Tuesday, October 19, 2010

Interview: Dr. Daniel Levy talks about becoming a biopharma consultant, part 2

Daniel Levy is the blogger behind Organic Chemistry - Education and Industry. When he's not blogging, he runs his own consulting firm, DEL Biopharma. I asked Dr. Levy a number of questions about striking out on his own and being a consultant. What follows is an e-mail Q&A, which has been checked by Dr. Levy for accuracy. This interview was divided into two parts; yesterday was part 1. Today is part 2 of 2.

CJ: What do you feel is the minimum number of years of experience required to be a successful consultant? Is this a path only available to those with more than say, 15 years of experience in pharma?

Dr. Levy: The first consulting opportunity I found was after my first company closed. I had only 5 years of industrial experience and I was asked to design potential drug structures marrying features of both known matrix metalloproteinase inhibitors and thiazolidinediones useful as PPAR gamma antagonists. This work was incorporated into a patent on which I am a named inventor.

Consulting opportunities can come at any time in one’s career. However, reasonable consulting fees, like full time salaries, should be realistic when matched to actual experience. There are many companies that will prefer to work with more experienced individuals. However, I think that, in today’s economy, we can all consider ourselves consultants. We work in an at-will employment environment with no implied obligations between employer and employee. Jobs in small companies generally last no more than 5 years and it is not uncommon to find people who have worked at 6 or more companies over the course of their careers. The only functional difference between being an employee and being a consultant is that consulting contracts are usually much shorter than typical full-time employment terms.

While functional differences between full-time and consulting relationships may be similar, there are significant practical differences Such differences include the fact that there are no benefits (health/dental insurance, ADD, unemployment, 401k, vacation, sick leave, etc.) available to consultants. Therefore, the absence of such benefits must be reflected in the hourly wage for consulting activities. Such fees, as a rule of thumb, range from 2-3 times the hourly compensation earned as a full-time employee. Furthermore, all consultants, whether new or experienced, must recognize that not all time is billable. Additionally, in addition to billable and non-billable services, all consultants must spend approximately 25% of their time networking for new assignments if they want to maintain consulting activities. In light of this, all non-billable time and self-funded insurance expenses more than justify the higher hourly fees consultants receive compared to their full-time counterparts. Finally, where full-time employees generally receive their paychecks from regular payroll, consultants must invoice for services and sometimes have to contend with delinquent clients.

CJ: Can you describe your experience with outsourcing overseas? What is your opinion of offshore synthetic CROs -- do you limit yourself to a number of select and trusted companies or do you cast a broader net?

DEL: Outsourcing overseas is generally no different than outsourcing domestically. Whenever working with a contractor that is not within immediate geographical range, primary challenges relate directly to an inability to visually explore experiments when problems occur. Also, without a site presence, it is difficult to assess how much time is actually being devoted to projects. These issues are only slightly complicated due to large time zone differences.

Regarding visual inspection of experiments, the use of digital photography is very helpful. In one example, I was working with a vendor that routinely sent digital photos of final products in packaged vials. Realistically, this did not provide much in the way of useful information. However, one of the reactions this vendor was executing was consistently performing below expectations. This was a surprise because I developed this reaction and was always able to generate reproducible results. The key was controlling the time this reaction was allowed to run. In digging deeper into the issues at this CRO, I learned that my protocols were being used but the reactions were not being monitored by thin layer chromatography (TLC). When I explained to the CRO that this was an essential part of guaranteeing success in this protocol, TLC was incorporated according to my specifications. To my surprise, the problems still did not go away. The answer was found when I was looking at a recently sent digital photo of some product ready to be delivered. In the background of this photo, I noticed a TLC plate being developed. This was, in fact, a 20x20 cm preparative TLC plate that generally takes 30-45 minutes to develop. All of my protocols utilized 2.5x7cm plates that can be developed in less than 5 minutes. When I confirmed with the CRO that they were in fact using preparative sized plates for analytical work, I realized that the reactions were allowed to run up to an hour longer than specified – resulting in poor quality product and lower yields. Per my instruction, the CRO switched to the small TLC plate format and the problems were resolved.

Regarding assessment of productivity without a dedicated site presence, such assessments can largely be determined based on the record of accomplishment during the course of a given project. If productivity is low, timelines will not be met and there will be very little progress to report from interim periods between conference calls. From my perspective, repeat business comes from happy clients and all CROs are aware of this.

As for my list of preferred CROs, I generally stick with companies with which I have either done business or have personal relationships. I will favor organizations that have successfully delivered on programs for my clients and select my vendors based upon my clients’ needs as matched to the strengths of various CROs. In the end, my clients make the final decisions based upon project bids and timelines. This allows for discussions with new organizations which, if selected for given projects, can become part of my list of preferred vendors.

CJ: What's your longterm forecast of US pharma? Do you see the jobs coming back (and when)?

DEL: In recent years, the US pharma industry has undergone significant consolidation precipitated fundamentally by a deficiency of funds available to support research activities. From my earliest days in industry, the first signs of financial constraints were reflected in a reluctance of venture capital firms to invest in companies earlier than phase I clinical trials. Furthermore, a once lucrative IPO market gave way to large companies purchasing small and successful biotechnology firms. This latter situation resulted in the paradigm of large companies acquiring smaller companies for their products and subsequently laying off their employees. Thus, many new companies began to emerge with the goal of becoming acquisition targets.

Whether a future acquisition target or a stand-alone biopharma company, product pipelines are dependent upon research activities. As VC and/or investor financing dried up, companies were forced to conserve capital. Such capital conservation took the form of shifting research activities from an internal infrastructure to a model relying on outsourcing. Furthermore, since products do not reach market without successful development programs, research pipelines were accelerated towards development. Both of these scenarios, accelerated development and outsourcing, resulted in significant reductions in dedicated research personnel. The result is the present situation where high unemployment in the pharmaceutical/biotech sector leaves a solid pool of unutilized talent asking the question “when will the jobs come back?”

From my perspective, the pharma/biotech sector has undergone an irreversible transition. This does not mean that jobs will not come back and it certainly does not imply that there will be no growth in the future. I believe that when all the dust settles, new business models will emerge where fully integrated contract organizations will provide infrastructure to much leaner parent companies. All this model takes is a few innovative thinkers and the capital to bring novel business models to fruition. In the meantime, if full time employment is not available, my advice is to seek part time or consulting opportunities. Such opportunities may not pay all the bills, but they will maintain thought processes in useful and marketable areas. The trick is to stay active, remain optimistic and continually expand skill sets. In today’s economy, there are plenty of excuses for not getting paid. However, there are no excuses for not working.

1 comment:

  1. As a synthetic chemist currently employed by a domestic CRO, it's refreshing to hear the side of someone who is not doom-and-gloom about outsourcing, but is actually bullish on growth for our industry.

    His closing statement is pretty motivating, like a Veni Vidi Vici for chemists...