Drug Development Is a Team Sport - And Procurement Has to Play.

Somehow you've got to build those relationships. And I feel like when I've seen bad situations happen is people in the pharma space and the finance procurement do not extend it. They say, well, they should come and find me. And I said, no, it's the other way around.

We need to go to them. On this episode of Executive Ed, Greg is joined by Dave Stowe, founder and managing partner of Adventus. Dave shares how life sciences procurement teams can better support drug development from early discovery through clinical trials and what's at stake when they get it wrong, supporting on those relationships from supplier contracts and trying to put some parameters around it to manage it, because if the costs gets out of hand, you kind of going to lose it money and might have failures and really it can mean bankruptcy in some of those very risky early stage investments.

Hello and welcome to Tenzing's Executive Edge podcast. Today I'm joined by Dave Stowe, founder and managing partner of Adventus, a boutique advisory firm helping emerging biotech and pharma companies scale growth through operational complexity. With a background spanning consulting at PwC and Oliver Wyman and procurement leadership roles at Horizon Therapeutics and Purdue Pharma, Dave brings deep expertise in building procurement and supply capabilities that support commercialization.

Earlier in his career, Dave worked in engineering, operations, and purchasing roles across the automotive, aerospace, plastics, and industrial sectors, which gives him a broad foundation in complex global supply chains. In this episode, Dave and I will discuss how life sciences procurement teams can better enable drug development, clinical trials, and long-term growth in an increasingly complex landscape. Welcome Dave, and thank you for joining me on the podcast today. Yeah, thanks, Greg.

I'm glad to be here and be a part of this discussion. Thanks. I'm looking forward to it, and I think all the pharma folks out there that listen will take away a lot from this. And today, you know, we're really going to talk about sort of the beginning of the process and where procurement helps on the R&D side of things.

But, you know, we know that for pharma companies, ongoing new drug discoveries and developments are essential. They're really the lifeblood of a pharma business because these products, you have to keep introducing new products and those products eventually come off patent and are subject to generics. So introducing new products and doing that effectively is really important to the success of any pharma company. And so today we're really going to focus on the beginning.

Like I said, R&D in pharmaceuticals and in the scientific study approach. So why don't you tell us about that? Like when you think about a pharma company getting started to go after drug discovery and bring it to market, what should they be thinking about in procurement? Well, I think there's a couple of things.

First is it's important for all of us to understand whether you're a scientist or you're in the business side of it, the finance and the procurement side of it is human health evolves, and this is really has to think about the human health aspect of what we're doing here. And so whether it's cancer treatment, it's evolved over centuries of thought process, but really some very innovative ideas even recently about thinking about what we had, how we treated cancer maybe 15, 20 years ago and how we can treat cancer now or other diseases, heart disease, diabetes, there's all these different areas of human health that are very complex to start with.

And the science aspect of it is an idea starts in drug discovery. Somebody has thought about how at the cellular level, the chemistry, the biochemistry, how that's going together, right? And they maybe feel that they have a better treatment. And so from there, they kind of at human health starts the idea of a better way of helping people.

And there are many, many different diseases. There's a lot of rare diseases out there. So some are very small populations. Some are very large.

A lot of people are very familiar with cancer and heart disease, but there's so many more needs for treatment out there. So I think it's that innovative idea. You're right also to comment on the fact that a large pharmaceutical company that is marketing these large drugs, they do have intellectual patents or protection on it, and as a result of that, they have a limited time period in which they're going to recoup their investment. That's one major part of the business drivers of a lot of this, but there's much more that goes on about evolving that drug, even if it has a patent and what they can do to extend the patent and so forth.

So that's the interesting area of health treatment really is how I look at it. I was just going to say, so they, you know, it obviously starts with helping people, you know, improve their health, right? Better living through chemistry, we might say, right? In layman's terms.

And, you know, so they embark on this, you know, they feel like there is something there and then how do they start going to commercializing or even just starting the process of getting a drug into the approval process? So there's the FDA here in the U.S. has a, you know, very structured way of companies moving through this pipeline.

It's basically a couple of main stages. There's the core drug discovery, which was really in the area of, I'll call it the laboratory, right? So we're just talking about looking at chemistry, to your point. And then you move into preclinical, which is a lot of animal testing that gets into the areas of, particularly around safety.

And they look at a number of different aspects of the drug and maybe how it could have toxicity or the adverse event on a biological organism. And then they move in from preclinical with the FDA and discussions of what their data and their insight is against scientific studies that they feel that now it's ready to go to human trials, in human trials. So first in human trials started in clinical trials, they have three main phases, phase one, two, and three. And each one of these phases, there's a lot of discussion about what's called endpoints, right?

