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  • 1. Pharmaceutical Analytical and Stability Study Outsourcing To Stabicon Presented By Vijay Kumar Ranka Stabicon Life Sciences Pvt. Ltd. 1
  • 2. Index Part: 1. Introduction 2. Changing Industry Trend of Pharma 3. Criteria for Selecting Offshore Outsourcing Unit 4. Outsourcing Process 5. Outsourcing Requirement 6. Risk and Mitigation 7. Benefit of Outsourcing 2
  • 3. Part - 1 Introduction
  • 4. Changing Industry Trend of Pharma Present Pharma Industry Challenges • Revenue under pressure • Cost and risk of developing new drugs are increasing • Globalization How to Over Come the Present Challenges • Corporate restructuring i) Consolidation within industry, refocusing on fewer business lines ii) Adoption of risk reduction strategies iii) Acquisition rather than development, Use of Joint ventures 4
  • 5. Outsourcing Redefined Outsourcing is “strategic management tool” that involves the restructuring of an organization around its core competencies • Outsourcing is thus a transfer or delegation of an organization's project /facility management functions to an external firm. • Types of Outsourcing • Onshore • Offshore / Offsite Onshore: Onshore outsourcing (also called domestic outsourcing) is the obtaining of services from someone outside a company but within the same country. Offshore: Offshore outsourcing involves sending certain types of work overseas to be completed by independent third parties. Offsite : Referring to a location other than the subject site 5
  • 6. Offshore Pharma Countries 6
  • 7. Why India?? •40%-60% cost reduction for off shored process t India’s Value Proposition ity tiv c du Pro Quality •Technical manpower resource cost likely to continue next 20-30years Co s • Faster turnaround time •Adoptability to Different Time zone 24X7 service •Access to highly qualified – skilled pool •Faster adoptability to New Technologies 7
  • 8. Strength At A Glance HR Management • Enough human resource • Quite easier to motivate and retain people Infrastructure • Better Infrastructure facilities at very low cost • Best Net Connectivity & Resource Availability • English Language Proficiency • Expertise in New Technologies • Quality Assured (A grade) & regulatory requirement • Unexpected Cost Advantage • Research & development Abilities & Skilled Manpower • Excitement about Pharmaceutical in the area 8
  • 9. Part - 2 Criteria for Selecting Offshore Outsourcing Unit 9
  • 10. How to Select ? 10
  • 11. Outsourcing at Stabicon 11
  • 12. Why Stabicon ? • • Ability to work in joint ventures and across divisions, cultures and countries Ability to integrate an understanding of IP,Scientific expertise and business strategy Ability to spur creativity while managing commercially Expertise in functioning and decision making of regulatory requirement Human resource skills to transform Pharma companies • Dedicated support systems for web interface with real time information • Quality system must meet regulation in multiple markets plus clients internal standards • • • 12
  • 13. Stabicon: Quality Not Quantity • Quality is the new buzzword and is dominating business process and services like never before in this sector. • Quality is no longer an oral guarantee given over handshake, but Stabicon has well defined set of criteria are applied to the entire process. • Stabicon Standards of quality are par with, if not superior to your counterparts requirement aboard. 13
  • 14. What Can be Outsourced? As per International Regulatory Requirements like ICH, WHO, USFDA, MHRA, EMEA, MCH, TGA, ANVISA, ETC… • Stability Study Programs • Customized Stability Study program to meet specific dosage requirements. • Analytical Method Development & Validations. • Bio-waiver Studies (Comparative Dissolution Profiles) and Formulation Development • Impurity Profiling / Stability Indicating Methods • Microbiological Method Development & Validations 14
  • 15. Stabicon Capabilities • Major installations are 21CFR Part 11 compliance. • Assured Data Integrity through online web-access monitoring and willing to share entire manuscripts & Raw-data. • Assured Data Security through Central Networking Software for entire chromatographic data management. • 24x7 Data online monitoring for assured Stability Programs. • Validated LIMS for Efficient Stability Program & Sample Management. • Dedicated & Independent Quality Assurance Unit. • Accreditation : Approved by Health Canada as per Compliance to Division 2 of F&DR(GMP) • In the process of accreditation from WHO GPQCL & ISO 17025 : 2005 15
