This overview is the introductory essay to the Biochemicals and Chemical Reagents section of the 2012-2013 Buyers Guide.
Most in vitro diagnostic (IVD) assays require biochemical and chemical reagents to make them run. To meet this requirement, IVD manufacturers initially developed and produced the reagents (i.e., the controls, blocking solutions, buffers, washers, substrates, antibodies, and so forth). This approach afforded ultimate control over supply of these critical assay components, but came with its own price. IVD manufacturers needed to invest their finite resources in reagent product development, manufacturing equipment, quality programs, and human resources to maintain these programs.
This DIY approach to assay development has been largely replaced by a partnering model over the past 20 years. Today’s market is defined by IVD companies sourcing most biochemicals and reagents from companies that specialize in producing high-performance, consistent, stable products using the latest technology. This paradigm shift has brought additional value to the IVD assay market. IVD companies now have access to kit components that truly perform better than what IVD companies could develop and produce themselves. IVD manufacturers now can focus their resources on assay performance (not reagent/component performance), the increasingly complex regulatory environment, and marketing and selling their finished tests. The paradigm shift has also provided value to the specialty chemical and biochemical companies, who can justify reagent development programs because of the large potential sales opportunities afforded by the continued growth of the IVD market.
To get the most out of these partnerships, IVD manufacturers need to be strategic in their selection of partners. The stakes are high. Pick the right partner and great value can be added to the assay development process and final product. Pick the wrong partner and all sorts of problems can materialize. (Let your imagination run wild.) With more than 30 years of combined experience working with IVD manufacturers, we share some of the lessons learned and best practices in this article to help you make the most of your partnerships. We explore some of the key factors to consider when selecting and working with bioreagent supply partners and some of the future trends that will affect these partnerships.
When talking about the relationship between IVD manufacturers and suppliers of biochemical and chemical reagents, we consistently use the term partnership. This reveals one of our biases—namely, that more value can be achieved through a partnership than with a simple buyer/vendor interaction.
What is the difference? When it comes to sourcing IVD components, a buyer/vendor relationship typically starts with a buyer’s product need: 500 milligrams of a secondary antibody conjugate, for example. Vendors currently manufacturing the reagent or those with the capability to manufacture it are asked to bid on providing the product. The vendor’s role is simply to produce an antibody that meets the buyer’s specification. Without much visibility to the duration of the supply period, nor commitment to a longer-term relationship, the vendor extracts value through a transfer price on the reagent that is appropriately high to make the job financially attractive. Buyers are motivated to get the reagent at the best price. While both buyer and supplier may ultimately profit from the relationship, much of the potential value is lost.
By contrast, a partnership typically starts with a problem that needs to be solved. For example, how can IVD target assay sensitivity be increased, while keeping cross-reactivity low? If IVD manufacturers reach out to biochemical reagent manufacturers to help solve a problem, not just fulfill a product need, they open the door to greater collaboration and a broader array of solutions. Following our example, biochemical manufacturers may offer a more-appropriate reporter molecule for the antibody conjugate, or they may suggest new blocking reagents that reduce background while enhancing specific signals, more sensitive detection substrates, or a combination of reagents that address the need. Perhaps a secondary antibody conjugate is still part of the solution, but with a partnership relationship, the biochemical manufacturer has a much better understanding of the problem being solved and the context for the product solution. There is greater commitment to work together, beyond the purely financial aspects of the transaction. The partnership also creates a vested interest in the ultimate success of the finished IVD product.
So, you have made the strategic decision to partner with reagent suppliers. When is the best time during product development to start establishing this working relationship? The answer to this question depends on many variables (your needs, the availability of internal resources, financial resources, and so forth). In our experience, starting the process of finding and engaging a reagent supplier early brings the most value. Here’s why:
• The process of finding the right partner takes time, probably more time than you expect.
• By being engaged early, reagent suppliers can help solve the larger assay problems with technology and products you may not have envisioned.
• Early awareness by both sides of key assay design goals and specifications helps to guide selection of appropriate reagent solutions and limit false starts. For example: Does the final IVD need to perform in harsh conditions or standard laboratory conditions? What are the stability requirements for the reagents? Are there key requirements around time to results? Are there instrument compatibility requirements?
Finding the right reagent supplier partner is an inexact science. There is no special formula for finding the perfect partner. Similar to the Goldilocks fairy tale, problems can arise when working with partners that are too big or small.
The definition of too big or too small is a relative determination based on the needs of the IVD manufacturer. The problems associated with supplier companies that are too big include slow responses to questions and issues, and unwillingness to be flexible with requests that fall outside of their standard operating procedures. In short, large organizations find it difficult to be flexible, nimble, and quick. The problems with too-small supplier companies are different: typically, they are highly motivated and quicker to respond. Problems can arise concerning financial stability of the organization, insufficient quality systems, insufficient process controls and batch control, availability of technical support, and the ability to handle manufacturing from small to bulk scales.
In our experience, the just-right partnership is not necessarily about company size, but more about the relative importance of the partnership for both the IVD and reagent supplier companies. When the project priority level is shared by both partners (in other words, project success is equally important for the IVD manufacturer and the supplier company), then both sides are motivated to advance a project more quickly, with fewer issues. Other attributes of the just-right biochemical reagent supplier include:
• experience developing and manufacturing reagents for the IVD market;
• availability of timely technical support;
• a robust quality system (look for certifications such as ISO, GMP, and so forth);
• financial stability (will the company be able to serve your needs in the future?);
• openness to buyer audits;
• comprehensive raw-material or process controls to ensure a consistent supply.
