asap 2012 global summit presentation: clinical outsourcing alliances
DESCRIPTION
Presented at the Association of Strategic Alliance Professionals (ASAP) Global Summit. Las Vegas, NV 03.08.12TRANSCRIPT
The Emerging Landscape of Clinical Development Alliances
John D. Barry Michael W. Young
Vice President, Alliance & Sales Management Vice President, Alliance Management Group
Clinical Development Industry
• CRO – Contract Research Organizations−Outsource clinical services for life sciences
companies (principally pharmaceuticals)−Approximately 1200 in the world ranging from
1 person to 20,000+ professionals−Over 72,000 people employed in 2010−Conducted more than 11,500 clinical trials,
involving two million research participants in 114 countries in 2010
−Contributed to the development of all of the top 20 selling prescription medicines
−Involved in the development of at least 33 of 38 new medicines approved for use last year in the United States and Europe
Drivers for Outsource Development Alliances
• The Recession and Continued Economic Pressure• Big Pharma / Biotech downsizing
− Approximately 20,000 layoffs in R&D personnel since 2008*− Represents over 10% of total R&D Headcount employed by top
30 pharma and biotech companies worldwide
• Market Forces− Capacity constraints− Rising workload− Increased Regulatory requirements− Increased safety and QA concerns− Rising workload inside Pharma− Decelerating revenue growth− Intense capital market pressures
• Need for Greater Efficiencies and Speed to Target− Reducing costs and outperforming competition
*Wall Street Journal
Taking Orders• Transactional• Tactical execution• Managing inputs• Accommodating issues• Many interfaces• Diffuse accountability
Traditional State
Strategy
Life Sciences Company
CRO
Execution
Evolving State
Partnering• Trust & relationship• Strategic plan & execution• Managing outcomes• Proposing solutions• Single peer to peer points of contact• Empowered authority• Reduce need for internal oversight
Strategy
Life SciencesCompany
CRO
Execution
Industry Transition in Progress
Transactional State*
APPROACH• Ad hoc, per project basis• Driven by insufficient internal personnel or expertise• Sponsors interact with large numbers of service providers• Traditional service providers only engaged for a single project
PROCESS• Sponsors solicit multiple bids for prescribed work• Select lowest bidder (or combination of perceived best deal)• Sponsor commits significant resources for oversight• Some Sponsors have established “preferred providers” to
expedite selection and contracting• Sponsors “resort to micromanaging the relationship”• Middle-manager focus for planning and governance
*Tufts Center for the Study of Drug Development 2009
Partner-Based Alliance State*
APPROACH• Departure from Transactional State focuses on mutual
investment and mutual reward• Foundation lies in honest assessment of Sponsor core
competencies and acknowledgment of what will be done better, faster, cheaper by the outsource provider
• Commitment to invest in and implement structures and policies to support an alliance relationship
• A visible senior management commitment to the goals of the stated alliance
• Not project work: Shift from CAPACITY-based outsourcing to COMPETENCY-based outsourcing
*Tufts Center for the Study of Drug Development 2009
Partner-Based Alliance State*
PROCESS• Sponsor shifts to Partner• Provides significantly more transparency to oncoming pipeline• Incorporates planning and scientific expertise of CRO• Dramatically reduces out of scope costs and improves quality
of work delivered• Governance and operating procedures are a shared
responsibility• Affords both partners the chance to optimize core
sompetencies• Dramatically reduces Partner oversight requirements lowering
resource needs and overhead• “Nearly all functional tasks can be outsourced in partner-based
relationships”• Real time, cost, and productivity gains can be realized
*Tufts Center for the Study of Drug Development 2009
Degrees of Separation
CRO / Sponsor relationships:• range from simple customer/vendor transactions
to true outsourcing partnerships• individual relationships vary over time.
Degrees of interdependence between companies
Acquisition
Merger
Joint
Venture
Strategic
Alliance
Franchise
AllianceJoint
Team
Relationship
Outsourcing
Partnership
Out / In
License
Customer /
Vendor
Transactions
Need for
Alliance Management
Adapted from: “Managing Alliances for Business Results”, Weise, et.al. 2006
CRO Allia
nces
Partnership Model Options
• Transactional Model − Project by project outsourcing. − No further commitment from provider or customer.
• Functional Service Provider Model− Provider commits resources to the model but functional
management remains with customer− Generally includes an inputs based contract where an input is
an FTE• Enterprise Solution
− Creates a productivity based model that encourages the provider to innovate
− Generally includes an outputs based contract that pays for productivity
− Some examples:• Asset based – device/drug or TA – able to plan and deliver:
− on core team− program efficiencies for subsequent studies− process improvements pertinent to that asset
• Wider strategic alliance – able to build on all elements above, developing greater insights, influence and efficiency
Four Pillars of a Successful Partnership
• Each partner adds their core competencies
• A dedicated organization• Cultural alignment• Therapeutic expertise• Value proposition & shared risk
PPD Alliance Culture
• to resource to our client’s needs• to assure client objectives are met rather
than simply aligned with PPD abilities• to keep the goals of the stated Alliance
first• to be constantly looking for win-win
opportunities• to provide valued transparency• to constantly seek meaningful
communication
Objectives of Enterprise Solutions
• Achieve goal alignment between partners• Foster innovative behaviors• Connect financial rewards with enhanced
delivery• Leverage economies of scale• Eliminate redundant competencies• Create competency synergies between
partners
Enterprise Solution versus FSP
• Enterprise Solution− Creates a productivity based model that encourages the provider to innovate (contract commitments; supplier processes and systems, etc.)
− Generally includes an outputs based contract that pays for productivity− Typically provides full function sourcing with no like resources maintained by Sponsor
• Functional Service Provider Model− An agency or staff augmentation model where a portion, but not all roles are provided by a single supplier
− Provider commits resources to the model but functional management remains with customer
− Generally includes an inputs based contract where an input is an FTE