worked with in the past
(30:01):
because they feel they can trustthem.
That's not necessarily a badthing, but it can be limiting.
I was talking to a sort ofmid-trade, post-stage some weeks
back at an edit at a conferencewith a Swissman and they said,
oh no, we don't at a conferencewith Karlsruhe and Swissman, and
they said, oh no, we don't havea problem with Sheldon because
(30:21):
we've all done this before andwe know who we want to work with
.
I say, yes, but what about allthe ones which you don't know?
What could you be missing?
And again, in theseincreasingly lucid times and the
LTs don't have the bandwidtheither to be managing currency
(30:42):
fluctuations or worrying abouttheir fragile supply chain, or
dealing with flaky suppliers orchasing unpaid invoices, those
are all disciplines which theyneed to be concentrating on
building the business anddriving the science, not all
those sort of factors.
They need to be concentratingon building the business of
driving the science, not allthose sort of factors.
(31:03):
And so they are really at theirmost exposed.
Ben Comer (31:05):
You're absolutely right, people wear a lot of hats
.
You know, in early stagebiotech.
I could understand that.
You know a procurementspecialist may not be on staff,
especially in the early days.
Is it your recommendation,though, that a company that is,
say you know, moving intoclinical trials, scaling up
manufacturing, making a lot ofpurchases even if they're not
(31:29):
willing to pay, you know, afull-time salary to a
procurement person?
Should they consider, you know,a fractional kind of employee
relationship, or even you know,a part-time consultant, or is it
something you know that acompany can work through or
figure out itself?
I mean, I guess my question ishow do you go from this place of
(31:50):
not knowing what you don't knowto being successful, like you
know, as a procurement managerat a small company that's
rightly prioritizing theirscience?
You know, in data?
Tom Wells (32:03):
Well, I mean obviously as a procurement
consultancy.
I'm going to say they shoulddefinitely do a procurement
consultancy.
Yeah, that's not the onlyanswer.
I think there's a couple ofthings which every fund should
do when starting out, and thefirst is put in place some just
simple but effective procurementtools.
There are many, many differentprocurement digital solutions
(32:28):
out there.
They do tend to come and gopretty quickly.
It's not always easy to choosethe most appropriate one, but
it's not necessarily it.
Ben Comer (32:38):
Yeah, what's your favorite tool?
Tom Wells (32:41):
Oh, very good question.
I'm pretty much agnosticoverall because different tools
are right for differentbusinesses.
I guess the one which I havemost experience of is Zip, which
is a great procuringorchestration tool with a very
fast-growing company.
There are many others, I wouldsay, for full disclosure.
But what you want is somethingwhich is no more complicated
(33:04):
than you need it to be, and sosomething that just means that
when you're onboarding asupplier, when you're processing
invoices and payments, whenyou're looking at contracts and
so on, you just want everythingto be as simple as possible, to
be in bond plates and to beorganized, because you do not
want that Friday meeting at fiveo'clock.
(33:24):
Something has gone wrong andnow we've got to source it.
So just basic systems whichdon't have to be expensive,
don't have to be complicated andwhich can be scales to match
the size of your business, togrow.
I'd say that's an absolutefundamental.
So anyone like Zip or any ofthe other companies, they will
(33:45):
help you with a detectionpackage so you don't have to do
that work yourself.
That, I think, will save you inso many other ways.
I mean.
The other thing is just I meanthere are many areas where you
could simply do need aspecialist person.
Again, office space you couldprobably negotiate that, but
(34:06):
it's easy to tie yourself in forvery long leases without quite
understanding the small breakwalk, and it's easy to leasing
company vehicles for longer orfor more money.
So you just need to takecareful steps and always try to
get someone to you know.
(34:26):
If it's no, you're wellfamiliar with, find someone
who's going to check it for youand, yes, that could be
consulted.
It could be a part-time or not,but that could be helping.
At a more tactical level, whereI think the biggest area of
expense and complexity forearly-stage biotechs is the CRO
(34:46):
relationship, and we all knowhow complex, how sensitive, how
happy those relationships can be, and that's where it is
critical to understand what am Iactually procuring within this?
So, as the sponsor, someone inthe LTM growing biotech I'd say,
(35:11):
well, I've actually sufferedseveral clinical trials.
