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2010 Avoca Report Executive Summary

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  • 1. What Does the Future Hold forClinical Service Provider-Sponsor Relationships?Executive Summary of Results from theAvoca 2010 Industry Survey June 2010
  • 2. CONTENTS Introduction: Objectives of the Industry Survey Methodology Respondents Key Findings Conclusions 2
  • 3. OBJECTIVES OF THE INDUSTRY SURVEY Each year, The Avoca Group polls industry management to understand trends in the outsourcing of clinical research. 2010: How outsourcing relationships are expected to change between the present and 2014. 3
  • 4. OBJECTIVES OF THE INDUSTRY SURVEYQuestions were posed about: Drivers of change in sponsor-clinical service provider relationships Changes companies plan to make to increase the efficiency and quality of outsourced clinical trials Strategies for successful implementation of new outsourcing strategies and tactics How planned changes will impact outsourcing strategies, vendor selection priorities, and the management of outsourcing relationships. 4
  • 5. METHODOLOGY Invitations to participate were emailed to selected executives and managers of sponsor and service provider companies during Q1 2010. Links within the emails directed respondents to the appropriate web-based survey instruments: sponsor perspective provider perspective Respondents who completed the survey were offered an executive summary of the survey results. For questions in which participants were asked to respond on behalf of their companies, only one respondent per company (the most senior) was used in the analysis in order to avoid over-representation of companies with multiple participants. 5
  • 6. RESPONDENTS285 surveys 109 sponsor surveys 73 companies 72% pharmaceutical companies; 22% biotech; 6% other 48% self-described “Top 20” 70% executive/middle management 174 service provider surveys 88 companies 71% full-service CROs 59% self-described “Top 20” 79% executive/middle management 6
  • 7. Sponsor Respondent CompaniesAbraxis Bioscience Cardiokine GlaxoSmithkline Orion Pharma Global Alliance for TB DrugAchaogen CareFusion Research Services OSI Pharmaceuticals DevelopmentActavis South Atlantic Celgene Grunenthal OtsukaActelion Celtic Pharma Development Hoffmann-La Roche Pain TherapeuticsActivX Biosciences Chugai Pharma Europe Incyte RatiopharmAdnexus Cognizant Intendis RegeneronAllergan Collins Johnson & Johnson SanofiAllon Therapeutics Cordis Corporation Knopp Neurosciences SantheraAmarin Technologies Coughlan Kowa Research Europe Shire Pharmaceuticals Dainippon Sumitomo PharmaAmgen Lexicon Solvay Pharmaceuticals AmericaAmylin Deltanoid Pharmaceuticals Lilly Teva PharmaceuticalsAstellas Pharma Dey LP Lundbeck TibotecAstraZeneca Eisai MedImmune Vicus TherapeuticsBaxter Endo Merck Wyeth ResearchBayer Schering Pharma Ferring MillenniumBIAL Five Prime Therapeutics Mitsubishi Pharma EuropeBiogen Idec Forest Laboratories NovartisBMS Fresenius Biotech Novo Nordisk Genentech, Member of RocheCadence Pharmaceuticals Ocasio group 7
  • 8. Provider Respondent CompaniesAagami DCL Medical Laboratories KLIXAR QED Clinical ServicesAcurian Eurofins Medinet Kromite LLC QuanticateAepodia Eurotrials Kuantum CRO Quest DiagnosticsAsia Global Research ExecuPharm Laboratorio Hidalgo Quintiles FOCUS Clinical DrugAsiatic Clinical Research LatAm Clinical Trials Radiant Research DevelopmentAverion Forma Life Science Marketing Manipal Acunova Limited RadPharmAxiom Marketing Gagnon Medpace REGISTRATAXIS Clinicals GFA MedPoint Communications ResearchPointAxis Group GVK Biosciences Private Limited MRC RH Bouchard & Associates Ronald Fehst ResearchBeckman Coulter Genomics Harrison Clinical Research Group Myoderm ConsultantsBiomedical Systems Harte Group Ockham RxResearch StaffingC3i i3 Research Omnicare Sariola-HeinerClinForce ICON Paragon Biomedical SQV Clinical Research ServicesClinical Financial Services INC Research PAREXEL Stiris ResearchClinical Research Management IndiPharm Pharma Medica Research TFS Trial Form SupportCogent Performance InsightRx Consulting LLC Pharma Services Network TKL ResearchManagementCOMSYS Clinical Integrium PharmaNet TooneConsentSolutions invivodata PharmaWrite US OncologyCovance IRB SERVICES Pharm-Olam Vantage BioTrialsCRS Clinical Research Services Iris PPD VirtualScopicsCyncron John R Vogel Associates PRA Woodley Equipment CompanyDatatrial Kendle PSI ZeeCRO 8
  • 9. Key Findings