We just set up this design of experiment. We're going to claim a hypothesis that we feel that this, at the cellular level, that the drug should do something to the cells. And so there's a discussion with the medical community, with, you know, researchers and with the FDA to talk about what that endpoint might mean. And then it's a design of experiment.

So you set that up. Now we get into actually conducting that, and it takes time and it takes time and money, and so this is where this is a lot of risk reward, right? So some of these ideas have been in particularly academia for a long time, but it also means that there's a lot of industry and academia collaboration globally, but in the U.S.

it's extremely large and it's a big part of how any pharmaceutical company, small, emerging or large, is going to look at their idea for drug development. What does that mean? And so appreciating that from a business perspective and from a procurement perspective, now we start engaging with suppliers. What does that mean with suppliers?

And so obviously there's the core laboratory work that's, you know, we think of the bench, you know, we go into a university setting or into a laboratory setting and we just do those experiments. But then we move into the animal testing and there's different, interestingly enough, different types of animals have different chemical reactions. And so there's a need to kind of look beyond just the mice world or into other animals and what are they seeing in nature that they can bring into a thought process for human interaction, right?

Now that's very scientific and a business finance or procurement role doesn't get into that area, but it's the supporting of those relationships from supplier contracts and trying to put some parameters around it to manage it, because if the cost gets out of hand, you kind of going to lose money and you're also going to run out of, and you might have failures and that's just extremely bad from a business perspective. And really it can mean bankruptcy in some of those very risky early stage investments.

Right. And I know that through experience that, you know, the pharma companies don't do all this themselves, right? It doesn't make any sense to, right? So can you talk about sort of who are the suppliers and the services they provide at this stage of the process?

Yeah, and I think it's important that the main, we'll call them, they're called CROs or contract research organizations. These are, I really look at them as professional service firms that have staff that are in PhDs and people who are very skilled in understanding how to run these tests. And so whether they're in the preclinical area, focus much more on the animal testing or in the human trials, there are organizations that go out and help structure this design and design of experiments is going to say, here's our scope of what we're doing.

Here's our end points. Here's how we're going to test it. There's obviously, you know, the idea of a double blind test. So we have situations where we, nobody knows exactly who's being treated.

So there's a lot of scientific or there's a lot need for information capture. So there's, I'll call it, not just the people who are doing the actual research, but there's also clinical trial management systems. And so that data becomes another piece of this. So think about labor and information.

How do you bring it together? So I think those are big areas in this space. And then of course, there's a lot of regulatory oversight. So how do we handle this?

So documentation of paperwork and documentation of findings, and then presenting those findings in an academic setting, in a conference setting to the FDA but there's a need for the scientific knowledge to come out. So the service base, you know, we'll call it is the CROs is the main area. There's also a lot of, you know, the suppliers of the drugs, so to speak, the chemical suppliers, the labs that are going to do the testing and the specialty pharmacies. There's of course, you know, now getting more, starting to get into the legal area when you get into intellectual property, how do we balance that?

As we find more insights, what does that mean? Do we have a talk with the patent attorneys to think about amending the patents or filing new patents? What are we uncovering? And then we start to see things.

And then the other thing that's important is thinking about the pivot. Every company that goes through any trial and testing at some point, their idea might not exactly be where they're going, but maybe it gives them another insight and they have to switch through. And there's, there's been interesting study, I guess you could say of what was about 20 plus years ago was Viagra. Right.

And it was more about heart treatment. And then it kind of saw some indications that we can all look online and figure out what those indications were, but it led to a different marketplace and a different aspect of human health. And again, these are just interesting things that happen. And it's the curiosity, there's a supplier and interacting with those suppliers is how do we keep that collaborative relationship so we can uncover that idea versus very rigid, you know, you do this and I pay you for this, that, that relationship's very difficult to find ideas and create an innovative culture.

So hopefully that kind of helps kind of understand how to, especially when you're early stage. Now, when you get into the clinical stage and you kind of move through that, you're now getting a very proving out that through larger patient populations, you are effective and you are safe in what your, you know, your hypotheses are so that you can get to the end of phase three and get an approval from the FDA to actually then market and sell the drug in the U.S. And then other, you know, government agencies outside of the U.

S. manage their. Yeah. Yeah.

I, I, uh, I'll, uh, jump in there with, uh, you, you mentioned Viagra, right. It was, it wasn't really initially intended for what it ended up becoming a blockbuster, uh, for, uh, I think today maybe the analog to that is, uh, is the GLP-1 drugs that were designed for diabetes and, uh, you know, finding great weight loss benefits, right. Uh, for people. So, um, yeah, that doesn't always, uh, it doesn't always work out.