  • 16. Flexibility • Flexibility of being able to access a large pool of resources working on various Project and increasing / decreasing the teams at a short notice. • Flexibility to select the team jointly from the best handpicked from Indian Pharma Industry pharmaceuticals brains • Higher availability of our team to manage contingencies as they work 6 days a week and available at odd hours even on Sundays for emergencies. The team can also work at normal office timings of your country. • Team are trained to understand the culture of your country, thereby leading to better communication and co-ordination across the teams. • Based on varied experience, the processes are designed to comply with the industry's best practices and standards, enabling total transparency, access & control of our team . • Flexible engagement contract, leading to managed business risks. 16
  • 17. Information Management System User name with safe password World Wide Client Location Internet usage/Web based Application /Empower/LIMS and etc. Stabicon Email Usage Phone Lines Regular phone no. in World wide Skype Usage/VC Line 17
  • 18. Stabicon Advantage • Modest sized company with extensive experience of offering offshore services to clients globally. Advantages: • Competitive pricing & risk sharing (dedicated model, incentive model, royalty model) Speed & agility (response time) • Drastic reduction of your operating costs. • Gain access to the world-class pharmaceutical skills. • Seek resources not available in-house. • Finish projects which otherwise cannot be finished in-house due to technical or staff limitations. • Free up non-capital resources for other in-houses projects. • Gain a fresh and new perspective on a stalled project. 18
  • 19. Part - 3 Outsourcing Process 19
  • 21. Best Practices in Outsourcing Processes Outsourcing to Stabicon should be much more than off shoring Outsourcing to Stabicon should be much more than off shoring and staff augmentation and staff augmentation Adopt a partnership based approach to Stabicon outsourcing and move towards a competency based vendor selection Best Practices Follow a staged approach for transition to an offshore partner with a careful selection of projects Prepare detailed transition plans for each project, especially Stability projects Establish strong governance and management oversight to manage relationship and performance Ensure that outsourcing processes are tailored to your business requirements 21
  • 22. Project Transition Plan – Details For Individual Project Project Stage Project Planning Knowledge Acquisition Duration 1 – 2 Weeks Description 2 – 4 Weeks  Establish Project scope, Expectations Member of and Criteria for Stabicon team work with client to Success understand  Set team Document composition, System/ Process requirements  Finalize and performance metrics transition plan Stabicon/Offshore Transition Stabicon Simulation 3 – 4 Weeks  Execution of project as per approved protocols Review and approval of reports by client Stabicon Training/Pilot 2 – 3 Weeks Establishment of coordination team, process and metrics Program for Stabicon Stabicon Execution Ongoing Complete fulfillment of projects request by Stabicon as agreed upon Service Levels Agreements Client Staff FTE Off – shore Stabicon Staff FTE 22
  • 23. A Staged Approach Helps Transition to Offshore Partner Complete outsourcing Increase scope and scale Test Typical projects  Short projects  Method validation & Stability testing  Complete MD,MV & Stability program Key Success Factors in a Transition  Involve the end user closely in the transition • Discuss in existing governance forum • Involve end user in oversight Increasing management complexity and mission criticality 23
  • 24. Critical Practices For – Strong Governance & Management Best Practices Key Levers • Partnership Board • • Relationship Management Performance Management • • • • • • Partnership board consist of both senior management from both sides is the final decision making authority Every quarter, partnership board should consist of senior review the level of outsourcing and the performance. Every year, partnership board conducts joint strategic technology planning sessions Day-to-day project management would be performed by dedicated relationship managers from each side Relationship managers will facilitate smooth project execution, define processes and act as trouble shooters Performance tracking should be automated and Commitment tracker Clear definitions of success and failure Predefined processes for increased and decreased collaboration Exit clauses that define responsibility and timelines for knowledge transfer, documentation and intellectual property rights 24