  • 10. Sponsor Data 10 15 20 25 30 35 40 45 50 0 5 Better measurement of provider performance (Key Performance Indicators [KPI]) Increased use of preferred providershipsWhat changes has your Better methods of/criteria for provider selectioncompany recently (last Better internal information sharing regarding clinical research provider performance 2 years) made, or is it Reduced number of providers currently making, to Better delineation of expectationsimprove the efficiency Implementation of a functional "Lessons Learned" program of its outsourcing Improved outsourcing models relationships? Better capturing of relationship metrics (Key Relationship Indicators [KRI]) Increased use of technology platforms to improve communications (73 companies) Change in specific providers used More functional outsourcing More full-service outsourcing Increased incorporation of performance bonuses into contracts Increased incorporation of performance penalties into contracts Increased number of providers 10
  • 11. Provider Data 10 20 30 40 50 60 70 80 0 Enhanced focus on repeat business Improved relationship managementWhat changes has your Increased pursuit of preferred providershipscompany recently (last Better capture of customer feedback 2 years) made, or is it More senior management involvement currently making, toimprove the efficiency Better delineation of expectations of its work with Better measurement of performance (Key Performance Indicators [KPI]) sponsors? Increased use of technology platforms to improve communications Better internal information sharing regarding sponsor expectations Improved outsourcing models (88 companies) Different resourcing models Implementation of a functional "Lessons Learned" program Better capture of relationship metrics (Key Relationship Indicators [KRI]) Increased incorporation of performance bonuses into contracts Increased incorporation of performance penalties into contracts 11
  • 12. ThemesFor sponsors: Consolidation of outsourced work with a restricted number of preferred providers Changing criteria for selection of providers and preferred providers Investment in formal programs for measuring and managing performance and relationship qualityFor providers: Increased focus on pursuit of long-term “preferred” client relationships Investment in formal programs for measuring and managing performance and relationship quality 12
  • 13. Future Direction #1 Sponsors:Consolidation of outsourced work with preferred providers Providers: Increased focus on pursuit of long-term “preferred” client relationships
  • 14. Where are we now? 69% of sponsors currently have preferred provider arrangements. More than ¾ of providers are increasing their pursuit of repeat business, and more than half are increasingly pursuing preferred provider relationships in particular. 14
  • 15. Sponsor Data What approximate percentage of your How has this percentage changedclinical research outsourcing spend went between 2007 and the present? to your preferred providers in 2009? 11% Increased 0% - 25% 26% 26% - 50% Decreased 42% 25% 51% - 75% 4% Stayed the 76% - 99% same 70% Dont know Dont know 22% N=45 N=47 15
  • 16. Provider DataWhat approximate percentage of your How has this percentage changedannual revenue came from preferred between 2007 and the present? clients in 2009? 11% Increased 0% - 25% 31% 35% 26% - 50% Decreased 23% 51% - 75% 55% Stayed the 76% - 99% same 14% Don’t know Don’t know 31% N=71 N=67 16
  • 17. Is there evidence that increased allocation topreferred providers results in higher quality work or greater value? If so, why? 17
  • 18. Sponsor DataIn general, how satisfied are you with the work that has been done for you by Clinical Service Providers? N % spend to preferred providers No preferred providers 52% 24% 24% 21 0 - 75% 64% 16% 20% 25 76% - 99% 5% 58% 32% 5% 19 0% 20% 40% 60% 80% 100% Very satisfied - 5 4 Neither satisfied nor dissatisfied - 3 2 Very dissatisfied - 1 18
  • 19. Sponsor DataIn general, how satisfied are you with the value that you have received for the money spent on your Clinical Service Providers? N % spend to preferred providers* No preferred providers 5% 14% 48% 33% 21 0 - 75% 48% 28% 24% 26 76% - 99% 58% 37% 5% 19 0% 20% 40% 60% 80% 100%* p<.05 Very satisfied - 5 4 Neither satisfied nor dissatisfied - 3 2 Very dissatisfied - 1 19
  • 20. Provider Data In general, how satisfied are you with your relationships with the sponsors with which you work? % revenue Nfrom preferred clients* 25 37 8 * p<.01 20
  • 21. PROVIDERS: Do you feel that your company performs more effectively for itspreferred providers than it does for its other clients? 43% yes 41% no 16% don’t know 21