Sometimes it works out better maybe. So, so these suppliers that, uh, provide these services, the clinical research organizations, and I think you're starting to move into clinical trials, right. Um, you know, how does a company typically go about managing that relationship and, and, uh, you know, again, it's still very science oriented, but I think the business starts to kick in, right. You don't have an infinite pot of cash to spend on these.

So how do you manage, how do you manage those suppliers to accomplish what you're trying to accomplish from a drug discovery and drug, drug approval through all the regulatory and legal hurdles without, you know, going bankrupt in the process? Exactly. And I think, um, I put it this way is it's a service, right? And so you're buying a service.

So the service is going to have different types of labor components in that. Now there are the people who have the medical doctors, the PhDs, the, the registered nurses, the people that are in the medical community that are going to do certain things in that study. There's also a lot of administrative work that has to go on. And so that's keeping track of patients and that's keeping track of, um, shipments of drugs and different types of, uh, of course you have a placebo and you have the actual drug.

And so how are you tracking that? So now we get into much more of a call it the program management or project management, you know, effort. And I think procurement putting a hat on that way. And sometimes in these companies, it's not always a typical procurement role.

It's somebody who has some of a science degree, but is maybe in the clinical operations team or in the R and D team of these companies. However, from a finance or procurement perspective, collaborating with those people to talk about that and, and listening to them because sometimes again, they're not finding the scientific needs that they maybe thought they might find. So then do they need to go find more patients maybe, or maybe the FDA has asked them to go find, um, enlarge the patient population.

So now we have this situation where again, to your point, costs start to change. And now we have some flex in there that there's always a little bit of a budget, but then you start to get into areas that are important to manage. Now, in some of these professional services, you know, having the regularly scheduled supplier management stuff that we talk about, which is we're going to have a meeting every month. We're going to talk about things, you know, each dashboard to some extent about how this is working maybe.

And then there's going to be certain discussions that are science oriented, and there has to be some discussions that are business oriented. And there's always friction. And I think you've got to make a constructive friction, right? Constructive dialogue about what's going on.

And sometimes you have suppliers that maybe are not managing that scientific study as well as you would want them to do that. And I think it's fair to say that's now a business discussion. It's just not, something's not right there. It's not a scientists are, we're paying people very good money, but we have to get the value results out of it.

And so those are, you know, the right way to do those are handling those through the relationships that a finance and procurement function develop with the head of clinical operations with his or her team, with the people that are working with those suppliers. I think sometimes the people in those scientific roles are not comfortable putting together a contract, a supply contract. So how do we then put together that supply contract that spells out controlled costs, pass-through costs, and then areas that, you know, we need to work on if there's some unknowns that happen, and that becomes, I think, a teaching moment for everybody about supplier management.

What does that mean? And it's just a different way of looking at supplier management than another industry might look at supplier management. Talking about people, we're talking about time management. We're talking about also trying to have some level of appreciation that there will be these scientific studies that just don't go the way they're supposed to go, but maybe if we spend a little bit more time or money, we can understand how to do that pivot that we just talked about, you know, with these different drugs, and that's really where I think that the enjoyment and also the benefit and I think the value of that supplier relationship can come into play, so.

Yeah, so I imagine there's a lot, it's just the word that keeps coming to my head is nuance to these, these relationships. It's not where there's absolutely clear deliverables maybe all the time, right? Or those deliverables may, may evolve through the course of the relationship with these third-party providers that you're working with, and, and you know, how do you adjust for that, right? When you're putting in place agreements or when you're, you know, just setting up relationships with these people, is it sort of understood in the industry or is there a, is there specific provisions that are unique here in this industry?

I will say that my viewpoint is it's a maturity discussion, and I think a very small, young organization that's very much in the earlier stages of this drug development, there is situations where people might feel like, hey, when I used to be at a large pharmaceutical company and I was, you know, senior research scientist there, now I'm over here at the startup and I knew these, this company and now I'm going to go engage them. And that's fine. And maybe in, in a very, very small company, it's going to be a home run.

You hit that and the relationship is good. But I think when you start moving into those preclinical and the early stage , um, phase one, where you've got the, what they call the, um, investigational new drug IND set up, now we're starting to get more investor money and we're also starting to change those relationships. And it's important that people don't just go with gut feelings of, I used to work with a supplier and I think they're great, um, and they, it's a point, it's just, let's talk and not to, to, to create a bureaucracy of why you can or can't work with a supplier, but how do we talk through what's the value in that relationship and especially for maybe the stage where you're at, because if now you're pivoting and this growth, it can be exciting, but you know, you're talking about a company that might've been spending maybe $20 million a year is now going to spend 40 million.