Yeah, I know what I'm doing, Iknow how the biotech protocol, I
know how to, yeah, and we knowwhat sort of sites we're looking
for, what sort of patientswe're looking for and all of
those things.
And they will then go and talkto a CRO.
There are many different typesof CRO relationships.
They all have their differentroles and talents and so on.
(35:31):
So as a sponsor, you've got tofind the right CRO and then come
to the right sort of agreementwith them.
But I just think it's essentialthat you have someone with a
strategic procurement backgroundbehind.
(35:51):
That might drive cost and valuefor both partners in this, and
it needs to be someone who isnot afraid to probe and to
chariot both their owncolleagues and the supplier
until everyone fully understandseverybody else's priorities and
needs and perspectives.
(36:12):
And that means you need a lotof what-ifs in there as well.
What if we don't manage to hitthe recruitment targets?
What if we have to maybe changethe protocol for some reason to
the thing?
What additional cost is thatgoing to add?
I think without a seasoned andexperienced procurement person
(36:34):
to look at it through thatdispassionate lens and more
scientific and non-physicist,what do you need to really
appreciate?
Without that, it is very easyto focus too much on price, not
off on value, and to get lockedinto long-term agreements that
consume money without actuallyactivating value.
(36:57):
And ultimately I'd say I meanmy parents were sheep farmers,
sheep cattle farmers.
One of my father's phrases wasstrong fences meet good
neighbors.
So you really need to make surethat everything is clarified,
even if people go.
It's all right, I know this,I've done it before.
(37:25):
Okay, let's write it downanyway, because without that
it's it's too easy to to notlate in stakes but maybe not
quite consider everything in thedetail which it needs to be
considered in.
And you're talking aboutmulti-year relationships, um,
with with many, many millions ofdollars behind them.
You've got to get it right, andthat does need a degree of
expertise and experience.
Ben Comer (37:44):
You mentioned earlier in our conversation the
potential for locking in poorprocurement practices at an
early stage biotech company andI wonder you know clearly you is
such a critical piece ofoperations.
But what kind of impact canthat have, I guess, from an
(38:13):
investor's point of view, youknow?
Is that, do you risk, you know,compounding failure, you know
on failure, by making some poorprocurement decisions early on
when it comes to futurefundraising?
Tom Wells (38:29):
Yeah, totally.
That can definitely happen,assuming you've got some funding
.
It could be.
I won't embrace it.
Your current funders want tosee evidence that their funds
are being used professionallyand efficiently to drive the
science and build a soundbusiness, and they don't want to
(38:50):
see the funds being spent onwhich is unnecessary or a little
bit for true.
And in the same way, futureinvestors want to see the
company's been an effectivesteward of its previous funding
and that it's likely to do sowith future funding.
Because I think, particularly inan environment where X has got
(39:10):
more discourse and interestrates are well higher, lower,
just more vonis high.
And then operation efficiency.
If you go back a few years tomore stable times, then
investors would say, well, if Iinvest now, I'll sell out in
five years' time I will.
It's the science right,everything with profit and value
(39:31):
.
That's no longer the case.
So I think investors more andmore are looking at the
operational efficiency of theirinvestees because that can have
a big impact on futurevaluations, particularly in this
very volatile world valuations,particularly in this very
volatile world.
Some of the bigger privateequity funds have something
(39:53):
quite large in value creationteams which is there to help
their investors improveoperation effectiveness.
They build their supply chains,maybe down their work on
procurement, but they have thoseteams to help their investors
because they see it as being animportant contributor to grow to
(40:15):
higher future valuations.
That sort of value creationteam approach is unfortunately
much less commonly available,actually at the early stages of
drugs.
But I think every companyreally needs to think how am I
spending this much dollar?
Because could this be, orshould this be gained through my
clinical trials?
(40:36):
Or shouldn't this be gained bymyself at BMW or Silver Fox?
Right, right.
Ben Comer (40:45):
I wanted to ask too about sourcing.
If you're looking for Actiniumfor a radiopharmaceutical, you
know you're fairly limited, asyou said you know to a couple of
providers.
They're expanding right now butthere are a number of different
.
You know sources that differentkinds of biotech companies need
(41:05):
and I wonder you know what youmight say about the kind of
cutting edge of procurement asit relates to sourcing.
Are there different models,different innovative approaches
to sourcing that you'veexperienced in your career or
that you see emerging at thispoint?