  • 22. Provider Data 10 15 20 25 30 35 40 45 0 5 Better understanding of expectations/standards If you feel that your Increased trust/less micromanagement company performs more effectively for its Greater volume allows for more efficient processespreferred providers than it Increased level of senior does for its other clients, management involvement what do you feel are the Higher staff satisfaction reasons? leads to better performance (70 responses) Relationship management systems improve performance Performance management/governance systems add motivation Higher staff satisfaction leads to less turnover Superior staff assigned to preferred provider studies Increased organizational motivation 22
  • 23. Summary Currently, nearly half of sponsors concentrate at least 75% of their outsourced work with preferred providers, and this fraction is on the rise. Those sponsors that concentrate their outsourcing spend with preferred providers enjoy enhanced satisfaction with performance and value. Similarly, providers that concentrate their business with preferred clients have a much higher level of satisfaction with their client relationships. 23
  • 24. Future Direction #2 Sponsors:Changing criteria for selection of preferred providers
  • 25. What have sponsors expected from their preferred providers until now?What do sponsors expect from their preferred providers moving forward?What do providers believe that sponsors expect from their preferred providersmoving forward? 25
  • 26. Sponsor DataWhat did your company expect of its preferred providers in the recent past? (2007-2009) N Discounted rates 58% 37% 5% 59 Increased level of oversight by provider’s 42% 51% 7% 57 senior management Preferred access to specific staff members 26% 62% 12% 58 Formal relationship management program from 24% 45% 31% 58 provider Formal performance 24% 51% 25% 59 measurement/management by provider Formal governance structure 23% 53% 25% 57 Advice/input regarding strategic planning 9% 53% 39% 57 0% 20% 40% 60% 80% 100% Always expected - 3 Sometimes expected - 2 Did not expect - 1 26
  • 27. Sponsor DataWhat does your company expect from its preferred providers in 2010 and beyond? N Discounted rates 72% 25% 3% 61 Increased level of oversight by provider’s 64% 33% 3% 61 senior management Formal performance 61% 29% 10% 62 measurement/management by providerFormal relationship management program from 51% 36% 13% 61 provider Preferred access to specific staff members 50% 47% 3% 62 Formal governance structure 50% 45% 5% 60 Advice/input regarding strategic planning 31% 56% 13% 62 0% 20% 40% 60% 80% 100% Always expected - 3 Sometimes expected - 2 Did not expect - 1 27
  • 28. Biggest movers: Formal performance measurement 24% 61% say always expect 25% 10% say do not expect Formal relationship management 24% 51% say always expect 31% 13% say do not expect Formal governance structure 23% 50% say always expect 25% 5% say do not expect 28
  • 29. Provider DataWhat do you feel that sponsors expected from their preferred providers in the recent past (2007-2009)? N Discounted rates 55% 42% 4% 139 Increased level of oversight by provider’s 31% 66% 4% 140 senior management Preferred access to specific staff members 29% 67% 4% 139 Formal performance 19% 64% 17% 137 measurement/management by provider Formal governance structure 14% 72% 14% 132 Formal relationship management program from 12% 57% 31% 136 provider Advice/input regarding strategic planning 9% 64% 26% 138 0% 20% 40% 60% 80% 100% Always expect - 3 Sometimes expect - 2 Did not expect - 1 29
  • 30. Provider DataWhat do you feel that sponsors expect from their preferred providers in 2010 and beyond? N Discounted rates 75% 23% 2% 122 Formal performance 53% 41% 6% 121 measurement/management by provider Increased level of oversight by provider’s 46% 53% 1% 121 senior management Formal governance structure 41% 50% 9% 115 Preferred access to specific staff members 38% 59% 3% 121 Formal relationship management program 121 30% 59% 12% from provider Advice/input regarding strategic planning 30% 60% 11% 121 0% 20% 40% 60% 80% 100% Always expect - 3 Sometimes expect - 2 Did not expect - 1 30
  • 31. Summary Sponsors have come to expect much more investment in and formalization of the management of their preferred provider relationships than they did even in the recent past. Providers appreciate many of sponsors’ expectations of preferred relationships, but may under-recognize the importance of formal relationship management programs. 31
  • 32. Future Direction #3:Increased use of formal performance and relationship management
  • 33. Where are we now? 54% of sponsors currently have Formal Relationship Management Programs in place with at least one of their clinical service providers. 66% of providers currently have Formal Relationship Management Programs in place with at least some of their clients. 33