Now they're going to spend 80 million. Now they're going to spend a hundred million dollars a year, just in that whole drug development world. And then they're going to go to a 200. Now there's much more structured finance.

There's much more structured legal. There's much more structured need for procurement. And how do we start to work together? And I think, um, having that because the emotions get going, right?

People have been there and maybe they, they're, they're early stage. The other thing too, is sometimes in that world of startups, maybe you're really good at the science world, but the business growth is tough. And so the churn of the organizational dynamics can just play out and that can be tough on suppliers and the organization. So keeping a level head, I think in the finance procurement mindset of we're going to collaborate, we're going to work together and we're going to try to adjust and flex, but depending on where we're at, we may need to think about a different supply base or supply structure or supply agreement.

And we're going to have to start to just know that we're having good growth, but it means that we got to change. So those are the things that I think the maturity, how does that really play out? Sometimes when the people forget about the, where they're at mature wise, and they think they used to come from large pharma and now they're down there in the startup, that can just create odd friction and that makes it difficult. And the money burn and the financial aspect and the challenges become more adverse than the positiveness of really growing a business where you really want to take it, which is the excitement of drug discovery and human health improvements, right?

So. Right, right. So when you're working and think about it as, as you're in procurement and how do you partner effectively with the R&D team on your side? Not so much those, those third party providers that you're enlisting to help with the, you know, clinical research and the, the, uh, the trials and everything, but the internal team, like how do you work together and maybe steer them with the sort of a lens toward the right things without, right, you don't want to tamp down their, their capabilities, right?

You don't want to, you don't want to hamstring them, so to speak, in their ability to execute on what kind of work they do, but they're a, they're an R&D and R&D is really different than business, right? And so, so how do you, how do you, you know, what, what are some things you've done, maybe some best practices that you can share that, that you found effective to work with that organization and, and achieve the outcomes, right? It's all about outcomes and how do you work effectively to achieve those outcomes?

No, it's a, it's a very important point here. And I found that in a couple of situations that I, it's just relationship building, first of all, is the main thing you have to be willing to say to somebody that's the, in these organizations, internal, I hate, you got time for a coffee, you got time for lunch, you got time for whatever, and, and, and listening to them, and I find that whether I was talking about pharmacovigilance or talking about some of these clinical trials, when I listen more and I encourage my staff to listen to, and sometimes people come back and say, well, you know, we have a budget, we have to live in a budget.

Well, we, we have to do some things, but how do we work together? So what I found is that instead of procurement being perceived as a bureaucratic, you know, very good, if you were buying something for the government, you know, we're in a situation where we might flex and this pivots might happen. And so the budgets that I set up at the high level with suppliers might change as I move through this. Having the relationship, because you're listening to them and they may say, Dave, now, could you help me with understanding what the supplier could be capable of doing, or how would I discuss that?

Now you're getting into those, those trusted areas that are very important that we in procurement and finance need to have with that, you know, organization. And I know that the C, at the CFO level, there's a lot of concern when they see the burn rates and the, and the budget's just kind of, the cash is tough, right? I mean, everybody sees the cash and what I try to do is definitely cash is important, but I'm not there, I'm not the budget master, I'm there to help them manage the project.

Now I've found, I think like all of us in good negotiation is we listen and then we can define the right parameters to negotiate around, and then maybe we can find the right cost structure. But it's a relationship that has to be built continually. And so finding that time to say, whether it's on a monthly basis, can we sit down if it's just high level, but when you get into specific projects and you're really trying to manage it, you've got to spend time to see if you can even have lunch and dinner or lunch and coffee or whatever it is, or breakfast, whatever.

Somehow you've got to build those relationships. And I feel like when I've seen bad situations happen is people in the pharma space and the finance procurement do not extend it. They say, well, they should come and find me. And I'd say, no, it's the other way around.

We need to go to them and we should probably spend very little time in our, and then we're virtual offices, but very little time in an office environment so that we're listening and talking to people. And sometimes also it's seeing that they're putting together, um, in that clinical, you know, R&D area, they're going to be presenting things. And those are key, um, readouts, right? And so how are they reading those out?

Understanding even to this extent that we can, for not purely science people, what can we talk about some of that level of science or what are we talking about in terms of the regulatory nature of it that resonates with them? So find that common vocabulary is maybe my recommendation here for us in procurement and finance versus, you know, just saying it's a budget issue or we got a cost or I can save money. I mean, those things that just don't work well in a, in a relationship that needs to be cultivated.