Tom Wells (41:26):
see emerging at this point.
Yeah, I mean, I think there aretwo really interesting areas
there.
One is what I'd call innovativeinnovation and the other,
actually, which is always worththinking about, is supplier
diversity.
So if we look at the firstpoint, how do you look for
innovation?
If you always choose suppliersby going through the traditional
RFI, rfp approach to thetraditional suppliers, don't be
(41:51):
surprised if you only get thetraditional answers.
But there are a whole range oftechniques which you can use to
go far beyond the traditionalsupply base and solutions that
can bring you.
So, instead of an RFI requestfor information, rfp request for
proposal, what are they getting?
An RFO, which is a request foroutcome.
(42:11):
I guess a way that you can thinkof it is sometimes you know
exactly what your solution isgoing to look like.
You know really what it lookslike.
Sometimes you don't know whatthe solution is going to look
like and you don't necessarilycare what it looks like either.
Equally, sometimes you knowexactly where your solution is
going to come from and sometimesyou don't know or care where
(42:33):
it's going to come from.
So if you know exactly whatyou're looking for and you know
pretty much what sort of companyit's going to come from, then
just go to RFP.
I like to be able to say thisis what I want.
Please give me your best priceand your leverage helps.
If I know pretty much whereit's going to, what I'm looking
for, I don't know every motor tocome from, okay, rfi.
(42:55):
So I go out to a wider group ofcompanies and I say this is
what I'm looking for.
How much can you out in thisarea?
Send me your outline, yourcapabilities.
Now we're going to decide whichone to go for.
If I know where, what sort ofsupplier I'm going to be looking
at, which part of the supplybase and idea might come from,
(43:17):
what solution might come from,but if I'm open to what that
solution actually looks like,then let's go for an RFO.
Explain your circumstances tothe future supplier to say, help
me solve this problem, but I'mnot giving you any specific
direction on what that solutionmight look like.
Right, so you'll start gettingbroader ideas, but from the same
(43:40):
group of suppliers.
But sometimes you say I'mtrying to solve the problem, I
don't know what my solution is,I don't know where it's going to
come from, and so the sort ofapproach you can take is OECD
limitations.
I'll give you an example.
I'll say this this is from alarge US pharma company.
I won't name the name, but Iwas talking to one of the brand
(44:05):
teams and it's the classicconversation but what keeps you
awake, what business problem doyou really love to solve?
And they said we have amildness neurosis drug.
One of the things we would loveto be able to do is to assess
cognitive performance moreeffectively, because cognitive
performance can actually be anearlier, better indicator of
(44:26):
progression, or what would havebeen that of the disease, than
the usual tests of physicalperformance.
But the problem is there havebeen no advances in the way that
we measure cognitiveperformance for 20, 30, maybe 40
years and the current teststhat were passed so patients can
actually learn how to do it, sowe get artificially high score.
(44:49):
They take 14 words to be done,you have to do a more clinical
set of words, so on.
So you know they're not great.
And so the brand begins to saywouldn't it be great if there
was a way of assessing cognitiveperformance which could be done
by the patient themselves ormaybe by their carer Every day
(45:10):
at home?
Take very little time to do itin a format which cannot be
learned so they can't get betterat the tests by repeating them,
and which would produce datawhich is reasonably clinically
robust and can be shared withtheir HOP or with their
specialists.
And of course, there is no suchsolution.
(45:30):
So we said, okay, let's seewhat we can do.
We put that, we wrote up thatproblem statement, put it on an
open innovation platform or wasit in the center of the world?
And we put that challenge outthere to five or 600,000 people
around the world who hadpre-registered as solvers on the
(45:52):
open innovation platform andwithin three months we had about
135 responses, of which 120plus were completely useless and
within varying degrees.
Many of them were quite bad,but there were a handful which
you looked at.
But actually that's apotentially useful idea and we
(46:13):
eventually drilled it down tothree.
So it's three submissions, allof which were workable.
One of the winning one and we'renot buying that $10,000, buying
teams the winning one, as Iremember, came from a
25-year-old grad student workingin a real estate firm in the US
.
Another came from a retiredmural consultant in Canada and
(46:36):
the third one was an 18-year-oldSpanish student based in London
.
Each of these three solutionswas completely workable.
In fact, they've been developedfurther since, but they all
came from people who were so faroutside any traditional supply
base that you couldn't imaginebeing further.