  • 25. Outsourcing to Vendors is more than Offshoring and Staff Augmentation “Winning” Mindset “Traditional” Mindset Use Stabicon for project components Outsource complete projects Maximize offshore component Use offshore, offsite and onsite presence judiciously Use staff augmentation approach for onsite presence vs. Maintain onsite presence for managing and delivering solutions Extend organization virtually (includes development, management, infrastructure projects, etc.) Focus on development outsourcing only 25
  • 26. Advantages of Partnership “Partnership” approach “Transaction” approach No long term commitment Medium/Long term commitment RFP issued for every project Competency based vendor selection Stabicon not expected to invest Stabicon expected to invest in infrastructure, knowledge transfer, etc. vs. Stabicon expected to leverage their knowledge base and contribute to overall strategy and planning issues Stabicon follow customer orders with limited value added Vendors not involved in technology strategy and planning Stabicon expected to be actively involved in technology planning Insufficient focus on risk mitigation Proactive measures for mitigating risks 26
  • 27. Technology Provider Successfully Follow a Phased Approach for Partnership Year : 2015 No. of people : 10-15 Marked up SLAs Scaled down SLAs to give time to Stabicon Year : mid 2013 No. of people : 3-5 Year : 2012 No. of people : 1-2 • Development project to test Stabicon capability • low priority and low complexity project of a small component • Medium priority and medium complexity Year : 2014 No. of people : 7-10 Year : 2013 No. of people : 5-7 • Medium priority and medium complexity project (including analysis and reporting) • High priority and high complexity • Full testing of products • Contribution to new releases (development) Partnership / Joint Venture Client onsite governance SLA  Service Level Agreements Moving up the value chain with increasing customer confidence in Stabicon capabilities 27
  • 28. Partnership Ladder Y Axis X Axis 28
  • 29. Partnership Model Has Benefits • Enables Stabicon to offer lower pricing because they have better visibility into revenue streams • Reduces the Stabicon total cost of doing business which can be passed to customer. • Learning curve benefits help in improving quality • Allows Stabicon to prepare resource plan in advance and staff projects with appropriate resources • Helps achieve best practice transfer by Stabicon Cost • Learning curve benefits help in faster time to market • Releases important customer resources for more value added work • Reduces time spent in the RFP process Time to market Quality 29
  • 30. Business Models Time & Material Model Build-Operate Transfer Model Build an offshore facility for the customer, Operate the offshore facility & customize it as per customer's needs & when model reaches maturity, Transfer the complete ownership of the facility & resources to the Client. Fixed Price Model Hybrid Model A major portion of project is on a Fixed Price basis and at the same time resources are deployed on Time and Material basis. Adopting such a model enables the client to maximize their ROI without compromising any aspect of the project itself. Define the business model and work hand in hand with our client. The client pays a fixed FTE rate. Dedicated Development Centre Model Extension of the customer's software engineering facility. The customer pays fixed monthly rate for the Team. The customer pays a Prenegotiated Fixed price for the complete project, which in turn is linked to well-defined deliverables. 30
  • 31. Part 4 Outsourcing Requirement 31
  • 32. Metrics Required to Support Outsourcing • Form a cross-functional team • Determine communication plan • Determine and finalize work plan • Define measurable deliverables. • Finalize data review and approval process • Finalize process to review out of specifications/OOT results • Have periodic meetings to review work 32
  • 33. Structure Required at Client Site to Support Outsourcing  Project Coordinator Overall co-ordination of the project.  Logistics Handling of Sample shipment  Quality Control transfers Co-ordination of specifications ,method stability protocols and stability results.  Quality Assurance Approval of Out of specifications 33
  • 34. Part 5 Risk and Mitigation 34
  • 35. Outsourcing Confusion Outsourcing – In many organization around outsourcing can cause emotional equivalence of a political or religious debate due to confusion 35
  • 36. Outsourcing Risk 36