Right, right. Yeah. It's, uh, so the couple of things I take away from what you just said is one, you have to seek them out and you have to deliberately and intentionally build these relationships. Um, then you have to go.

And when you, when you do have the opportunity to sit with them, um, you know, uh, listen, uh, and, and listen with an intent to understand, not to respond, but to understand what they're trying to accomplish and what's important to them and then, uh, start thinking of how you could help them maybe, uh, you know, put their dollars, get the most value for the dollars that they have in their budget for that particular, uh, service that they, that they need or that particular support that they need.

And, um, you know, support their mission, uh, but do so in sort of a fiscally responsible way. Right. Um, yeah. And I think that, um, I also started to uncover through this approach in this drug development area with CROs is a deeper understanding of maybe how a contract was set up with a supplier and then maybe some issues that we needed to talk about and then also roles, right?

So to some extent, maybe we're not the people that interface with the suppliers. It's the, the clinical team, clinical trials team, clinical operations team that does that. However, they're looking for that insight. And listen, the way this contract is written, it's probably going to be a challenge, but we should have a talk with the supplier and here's how I would structure the discussion with them.

Or before we go into these contracts and we renew the contracts, let's have some discussions about what the value that you're trying to really get out of it. And we should have something internal before we go to the supplier, right? And I feel like, um, good suppliers always have their, their salespeople in an organization there that's, that goes on. And so I think procurement needs to know how do we keep in front of our clients, which is our internal customers, um, and what they're thinking about and how can we then uncover a deeper need that they have for that service?

What is it about toxicity that you're looking for? If you need to pivot back to understanding in a mouse study, what's going on with a study, for example, around pregnancy, and so they will do this in a mouse and figure out if there's adverse events and it's interesting what's going on there. But we are now curious enough and there are then our colleagues inside the company are coming back and saying, well, maybe we could structure this differently on the supply agreement because we need a certain cost parameters and science parameters.

And now we're better understanding what that means as opposed to just you want me to go negotiate that. That's a very difficult discussion. I want to be working with you, Greg, or the team. And now I'm an extension, whether I'm the actual one writing a contract or negotiating, that's not the point.

Point is simply that I've given you insight that I can, and you've given me insight and we can be better together, so to speak. Put you on the spot, maybe here a minute. Stories always resonate right with the audience. So I, maybe if you could tell a story of where you sort of had a situation where it was not working so well, and you were able to build a relationship with the R&D organization and, you know, get aligned and come out with a positive outcome without disclosing the company or anything that's confidential.

Sure. You know, is there something you can share and you just to give a practical real world example of how that works in practice? I was within a company, so in the head of pharmacovigilance and pharmacovigilance is very important in the life science space, because it's really about monitoring ongoing drug safety and efficacy, right? There's a lot of data and information that comes not only from the company collecting data, but also from regulatory agencies like the FDA, but even globally.

And so now we're getting into much more of a data oriented on pharmacovigilance. And so the company needed to upgrade its whole pharmacovigilance process. And that included really working with a lot of suppliers for a variety of reasons. The original contract written many years ago just was not serving and the supplier was not serving their needs.

So they needed to pivot and change that. Now it's a combination of services and information. The services, sometimes the head of pharmacovigilance at R&D, woman with PhD and our team is very smart, they can manage that. But I think the struggle became more the desire to just assign a contract maybe from a IT perspective, right?

So the corporate IT team was kind of working with this very good people, but it's kind of like seeing the bigger picture of what's going on. And in this particular situation, the use of technology is rapidly changing and how we interact with the subcontractor that's, because you take a lot of this data and you use a third party to help analyze the data, right? So you're going to not the core team within the company is doing that. They're outsourcing some of this.

So there's some moving pieces going on here. So the head of pharmacovigilance, she wanted to look at this system more and understand, have more demonstration. So we brought the system suppliers in there again, without divulging who they are, people probably know who I'm talking about, but the point simply is it's insight that she and her team wanted to get about using this technology information system to help them manage this pharmacovigilance process much better. It took months to do this, right?

And I think the desire was, couldn't we just get it to an RFP and just get, you know, prices and we could just compare apples to apples and do that. Well, there's no apples, apples. This is not even apples and oranges. This is something that's just too foreign.

And the use of data I find in today's society is so important. So now how do we think about that? So you got to put on kind of a bigger hat in doing that. So what I found is working with her and her team is that listening, what she was really wanting was demonstrations.