  • 34. Sponsor and Provider DataIf your company has a formal relationship management program in place with any of its vendors/clients, what does the program include? Sponsors Providers % % Formal governance structure 89 66 Lessons Learned Meetings 86 85 Performance metric assessment and review 84 79 Issue documentation and resolution 76 79 program/escalation procedure Systematic ways of gathering relationship 57 47 metrics from internal staff (e.g. surveys) Systematic ways of gathering relationship 32 55 metrics from partner staff 34
  • 35. Of those who have experience with formal relationship management programs: 68% of sponsors report having had primarily positive experiences. An additional 30% report a mix of positive and negative. 61% of providers report having had primarily positive experiences. An additional 31% report a mix of positive and negative. 35
  • 36. Formal Performance Measurement:Sponsors 55% of sponsor companies currently use Key Performance Indicator measurements (KPIs) to evaluate clinical service providers. 30% of respondents from these companies feel that their KPIs are adequate. So 17% of sponsors are doing this AND doing it satisfactorily. 23% of sponsor companies currently use Key Relationship Indicator measurements (KRIs) to evaluate their relationships with clinical service providers. 68% of respondents from these companies feel that their KRIs are adequate. So 16% of sponsors are doing this AND doing it satisfactorily. 36
  • 37. Formal Performance Measurement:Providers 71% of provider companies currently use Key Performance Indicators (KPIs) to evaluate their own performance. 49% of respondents from these companies feel that their KPIs are adequate. So 35% of providers are doing this AND doing it satisfactorily. 31% of provider companies currently use Key Relationship Indicators (KRIs) to evaluate their relationships with sponsors. 62% of respondents from these companies feel that their KRIs are adequate. So 19% of providers are doing this AND doing it satisfactorily. 37
  • 38. Summary Although most companies report having positive experiences with relationship management programs, many face challenges in operationalizing the metrics component to formal performance and relationship management. Clinical service providers appear to have been more aggressive about, and more successful at, implementing formal performance metrics than have sponsor companies. 38
  • 39. Conclusions
  • 40. Conclusions Both sponsors and service providers appear to recognize the benefit of focusing on long-term, preferred relationships and alliances, and of investments in increased monitoring and management of the performance of these relationships. It appears that careful selection of a restricted number of “preferred” outsourcing partners and increased investment in formal management of relationships with those partners leads to increased efficiency and quality of outsourced clinical research. Companies that invest in establishing excellent sets of metrics, comprehensive and formal relationship management programs, and effective change management strategies are most likely to benefit from this approach. 40
  • 41. 2010 Avoca ReportIn the 2010 Avoca Report, The Avoca Group presents the complete data obtained in the 2010 Industry Surveys. Topics include the future of companies’: overall approaches to outsourcing priorities in the selection of all providers and preferred providers strategies and tactics for measuring and managing outsourcing relationships planned use of risk-sharing and alternative resourcing outsourcing models The report also examines companies’ experiences and satisfaction with the outsourcing management approaches to date, and investigates whether “early adopters” are in fact experiencing better outsourcing outcomes. Further, the report explores the challenges faced by companies in introducing new approaches and requirements for successful implementation. Material differences between “Top 20” and smaller sponsor companies, and between CROs and other types of provider companies, are presented and discussed. The report is approximately 70 printed pages and contains 48 tables and figures. If you are interested in obtaining a copy of the full 2010 Avoca Report, please visit our website at www.theavocagroup.com. 41
  • 42. Improving the Health of Critical Business Relationships Thank you Contact Avoca at: (609) 252-9020 www.theavocagroup.com info@theavocagroup.com 179 Nassau Street Suite 3A Princeton, NJ 08542

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