An Introduction to “Platform” Vendors: A Life Sciences Primer

Drug Sponsor HR

Airbnb disrupted the hospitality industry. Uber disrupted the taxi business. These are examples of “platforms”:  transformative, participative, non traditional ecosystems of supply and demand that efficiently match users to each other in order to make financial or social transactions and create value.

Traditional companies are hierarchies dependent upon directive management and process silos.  A platform unlocks value that can not be created by hierarchies.  For example, WeWork is a platform business that transforms traditional office leasing to monthly hot desk subscriptions.  In addition to flexibility, WeWork users enjoy tremendous added value from community with other entrepreneurs which would be impossible via traditional office leasing. 

Closer to home in life sciences, Biolab adapted the WeWork platform model by creating a shared laboratory co-working space, fully equipped with microscopy, tissue culture rooms, autoclaves, cold storage and more.  A pharma start up can have immediate access to resources they would otherwise have to use precious investment money to build and then validate.  The same sense of community permeates Biolab, rife with entrepreneurial scientists who are all at similar stages of pharma start up and funding.  The connections made and shared experiences have quantifiably positive value for these start ups, and pharma innovation in general. 

LifeSciHub is a platform business in the life sciences R&D vendor ecosystem designed to address talent shortages.   At its core LifeSciHub is a community of small micro-businesses:  subject matter experts that have decoupled from the corporate ladder to become independently incorporated businesses of 1.  This allows drug sponsor access to talent and expertise that would otherwise be inaccessible by traditional, human resources based systems and strategies.  Figure 1 illustrates LifeSciHub’s value as compared to non-platform traditional flexible service providers.

Unlike traditional companies, with platforms, competition is less important than cooperation and collaboration. Partners may represent potential competition, but they are more likely to add value to the platform than anything else. In such an environment, controlling relationships are more important than controlling resources.

Michael O’Gorman is a pharmaceutical finance leader who created the Life Sciences Marketplace innovation to address the inefficiencies of current procurement systems.  “SAP Ariba is a well-known, but expensive procurement system used mainly by larger drug sponsor users and decision makers, but does not address many of the important vendor, supplier and site diligence steps.   Each vendor applies to an RFP hosted in Ariba for one drug company, then answers almost all the same questions in a different drug company’s Ariba instance, and so on.” He explains.  The Life Sciences Market flips that concept to externalize information, keeping otherwise redundant processes within the vendor ecosystem community where non-competitive information and value can be shared.  “For example,” Michael adds, “more than 80% of drug development RFPs are essentially the same across drug sponsors, because they are all attempting the same tasks, with the same systems, under the same regulations.   The Life Science Marketplace harnesses the power of that shared experience and knowledge by our extensive library of RFP templates.  We also have extracted over 100,000 site contacts from clinicaltrials.gov and are willing to give that data to any subscribing client that wants to do site feasibility, site surveys, and site budget requests through the Marketplace.”

Platform business models are proliferating throughout life sciences and other verticals.  This is an exciting opportunity to accelerate the pace of innovation in drug development.

Figure 1:   Contrasts in Platforms and Traditional Businesses

Contrast Examples- General 
PlatformTraditional Business Model
AirbnbMarriott
TechnologyReal Estate Inventory
FlexibleStatic
WeWork: Month to month hot desks, community of fellow entrepreneursTraditional: Office space annual lease, no community
LifeSciHub Platform Differences From Traditional Flexible Resource Providers 
LifeSciHubTraditional Resource Middleman
Economics
Flat fees and total Supply and Demand Transparency. Goal is to maximize supply side hourly rate without increasing total cost for demand, by reducing share going to “middleman”Withholds price information from both Supply and Demand, incentivized to drive supply side cost down in order to increase share going to middleman wherever possible.
Structure
Community based. No salespeople. All members work directly in drug development, refer projects and other SMEs to the platform. Heavily reliant on long term working relationships and direct experience with whom the member is referring. Members are permanently rewarded for positive referrals to both supply and demand. Places greater importance on maximizing the amount of money the independent SME can make.Recruiters- usually non SMEs, recruiters do not work directly in drug development and likely never have. Heavily reliant on large databases and search terms. Few or no direct working-in drug development- relationships. Need to compensate recruiters, both with salary and commissions increases internal costs, increases mark ups, reduces amount of money an expert can make, which lowers the quality of candidate. Places greater importance on maximizing the amount of money the middleman can make
Risk
1099- expert is independent incorporated, has other clients, is a fully incorporated small business. LifeSciHub indemnifies hiring entity from worker misclassification risk. More share of the hourly rate available to attract higher quality talent.W2 seen as a must-have strategy against worker misclassification risk. Assumes all workers are or prefer to be full time employees. Additional cost of W2 reduces amount of money going to SME.
“New” Talent Pool
Ex-corporate drug development experts with 10 or more years of experience who no longer values the corporate ladder and its linear career paths. Worker who values practicing one’s “craft” or expertise more than other considerations such as titles, promotions and managing others.Attracts workers who prefer to be full time employees. This is arguably a smaller talent pool than before due to Great Resignation associated dynamics. Corporate ladder-motivated. Looking for promotions, management positions, etc.

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