She wanted long demonstrations. So not just the 30 minute demonstration. She wanted an afternoon demonstration in which we sat in a conference room with also people dialing in, you know, to share screens and all that stuff and her team asking many questions of the software. And this is software A and software B providers, and then also the services and how those are coming together.

And again, hours of evaluation that can be frustrating for a lot of people. But in the end of this whole thing is we then ready to do the actual, what I call the good RFP, then really laying it out and then having healthy discussions with the suppliers who proposed it, then really knowing how to evaluate the suppliers and then ultimately even getting the price that you're looking for. And I know that this is frustrating to people, but this type of service also, by the way, needs to be approved by the CFO and CEO of a corporation in a pharma world, because if a company cannot manage its pharmacovigilance, that's another huge risk that's just going to be causing a lot of problems.

And so this is not a light piece of service and software to buy. It's a very integral part of it that's strategic to the company, but you got to listen, you got to work and you got to figure out how we're going to continue to evolve over those months so that we're learning something about what we're buying. And that's, I think what she was really looking for. And in the end, you know, we did quite well in saving money and implementing a new system, but it, you know, in the middle of it, some people were like, just pick it, you can't do that, you know, in this situation.

So anyway, yeah. Well, I think, you know, your internal client, the head of CoVigilance was very interested in what the experience was going to be like and what the quality of the solution looked like. And I think, you know, kudos to her for, you know, wanting the longer demonstrations and getting a lot of people involved to see what it's really capable of doing and will this work for us, right? I think when people are evaluating anything, whether it's a service, a software, a product, it's like, does this fit our need, right?

It may fit other people in our industry, but does it meet the specific needs of our company in the way that we like to work, in the way that we like to look at things and, you know, and does it fit obviously the financial, you know, budget that we've put aside for this and hold us within the compliance that we need to maintain, et cetera, and so on, right? So, you know, sounds like you set up a process by which you could get comfortable with the evaluation and get comfortable, more importantly, with the decision that they ultimately made.

Right. And I always feel like in the life science space, and I'm sure in other industries too, but let's just talk about this back to the scientific approach, right, we don't know, right? And so we're going to go into buying, I would say almost anything you're buying. I mean, of course there's accounting services and IT and other things, but what I was driving at, there's something there about some of these categories that we're interacting with, where we have to put ourselves really in their shoes, our, our internal, you know, colleague's shoes and without new drug development, it's not just the generics, it's back to the human health is not going to advance and I think that's the key mission of probably almost all these companies is that they really want to help advance human health in some therapeutic area.

And so if we're going to be in the finance and procurement roles, what does that mean to support that effort and understanding that molecular structure, not to be the PhD in the room, but to be the person who can bring the insight into it from a business perspective, knowing how they're thinking to some extent. So yeah, exciting stuff. Yeah. And, and is there any sort of internal like service agreement between a procurement organization or, and, and, and that, and the R and D organization, it's clear that there's at least some governance or expectations are very clear and, and, you know, sort of what they're looking for out of, out of the procurement function in terms of what they need, what support that they're asking for and what outcomes they're trying to, to drive.

So tell me about, is that, is that formally governed in any way in your experience? Well, um, I would say I've not seen the formal governance, not to say that you can't have it. Right. Um, and to some extent, maybe what I've seen in some of the world that I've been in more of the emerging pharmaceutical and some of the, um, but even established pharma from some of my bigger consulting days is there's has to be, I think still a, a relationship that's intangible.

You know, I feel comfortable. I can pick up the phone and talk to Greg. Greg can feel comfortable picking up the phone and talk to me. Right.

I mean, there, there has to be some level of that. Now, can we formalize that and, and structure that? I know CFOs sometimes in the past that I've seen try to do that because they're worried about the cost. I think that there's always friction that can happen.

Now, I think you have to be very active about it. So you cannot just say, well, you know, this will be really organic. No. Can we at least have quarterly discussions?

Can we have monthly discussions? Um, what would be productive working together? So there is a need to push some level of structure into that relationship. Do I formalize it with a, you know, some guidelines?

Maybe that's evolved over time and it's a trust, um, and people now feel comfortable. I think that it's very, um, important that, you know, within a, as a company grows, there's going to be many more categories. So then how do people have the expertise to really understand issues around early clinical trials or preclinical trials or late stage or the pharmacovigilance or, you know, dealing with the, you know, clinical trial management software aspect of things. I mean, those are different angles and categories, but it's important that there's maybe a regular discussion that it's not always finance driven because that would be wrong.

I think it needs to be also driven by, can I sit in on the R&D teams, you know, some of the work that they're doing to present to industry or present to academia. What does that mean? I mean, I had a doctor within the company sit down with me, an MD, you know, that walked through, he pulled up a book that he wanted to buy. It was a very analytic or academic book on eyes, the makeup of the human eye, because the company was looking at eye treatment, right?