(47:00):
Quite a structured butdeliberately wide-ranging
approach.
We were able to put a problemor an issue that had not been
solved or developed in decadesand come up with radical,
workable solutions within threemonths.
That's just one example of how,if you plan it carefully, then
(47:29):
you really can come up withgenuinely distinctive and
purposeful innovative solutions.
Ben Comer (47:38):
That's a great example.
I had one follow-up I wanted toask you on requests for outcome
.
Is that a kind of tool thatyou're seeing more companies?
I mean, is it a novelty at thispoint to send out a request for
outcome, or are more companiesactually doing that at this
point?
Tom Wells (47:58):
So I guess it's more common in some areas than other
In, I guess, in areas likeclinical trials, for example,
it's not that common.
I'm sure there are ways that itcould be used, but if you look
at something like marketing,then when you talk to your
agency and say that I want toincrease sales by 10% or I want
(48:21):
to increase my market share bywhatever and I'm not really sure
what sort of program orcampaign I'm looking at Go away
and brainstorm something andcome back to it.
That effectively is an RFO.
I could say I want a 30-secondTV ad which is going to cover
the following information andwill be broadcast on these
(48:43):
channels at this time.
That's pretty specific If I saythat my target audience are 35
to 45-year-old men who driveblue cars, wear yellow shirts
and make historically smoke tonsof red.
Today, I want to get them tochange their.
I want to sell more of thatproduct.
(49:06):
These are my buyers and I wantto.
The message I want to sell moreof that product.
These are my buyers and I wantto.
The message I want to give themis so what is the message which
I need to give them in order tomake that change in behavior?
How can I get that message tothem?
I don't know.
You're the kind of marketingagency you tell me.
Matter of fact, that isn't anRFO.
(49:27):
The skill is, then is an RFO.
The skill is then taking thatRFO idea and then applying it in
other areas of what you do.
It's never going to work foreverything and you need to know
that you're working withsuppliers who you to some extent
already know trust.
Another approach is more sortof co-development goal or
(49:54):
collaboration.
But again, if I've got asupplier who I know well and I
trust them and have an existingrelationship with them and I
might work with them on aparticular product or service, I
say let's build this togetherand if it's successful, you will
obviously get paid for for, forinfinitely delivering it and
obviously and I'll get therevenue whatever it is Then
(50:15):
let's actually trust each otherand work together to create
something new.
So it's an extension of the RFOIn.
It's not always going to besuitable, it won't be suitable
for every supplier, but it can.
When the partnership is there,when the trust is there, it can
really pay dividends.
Ben Comer (50:34):
How far can you go, I wonder, in that direction.
And when you were just talking,it reminded me of value-based
contracts, which some companieshave started to work that
essentially pay for outcomes.
Companies have started to workthat essentially pay for
outcomes.
Like you know, the healthinsurer will pay, you know, a
certain amount if the drug takesthe patient to the desired
(50:55):
outcome and will get rebated ifthe drug does not take the
patients out.
And I wonder to what extent thatis happening, if at all, in
kind of other aspects of pharmaoperations.
For example, you know going toa CRO and saying you know our
outcome, our expected outcome is, you know, full recruitment by
(51:17):
this date, this number ofpatients, and we're going to pay
you this amount of money.
But if you don't reach that,you know, if we have to delay
the trial start or you haveproblems with recruitment, you
know then we get down to thisnext payment.
Similarly, with marketingservices.
I don't know what the metricswould be, but it could be.
You know a certain number ofdoctors are prescribing within a
(51:38):
certain amount, whatever it is.
Have you seen any of that?
Has it gone to kind of thatextent in procurement in terms
of the supplier having some skinin the game?
Tom Wells (51:51):
Yeah, sure, and it's more common in some areas than
others and it's known as PaymentShare, game Share or Bonus as
Malice.
Okay, the problems are.
This is where I think it's aticker problem in life sciences,
biotech.
That's because there are somany potential variables.
(52:11):
So if you can link the outcomedirectly to the supplier's
performance, then great, theyperformed super well, they get
bonus.
They fail to perform, then theyget some kind of clawback.
But there are so many potentialfactors that could have an
(52:31):
impact.
So the supplier could performwonderfully, but the drug sales
aren't what you want.
Because a competitor came out,because there was a new piece of
data from another company.
