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The Emerging Landscape ofClinical Development AlliancesJohn D. Barry                                 Michael W. YoungVice ...
Clinical Development Industry• CRO – Contract Research Organizations  − Outsource clinical services for life sciences comp...
Drivers for Outsource Development Alliances• The Recession and Continued Economic Pressure• Big Pharma / Biotech downsizin...
Industry Transition in Progress          Traditional State                 Evolving State Life Sciences                CRO...
Transactional State*APPROACH• Ad hoc, per project basis• Driven by insufficient internal personnel or expertise• Sponsors ...
Partner-Based Alliance State*APPROACH• Departure from Transactional State focuses on mutual investment  and mutual reward•...
Partner-Based Alliance State*PROCESS• Sponsor shifts to Partner• Provides significantly more transparency to oncoming pipe...
Degrees of SeparationCRO / Sponsor relationships:• range from simple customer/vendor transactions  to true outsourcing par...
Partnership Model Options• Transactional Model   − Project by project outsourcing.   − No further commitment from provider...
Four Pillars of a Successful Partnership• Each partner adds their core competencies • A dedicated organization • Cultural ...
PPD Alliance Culture• to resource to our client’s needs• to assure client objectives are met rather than  simply aligned w...
Objectives of Enterprise Solutions• Achieve goal alignment between partners• Foster innovative behaviors• Connect financia...
Enterprise Solution versus FSP• Enterprise Solution   − Creates a productivity based model that encourages the provider to...
Enterprise Model Types  Distributed Model   An enterprise model that requires a geographic dependency.                    ...
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ASAP 2012 Global Summit Presentation: Clinical Outsourcing Alliances

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Presented at the Association of Strategic Alliance Professionals (ASAP) Global Summit. Las Vegas, NV 03.08.12

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ASAP 2012 Global Summit Presentation: Clinical Outsourcing Alliances

  1. 1. The Emerging Landscape ofClinical Development AlliancesJohn D. Barry Michael W. YoungVice President, Alliance & Sales Management Vice President, Alliance Management Group
  2. 2. 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
  3. 3. 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
  4. 4. Industry Transition in Progress Traditional State Evolving State Life Sciences CRO Life Sciences CRO Company Company Strategy Execution Strategy ExecutionTaking Orders Partnering • Transactional • Trust & relationship • Tactical execution • Strategic plan & execution • Managing inputs • Managing outcomes • Accommodating issues • Proposing solutions • Many interfaces • Single peer to peer points of contact • Diffuse accountability • Empowered authority • Reduce need for internal oversight
  5. 5. 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 projectPROCESS• 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
  6. 6. 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
  7. 7. 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
  8. 8. Degrees of SeparationCRO / Sponsor relationships:• range from simple customer/vendor transactions to true outsourcing partnerships• individual relationships vary over time. s n ce Outsourcing Strategic A llia Partnership Alliance RO Joint C Franchise Venture Out / In Alliance Joint Need for License Customer / Team Merger Vendor Relationship Alliance Management Acquisition Transactions Degrees of interdependence between companiesAdapted from: “Managing Alliances for Business Results”, Weise, et.al. 2006
  9. 9. 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
  10. 10. Four Pillars of a Successful Partnership• Each partner adds their core competencies • A dedicated organization • Cultural alignment • Therapeutic expertise • Value proposition & shared risk
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. Enterprise Model Types Distributed Model An enterprise model that requires a geographic dependency. Resource locations must be proximate to external workload requirements (they must move to the work, the work cannot move to them) Aggregated Model An enterprise model that can provide services to multiple geographies from a single location. These tend to include models with high technology dependencies that enable efficient data and information exchange

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