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depth and breadth of expertise required for small pharmaceutical companies to undertake DDD is daunting. The company must possess capabilities that include basic small business knowledge, accounting, legal, intellectual property tactics and strategy, scientific discovery, animalmodels, toxicol- ogy, specific disease domain understanding, regula- tory, clinical trials, manufacturing, marketing, sales and distribution skills as a temporal function of cor- porate development. In order to avoid the necessity of ballooning personnel ranks and significant over- head, a number of small pharmaceutical companies are exploring and developing the Virtual Pharmaceutical Company (VPC) model. This coun- terintuitive model is described and discussed below.


Overview:Virtual Pharmaceutical Companies The advent of the VPC was due to the efforts of numerous institutions including both large and small pharmaceutical companies. A number of early stage start-up companies in the biotechnolo- gy/biopharmaceutical boom of the 1970-90s era went through some form of VPC process. Genentech Inc was a virtual company from its inception in 1976 through 1978, until one of the founders, Herbert Boyer, established an in-house wet laboratory capability6. During the evolution of the VPC model it was perceived that companies involved in DDD could exist on a spectrum con- sisting of fully-integrated entities at one end and virtual entities at the other end. It was not until 1996 that the pharmaceutical company Hoffman- La Roche actually created a purpose-built VPC named Protodigm. The company employed only nine people and it was estimated that they decreased both development times and costs by approximately 25% compared to fully-integrated pharmaceutical companies7. Another pioneer in the inchoate VPC sector was Vanguard Medica (later known as Vernalis), which was one of the first companies to describe itself as a ‘Virtual phar- maceutical development’ company in 20037. There was an additional impetus for the devel-


opment of the VPC model. These efforts arose from a myriad of emerging global orphan disease initiatives8. The World Health Organization in 2000 facilitated the creation of public-private part- nerships to develop therapies for orphan diseases. The NIH (USA), the Global Fund and the Gates Foundation indirectly aided these efforts. In addi- tion, the advent of the internet/www and access to open-source, readily-accessible databases all fuelled the endeavours of individuals/small groups to become involved in the search for new therapeu-


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tic drugs8. Even with all of this uncoordinated, but substantive, effort as recently as 2014, VPCs had only been ‘described anecdotally’9. This is some- what surprising since a reported survey in the UK claimed that more than 40%of all UK DDD com- panies in 2009 were virtual entities10. In addition a more rigorous 2013 study indicated that more than 50%of biotechnology companies in Australia were VPC-like corporate entities7. This all indi- cates that historically there has been a quiet, but considerable, effort in the development of the VPC sector. However, there has been limited written recognition of its existence, as well as a clear description of the advantages and disadvantages of the model are somewhat lacking.


Definition of a VPC Most of us are familiar with the concept of ‘Virtual Reality’ as embodied by the simulated and immer- sive environments of software-driven games. However, as a blurring extension of this concept, PricewaterhouseCoopers (PwC) published a report describing the use of a computer-based virtual R&D process11. All of these descriptors should not be confused with a Virtual Company, which is somewhat less well defined and understood. In general, it refers to a company that does not pos- sess the standard ‘bricks and mortar’ infrastructure of a conventional company. In addition, the description also encompasses the process of how a company is managed and the type of business model adopted to facilitate growth and evolution. Such companies work on the principle that most operational tasks can be outsourced to third party providers, while the project management and strategic business execution are retained within the parent company7. The momentum for this type of approach is to create efficiencies of decision-mak- ing and simple lines of communication. The corol- lary is that this leads to a reduction in overhead costs, product development times and risk. For such an approach to be effective the in-house team has to be experienced and possess a number of core management and expertise skill-sets. A VPC is defined as a company that outsources


most of, if not all of, its essential tasks associated with the DDD process that includes such efforts as discovery research, preclinical evaluation and clini- cal development. The information and knowledge base is maintained within the company and held by management and advisors. Thus there is no in-house laboratory work undertaken by the VPC. A VPC consists of a small, experienced management and advisory core team. The initial goal is to expedite the proof-of-concept (PoC) for a drug candidate in a


Drug DiscoveryWorld Summer 2019


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