Eye diseases. And so he started to walk me through a lot of the cellular structure within the eye and itself. And again, I don't want, I'm not going to be the scientist, but just to appreciate what he's walking me through is very interesting. And so that half hour engagement walking through why we're going to buy certain things, because they want to then take these books and share them with the Salesforce, right?

So it was a little bit more commercial oriented, but it was very science oriented, and I think we need to appreciate that those are great opportunities just to have that relationship built, because I do appreciate the fact that, you know, what 70% of the human brain's information comes through the eyes and without good eyesight, people are very handicapped. And those are big issues on human health. So it's not just a cancer discussion. It's a human health discussion.

And that's, I think, what is interesting about some of this stuff. And that curiosity plays out in a relationship as you build it and go from there. So that's how I've really tried to approach it. I, you know, I think it's, you need the regular reviews, but if it's too structured on finance, it becomes difficult.

And even I had a discussion many years ago with the CEO of a company I was with, and it wasn't that he was upset at me, but it was just that he had come from a much larger pharmaceutical company. He found that the procurement team there just kept auditing and auditing how he was spending money. And it just, it rubbed him really too bureaucratic. And that was not something that he wanted at this new company that he was founding.

So definitely I agreed with him. And I tried to explain that even though I had procurement in my name, it's not me, but the perceptions are there and we have to overcome that. And that's only through relationships. Right.

Nobody wants an internal police force, but they want an internal partner that's going to help further the mission. And, you know, within reason, right? We should all be able to work together to accomplish the objectives that they're seeking to accomplish. So a lot of what's coming through here is, Dave, your understanding of, you know, you're trying to do your best to understand the science, not at the level they do, but at a level where you can appreciate that and appreciate what they're trying to accomplish.

And I would think that speed, right, is really important in this particular phase, right? Because whoever gets there first, you know, usually gets the biggest share of the pot, right? In these drugs, especially if there's competitors developing something that will compete with it. And so I think it's important to remember that, you know, we also got to keep things moving along, and we aren't there to slow things down.

In fact, if we can help you accelerate, you know, we'd love to help you, you know, do that if possible, right? Obviously, you must do the trials, you must go through the clinical and regulatory hoops that have to be, you know, run through, obviously. But to the extent you can be perceived as helping them to fulfill their mission, but also to do it at speed, I think would be, you know, a great testament to a good procurement organization in the pharmaceutical industry. Is that true?

Or am I barking up the wrong tree again? No, it takes, I think I saw a study published by McKinsey that the average cost for a new drug development is about $2 billion, right? $2 billion, right? And so time is money, but, you know, how do you manage that?

And I was thinking about the use of AI now as you roll into drug discovery. There's a lot of administrative things that need to be done. Reports need to be written. After you do these studies, you've got to file certain documentation with the FDA and other very important things need to be done.

Use of those tools in that area of AI to start it. You still want the human in the loops. By no means am I saying just bring in AI. I think sometimes people think in AI, I'm going to cut headcount.

No, it's about value adding. But, but this area that I am seeing evolve, and this is something that is just in the last, say, three or four years, maybe five, but it's, it's really a deeper understanding of where can a machine, AI tools help us manage administrative things in large computations and the human still has oversight. Now, procurement and our finance role is more collaboration as they go through the development of this stuff. But if we understand how the processes for filing of an IND or an NDA, a new drug application, we're now not going to be doing that job as a finance or procurement person, but we're going to be able to understand what tools they might need or how maybe we should negotiate what should the supplier do with their tool set to try to expedite that.

And now we're trying to take what call waste out of the system versus just trying to speed it up because I know that when you go to a scientist and say, can we do it faster? They're going to think you're going to do it worse. Like you're not going to do the study the right way. And that's not an area I ever want to be perceived as getting into, right?

But, you appreciate it and you can still ask questions about the process, not about the science of why you're doing the study the way you're doing it. And that also then helps to manage information, help also work with the IT team who's trying to negotiate a lot of these contracts as well, because there's so much data, data security issues, data oversight, that if we can be in there, we go from what I call a traditional, maybe not a traditional, maybe an older way of thinking of procurement as bureaucratic, fill out the paperwork.

We can buy it, we can get it done to a very dynamic work area that's moving extremely fast. Human health needs are evolving. It's not just in the U.S.

, we have 8 billion people on this planet. And so how do we get to managing that? And that's the exciting thing is we can then step into a lot of different areas in a role in procurement in that area of appreciating what's going on and how we can speed things up the right way versus taking waste out versus just saying, we just need to go faster and spend less. That's just not going to fly.

