The Changing Outsourcing Paradigm from Service to Strategic Partnership – A Sponsor View October 7, 2008 Marion Lorden, PMP Customer Care Manager Professional

The Changing Outsourcing Paradigm from Service to Strategic Partnership – A

Sponsor View

October 7, 2008

Marion Lorden, PMPCustomer Care ManagerProfessional 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?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


• 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


What are we looking for?

• Outsourcing solutions that result in:

• Cost savings

• Better utilization of internal/ external resources

• High quality outcomes


• 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

Preferred Providers

Benefits

• Preselected

• Efficient/fast start up

• Previous relationship

• Understands our needs

Risks

• Not getting the newest/best technology

• Stuck in a poor relationship

• Higher price due to lack of competitive bids

Standard Outsourcing Models

Single Resource/Contractors

• Adds single resources as needed

• Expansion of resources is limited


• A short duration spike in workload beyond internal capacity

Benefits Risks

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.


• ‘Best of breed'

• Completes work on all projects

• Build a long term relationship with each group

• Continue to work with favorite vendors

• Higher vendor management needs

• Complex communications

• Competitors will need to work together

Full Functional Outsourcing or Multisourcing

Benefits Risks

Full Service Outsourcing

• Hands off approach – vendors do it all

• Ease of vendor management – one contract, one Project Manager

• Misunderstanding of customer requirements across multiple functions

• Lack of control

• All your eggs in one basket


• All services outsourced for a given project/protocol

Benefits Risks

Off-Shoring

• More cost effective

• Access to patient populations

• Concerns with quality

• Communication difficulties

• Culture differences

• Hidden costs


• Running your trials in another country for cost and/or operational benefit

Benefits Risks

Strategic Partnerships

• Looking for efficient fast partners

• Complimentary skill set

• Expertise

• Risk sharing

• Skill set may change

• Conflict in corporate cultures

• Locked into partnership

New Outsourcing Model

• 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

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