The Changing Outsourcing Paradigm

from Service to Strategic Partnership
– A Sponsor View
October 7, 2008

Marion Lorden, PMP

Customer Care Manager
Professional Services
 Sponsor Point of View

• In the changing Clinical Outsourcing

environment, what is the Sponsor going
through?
• The need for a clear understanding of
requirements and a planned path to obtain
them
 Changes In How Sponsors Outsource

• Changes in the industry are driving new trends

in outsourcing paradigms
• We are changing how we resource clinical trials
…

Why?
Changes in the Biotech &
Pharma Industry
 Changes In Industry

• High rate of investigative product failure

• Fewer blockbusters
• Products coming off patent
• Generics flooding the market taking market
share and revenue

• Downsizing of organizations
 Changes In Industry

• We are under intensifying political,

consumer and scientific attack about the
safety and high cost of our products
• Causing an increased effort in our pre-
clinical and clinical programs to meet
escalating regulatory requirements
 Changes in Industry

• “Drug and Biotech companies are increasing

their R&D budgets to build out their product
pipelines which will increase their use of
outsourcing “
(Moody’s Global Corporate Finance August 2008)
 Understanding Our Expertise

• The rules of drug development are

changing and so are the questions being
asked
• It isn't enough for a Sponsor to merely
consider how to improve what it’s doing –
A Sponsor initially needs to determine
exactly what they should be doing in the
first place
 Understanding Our Expertise

• What do we do well?
• Research?
• Expertise in a specific field?
• Buying and developing technology?
• Financing the development?
Constraints & Climate
 Company Constraints

• Biotech firms which concentrate on

discovery often lack the infrastructure or the
expertise to:
• Conduct clinical trials efficiently
• Take a product to approval and beyond

• Smaller virtual companies may not have

the time or the financial resources for full
time staff
 Company Constraints

• Mid-size Pharma may not have the

pipeline to support full time departments
• Large Pharma is trying to keep costs in
line while expanding their development
arena
 Current Climate

• Expanded volume and scope of research has

increased 6% in global development
annually since 2002
• Holding growth on internal resources
Getz, K., Zuckerman, R. Contract Pharma June 2008
Changes in Sponsor
Outsourcing
 Changes in Sponsor Outsourcing

• Clinical Trials are:

• Increasing in complexity
• Difficulty meeting patient enrollment goals
• Driving us to find treatment naïve
populations in regions such as Asia and
Eastern Europe
 Changes in Sponsor Outsourcing

What are we looking for?

• Outsourcing solutions that result in:
• Cost savings
• Better utilization of internal/ external
resources
• High quality outcomes
 Changes in Sponsor Outsourcing

• Obtain experience and expertise that

otherwise is unavailable to hire
• Sponsors need personnel with skill set to
provide guidance and manage outsourcing of
projects – shift from previous execution mode
• Quickly ramp up as pipeline matures or…..
down if it fails
Outsourcing Models
 Standard Outsourcing Models

Preferred Providers
Benefits Risks
• Preselected • Not getting the
newest/best
• Efficient/fast start
technology
up
• Stuck in a poor
• Previous
relationship
relationship
• Higher price due to
• Understands our
lack of competitive
needs
bids
 Standard Outsourcing Models

Single Resource/Contractors
• A short duration spike in workload beyond
internal capacity
Benefits Risks
• Adds single • Expansion of
resources as resources is limited
needed
 Standard Outsourcing Models
Full Functional Outsourcing or
Multisourcing
• A outsourcing landscape that has moved
towards using one of multiple suppliers,
selecting specialist providers to make the
most of the available outsourcing options.
 Standard Outsourcing Models

Full Functional Outsourcing or Multisourcing

Benefits Risks
• ‘Best of breed' • Higher vendor
management needs
• Completes work on
all projects • Complex
communications
• Build a long term
relationship with • Competitors will
each group need to work
together
• Continue to work
with favorite
vendors
 Standard Outsourcing Models

Full Service Outsourcing

• All services outsourced for a given
project/protocol
Benefits Risks
• Hands off approach • Misunderstanding of
– vendors do it all customer
requirements across
• Ease of vendor
multiple functions
management – one
contract, one • Lack of control
Project Manager
• All your eggs in one
basket
 Standard Outsourcing Models

Off-Shoring
• Running your trials in another country for
cost and/or operational benefit
Benefits Risks
• More cost effective • Concerns with
quality
• Access to patient
populations • Communication
difficulties
• Culture differences
• Hidden costs
 New Outsourcing Model
Strategic Partnerships
• A formal alliance between two commercial enterprises,
usually formalized by one or more business contracts but
falls short of forming a legal partnership.
Benefits Risks
• Looking for efficient • Skill set may change
fast partners
• Conflict in corporate
• Complimentary skill cultures
set
• Locked into
• Expertise partnership
• Risk sharing
Outsourcing Process
 Outsourcing Process
• Determine requirements
• Meet with Stakeholders

• Vendors identified
• Research, database, recommendations
• Initial contact

• Documents developed
• Request for Proposal containing: information not included in
protocol i.e. timelines; Study protocol and/or study summary;
Study schematic; Bid grid; Intent to Respond Form;
• Evaluation process/forms
 Outsourcing Process

• Timelines set
• Proposal due date
• Vendor questions
• Expected award date

• RFP released
• Vendor questions

• Proposals received
 Outsourcing Process

• Evaluation
• Identify evaluators
• Set evaluation milestones/timelines
• Gather and assimilate proposal information – scoring
• Meet to discuss outcome and gather additional
information/make initial cut
• Meet with potential vendors
• Evaluate study teams interaction
• Final decision and award
 Outsourcing Process

• Contract monitoring and Control

• Cost & scope control
• Quality control
• Timeline/milestone vigilant

• Contract closeout
• Contract reconciliation
• Termination letter
Outsourcing Flowchart
Outsourcing Examples
 Example 1: Full Functional Model

• Safety Reporting department reduced to one

• Needed to outsource majority of tasks with
oversight from Sponsor
• Requirements
• Receive SAE documentation
• Enter SAEs into Oracle AERs database remotely including
preliminary MedDRA coding.
• Write SAE narrative.
• Quality Control will be preformed on the source
information.
 Example 1: Full Functional Model

• Requirements
• All source documents, memos, Medical Review Form, etc.,
will be scanned and posted electronically
• Prepare completed draft MedWatch Report
• Make corrections to database and MedWatch per the
Medical Review.
• Receive, process and QC all follow-up information as
described above.
• Prepare weekly reports
• Prepare SAE tables for Annual Reports, IB updates, etc.
 Example 1: Functional Model

• Difficulties
• Evaluators new to Outsourcing
• Education of process needed
• Evaluators went into great detail
• Time consuming
 Example 2: Full Service Clinical Trial

• Ph III trial initiated – limited internal resources

• Study details – global, 1300 pts, 120 sites
• Requirements:
• Project Management
• Global Clinical support
• Global Regulatory support
• Biostatistics
• Data Management/EDC
• Medical Affairs
 Example 2: Full Service Clinical Trial

• Difficulties
• Cross company input to determine requirements
• Evaluated 12 CROs
• 12 evaluators covering all aspects of requirements
• Education of evaluators and vendors to process
• High level of logistics required to meet timelines
• Additional step in evaluation created to quickly
reduce vendor numbers for more detailed look
 Summary

• Though the Outsourcing paradigm is

changing to acquire speed and efficiency by
leveraging CRO expertise, the choice of a
partner still needs a clear, well defined
process to make the right decision