Right. I wasn't suggesting cutting corners. I don't think you are either. It's really about the work has to get done.

The analysis has to be done. How can we bring in technology to make that happen faster? And I think that's where, you know, that's where AI is coming in and that's sort of the right mindset I think about, like, how do you apply it to be a thought partner or, you know, an accelerator of the work, right? That, you know, while I'm sleeping, this tool is working on things that, you know, I would be doing tomorrow if I didn't have this tool, right?

And put it to work as a partner more so than as a replacement for the person, right? Another area of going on in this drug discovery development area is the FDA is now releasing guidance on preclinical animal studies, right? The idea there is, could we, is there different ways of speeding that up and lowering that cost rather than going through a lot of animal studies? And one of the things that I read about, and again, I'm not going to tell somebody that should or shouldn't do a preclinical trial, that's not my job.

That my job is just to observe that there seems to be some changes going on at the FDA saying, well, maybe if there were some preclinical studies done outside of the U.S. or in other areas, could we apply those in toxicity or other areas, and then we wouldn't have to do another one, right? So you cut it out.

Again, we're observing it as a business person, and how would we then talk with our colleagues inside, and they may say that is what's going on, or I do still need to do the study, but here's how we can maybe tweak it. Then we can change budgets, we can change things, and we can understand time and money in doing some of these studies. And I think that's where I try to at least learn not to be the expert in preclinical trials, but to understand what the business parameters are and how they're changing in that area.

Right. Hopefully it helps. Yeah, yeah, yeah. Yeah, well, we can't have a podcast without talking about AI and, you know, dances, so I'm glad you're talking about that here, you know, these days.

These days we'd be remiss. But this has been a great discussion, and, you know, we've talked about this prior to taping that, you know, there's probably a two-part to this, and I think, you know, there's this R&D front-end part, but then there's once you get to commercialization, and now you're marketing the drug, and it's probably a whole nother podcast there, and I'd love to have you back on to talk about, you know, sort of the rest of the story as we follow, sort of following the drug through the life cycle, right?

And so I want to issue that invitation to you now, and also thank you for a great discussion about a topic that I think is very important to the pharmaceutical industry, and especially as things, I think, will accelerate now in this new era of AI, but you still need to coordinate all these parties and coordinate all this activity, and to do so at, you know, at a reasonable cost so that you, you know, you can win the game, so to speak, both from a patient health, which is paramount, but also from a financial point of view and financial performance point of view.

Exactly. And I think that's really what drives the market, and I appreciate the offer there, Greg. I've appreciated this conversation. The life science space, you know, we talked about the R&D space, but there's the manufacturing of the drug, which is a whole nother issue of purchasing and supply chain management, and then there's the commercialization you alluded to there, how do we interact with doctors and patients and serve them, and then also the backbone of a corporation, which is the whole back office stuff, right?

The IT and the finance and the professional services that are brought there, and I think it's kind of in that vein of always, though, how are we evolving and how does each one of those areas think about advancing human health that makes it exciting for me, and I know for a lot of other people, and I think when people are sick, that's usually, or their loved ones are sick, that's usually where they start to really pay attention to some of these advancements, which can be phenomenal, you know?

Now, people that are diagnosed with cancer, that used to be something that was very difficult to digest, but there is a lot of life-saving technology that extends, and a very productive life, too. It's not just to survive, it's enjoyment. And I talked about rare diseases in the, you know, the company I was with was looking at thyroid eye disease, you know, it's a very autoimmune situation, and what happens in that area and, you know, preventing people from having good vision, right, and even going blind.

So there's so many things out there that are exciting, but each one of these steps and each one of these functions kind of together in this complex world you alluded to is, is really how successful companies do it over and over and, and continue to grow. Um, but it's important that procurement and how we work, it's look at suppliers, engage suppliers, and think about that. That is very crucial, I think, to the success of any life science company, small or large. Thanks.

Yeah, no, the, the, the tailoring for life sciences came, came through loud and clear on here. It's, uh, you know, it's not like other industries, uh, you know, and even pharma within life sciences is different than, uh, say medical device, right? Where it's more, you know, more of a product versus a pill, if you will. Uh, so this has been great, uh, David, I, I, uh, welcome you back.

We'll, we'll probably do a part two with you, uh, to continue in the pharmaceutical track here, the life sciences track, but thanks for spending time and, uh, wish you a great weekend and until next time. Thanks Greg. I appreciate it. Take care.

Enjoy. Take care. All right.