It could mean that there was asupply chain problem which meant
that there wasn't enoughproduct available.
It could be that the salesforce didn't get adequate reach,
(52:53):
and there are any.
One of many, many differentfactors could either genuinely
or just by claim, enable thesupplier to say well, I took my
part, and the reason that theperformance wasn't what was
expected, it wasn't my fault, itwas due to whatever other
factors.
So where you can genuinely cutout all these other factors and
(53:17):
say there is a causativerelationship between input and
the faults yeah sure, that's apiece of cake.
It's perfectly workable and youcan see it.
If there are other factorswhich are just uncontrollable or
unpredictable variables, it'sgoing to be.
It will be more difficult and Ithink that you see, above that,
(53:41):
drug pricing, we can now lookat some examples of drug pricing
.
We get that take your drug, weget better.
We're more prices, we getbetter, all away.
Or even say prescribe the drug.
If you reimburse the drug andthe patient gets better, pay me
at the end.
Or pay me not six months if thepatient is still alive or
whatever it might be.
It was the patient's kidneyfunction continues to do this.
(54:07):
You pay me the interest changes.
You stop paying it, whateverthe rate might be.
If you can really pin downabsolutely clear links, of
course, in fact great, but it isjust so difficult to do that.
Ben Comer (54:20):
Yeah, yeah, and I think that's why there was
initially a lot of excitementabout these value-based
contracts, risk-based contracts,and they didn't become as
popular as, I think, you know,people initially expected
because of that complexity.
You know, comorbidities,lifestyle, all sorts of inputs
(54:40):
into the outcome that a drug candeliver that may not be able to
be easily accounted for, youknow, in a contract.
Tom Wells (54:49):
Yeah.
I do believe that, as I meandata is always going to get
bigger, but as our ability toprocess and, first of all, to
accumulate and analyze data andthen disaggregate it, that is
growing and growing every day,and I do think that we will get
to the point when it does becomeincreasingly possible to link
(55:11):
cause and effects, despite themany variables in the background
.
Ben Comer (55:17):
Great.
Well, we are running short ontime here, tom, but I want to
give you just a chance before wewrap up if there's any last
kind of final thoughts that youhave on this topic that maybe
you think are important that wehaven't discussed.
You know, perhaps any adviceyou might have to biotech
builders you know, working in aWTF world at the moment where
(55:41):
there's a lot of uncertainty,just you know, in terms of
global economic policy, in termsof global economic policy,
various conflicts around theworld what are your final
thoughts in terms of whatearly-stage and mid-stage
biotech companies can do to kindof stay on the right foot with
(56:02):
procurement or even use it totheir advantage?
Tom Wells (56:06):
There are some letters I would highlight and
they're not VUCA and they're notWTF.
What I would always try andhighlight is that in the middle
of the word procurement are thefour letters C-U-R-E, and I
always do highlight them.
I have them on my emailsignature, picked out in a
(56:27):
different font color.
So, because I think the message, both for procurement people
but also for early stagebiotechs is remember that if you
enable and encourage yourprocurement team or procurement
partner to be the best they canand to do the job that they can
do when the source andprocurement functions is
(56:50):
operating at its best, we reallycan have as direct an impact on
the patient as any other partof the function.
And so I believe that the cureor cure is, or should all this
be, a part of what procurementdoes.
So engage us, ernie, engage usdeeply, trust us, let us be part
(57:11):
of your business, trust that wedo have.
Hopefully, we have thescientific understanding and the
business savvy to be able tocontribute as your strategic
partner as well as yourcommercial backbones.
Involve us in that way and wewill genuinely help you deliver
a level of lasting value.
Commercial backbodies.
Involve us in that way and wewill genuinely help you deliver
a level of lasting value whichyou won't be able to find from
(57:33):
any other way.
Ben Comer (57:35):
Excellent, Tom.
Thank you so much for beinghere today.
It was an education for me andI expect it will be for many of
our listeners.
I really appreciate it.
Yes, peter, thanks Pete.
We've been speaking with TomWells, director of Life Sciences
at 4C Associates.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
(57:55):
Find us and subscribe anywhereyou listen to podcasts, and be
sure to check out new weeklyvideocasts of these
conversations every Monday underthe Business of Biotech tab at
Life Science Leader.
We'll see you next week andthanks for listening.
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