Creating a high-value relationship with reagent suppliers shares some of the attributes of building a successful marriage. Based on our experience, we present the following three keys to getting high value from your partnerships.
Build trust. Trust typically builds over time. The early days of many relationships can be filled with anxiety. For example, an IVD manufacturer may avoid discussions about forecasts (or slightly exaggerate them) in an effort to make sure the reagent supplier stays engaged with the project. At the same time, the reagent supplier may avoid discussions of production scale-up because of concerns about the ability to handle future demand. The fear is that honesty could easily result in a null deal, with both parties walking away from the table dissatisfied. Building trust is crucial to changing this natural tendency to be guarded concerning information sharing. In our experience, there is much more to be gained than lost through the establishment of open communication between reagent supplier and IVD manufacturer. Many of the common concerns (stolen technology, suppliers becoming competitors, and so forth) are unfounded. The payoff for open communication is substantial—potential issues are identified early and can be resolved.
Make time for each other. In our experience, maintaining open channels of communication between IVD manufacturers and reagent suppliers is critical. More frequent, planned communication between partners is better than communicating only when issues arise. A short list of topics to discuss include:
• a clear set of product specifications;
• acceptance/rejection criteria for each new lot produced;
• development of QC tests that can be performed by the reagent supplier that will be meaningful to the IVD developer;
• product forecasts, production scheduling, scale-up complications; issues encountered.
Commit to the relationship. To have a strong relationship, both sides need to commit. Supply agreements are the wedding rings that signal a commitment by both the IVD manufacturer and reagent supplier to an enduring partnership. Take the time to develop clear, meaningful agreements that capture reagent specifications and pass/fail criteria for each new lot, and acceptable versus unacceptable lot-to-lot manufacturing variations. In addition, capture demand forecasts, safety stock requirements, and product pricing. Although forecasting is an inexact science and very difficult, especially early in a product’s lifecycle, it is critical if a supply partner is going to be ready to serve future needs. With a well-crafted supply agreement, partners not only have a commitment, but also a clear set of future expectations.
The identification of the next new thing is a constant discussion point with product managers and development scientists alike. Future trends toward more automation, miniaturization, and bedside assays are both attractive and undeniable. Position yourself adeptly, and blue oceans of opportunity can present themselves. Choosing poorly can result in years of work to try and recover lost ground. Not surprisingly, this reality affects both reagent suppliers and IVD manufacturers. Given this situation, three important industry observations for consideration are presented here.
Prioritize better markers, before better devices. Point-of-care (POC) testing will continue to be an area of promise. There is no denying the success of POC testing for blood glucose monitoring, alcohol, and drugs of abuse, which dominate the segment. However, there is still a dearth of accepted markers that are specific enough for meaningful bedside analysis in many critical-care situations. An example of this need for effective POC markers is septic shock. Patients with advanced stages of sepsis carry a mortality rate of 25 to 50% and often die within hours if appropriate treatment cannot be assigned. A major hurdle to advancing this diagnostic area is a lack of useful biomarkers. Myriad compact devices capable of facilitating sepsis diagnosis already exist. The market is poised for action once appropriate markers become available.
Don’t neglect incremental improvements to existing platforms. Some of the greatest successes of new IVD detection systems over the last decade are the result of incremental improvements to familiar platforms. Two examples are the Meso Scale Diagnostics (MSD) and Luminex platforms. These platforms are built on technologies and workflows that are well aligned with flow cytometry and microtiter plate immunosorbent assays. Similarly, we see great potential for next-generation lateral flow devices that exploit one of several nonvisual detection methods to yield semiquantitative results. Improved lateral flow devices are well-positioned to attain continued growth in the medical testing community because, as with traditional lateral flow assays, they are robust, rapid, easy to use, and cost effective. Coupled with an enhanced reading device, which carries low capital cost, this technology can flourish in the cost-conscious days ahead.
Find new life for proven technologies. There is heightened demand for Western-style medicine, diagnostic tests, and medical devices in emerging economies as they become new centers for technology and commercial hubs. The initial products to enter these markets will be the most robust, versatile and cost-effective devices. Proven technologies such as ELISA and lateral flow assays, mainstays of the IVD market for more than two decades, are the logical first responders to these emerging-market needs. While new technology will continue to be highly valued in established diagnostic settings, which can bear large capital investments, emerging markets should be seen as an opportunity to capture additional value from time-tested assays.
Our experience in the industry supports the old adage: the more things change, the more they stay the same. In the era of venture-backed startups trying to position their new platforms in the most lucrative light, some will find homes in high-value niche applications while most will fail. With time, robust platforms will take hold, but many more will wither away without notice. What remains constant—regardless of the size of an organization, the complexity of the target, or the innovative technology of a detection platform—is the value that can be realized from experienced supply partners. —Les Kirkegaard, MBA, Senior Director of Sales and Marketing, and Seth Harkins, PhD, Director of R&D, KPL (Gaithersburg, MD).