  • 37. Risks Associated with Outsourcing to Stabicon Manageable Perceived risks Talent Project Why we believe risks can be managed High attrition rates due to large demand Stabicon is investing heavily in training. Complex projects have many failure points 3level review on project at Stabicon Active governance policies with interactions at all levels Differences in work culture Cultural Electricity and telecom not reliable Different IPR laws Infrastructure Geopolitical events can destabilize trade e.g. with India Political/Country Vs. Leading team at Stabicon have been proactively trained to handle culture gaps Government actively promoting uninterrupted power supply and telecom to technology companies Established legal system US and Indian Governments agreed to de-link the pharmaceutical trade from politics 37
  • 38. Cultural Gaps Risk:  Corporate culture clash to the difficulties in managing an outsource provider across large distances and different time zones  Throw in regulatory concerns and proprietary information and relationship management becomes even more difficult. Mitigation:  Focus on the performance and cost, but don’t let the service provider lead down path of vendor lock-in.  Avoid exclusivity in the contract. 38
  • 39. Customer Relationship Management Risk:  Managing expectations and maintaining relationship with service providers is essential for the success.  Offshore contract do meet expectations because I) Firms outsourcing without a clear methodology ii) Disconnect between expectations at management level and what’s actually delivered at the processes level. Mitigation:  By making sure the parties share a common understanding regarding critical interactions at the Operational & Management Level for successful outsourcing 39
  • 40. Knowledge Transfer Risk:  Transfer of knowledge from both side of a contract is critical otherwise can lead to broken connectivity . Mitigation:  Services require external & internal support  This result in Decline of productivity during first year of an agreement, largely due to time spent transferring 40
  • 41. Implied Cost savings Risk • Estimate most firm save 30-35% during first year; by third year, cost savings often reaches 40-45% as companies “go up learning curve “ for outsourcing and modify operations to align to an offshore model. • Outsourcing solely control cost can lead alignment issue and increased project delay. Mitigation • Corporation should provide strategy to its business lines of business to allow them to outsource within guidelines. • Brings in the strategic differential advantage of offshore outsourcing to your business, thereby, enhancing your profitability • Once firm understand its outsourcing drivers, selecting which application to outsource becomes straight forward. 41
  • 42. Compliances Risk:  Product failure/Regulatory/Security compliance failure is in fact one of the top concerns companies face when outsourcing services to external vendor. Mitigation:  The key to successful and secure outsourcing agreement is understanding i) Regulatory compliance followed by schedule third party Audits ii) Security covered by Legal Agreement iii) Privacy risks for a business process covered by CDA iv) Application or technology function outcome covered by Technical Agreement 42
  • 43. Sample Shipment Procedure 43 Mitigation: • Samples need to be shipped by Air freight cargo mode • For temperature sensitive products special containers can be used and temperature can be monitored • Pro forma Invoice detailing product name , quantity and value • Declaration for customs purposes stating the value of the product • Documents can be faxed to Stabicon for rechecking • Sample shipment after clearance from Stabicon • Samples will be cleared by Stabicon from Indian customs • Timelines for customs clearance : 3 to 5 working day 43
  • 44. Minimizing Risk • Choose a service provider who provides you with value adds, services or products that may not be in the contract. • Develop a strong partnership with the vendor • Simplify the interface between the two organizations • • Choose a service provider that has a proven track record - talk to customers of the service provider • Know your requirements, both current and future, and put them in the contract • Stay away from variable costs in the contract like communication, travel etc. • Treat the outsourced relationship as a partnership and the employees and extended team members 44
  • 45. Part 7 Benefit of Outsourcing 45
  • 46. Your Benefit as a Customer Reduced Operating Cost Increased Productivity Increased Profits Custome r Quick Turn around Time Better Quality 46
  • 47. Client High Growth Area can be Focused • Commercialization of Dormant Compounds • Generic or Biosimliar Versions of biologics • Improving the efficiency of R&D • Oncology and central nervous system disorder research • Stratified Medicine and diagonistic • Fusion of Pharmaceutical and consumer goods 47
  • 48. Thanks For any query, Please contact us at Stabicon Life Sciences Pvt. Ltd 3BM – 416, 3rd Block, HRBR Extension, Bangalore – 560 043 INDIA Phone: +91 80 4171 4280 / 81 e-mail : 48