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Transforming from a Service Provider to a Strategic Partner

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Presentation covering the drivers for outsourcin change in the Pharma industry. Why the there is a need for strategic partnerships, the value they create and examples.

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Transforming from a Service Provider to a Strategic Partner

  1. 1. Transforming from a Service Providerto a Strategic Partner Paul Overton, PhDGroup Director, Corporate Development Outsourcing Preclinical Development Conference, Zurich 30th November 2011
  2. 2. Overview: Are procurement and sales speaking the same language? Defining terminologies Defining value and relationships Drivers for a strategic partnership Tools of a strategic relationship Examples of value creation  Partnering for patients  Integrated risk managed solutions
  3. 3. Are we talking the samelanguage?
  4. 4. Are we talking the samelanguage? Sales and procurement  Perception of supplier/customer relationship  Buying process terminology Evaluated this further:  I asked selected customers and then the appropriate Sales and Account Managers for their comments/thoughts on two topics
  5. 5. Are we talking the samelanguage? Q1: How would you best define value, benefit, cost and price?  Broad mixing of terminologies  Value seen as “cheapest option” “good value”, “value for money”  Cost and price were interchangeable  Sales people financially less astute than procurement  Benefits seen as free “nice to have”  Benefits seen as “differentiator”  “Price is measureable, value is not”
  6. 6. Are we talking the samelanguage? Q2: How would you best describe the relationship you currently have with the supplier in question.  Is it tactical, consultative or strategic?
  7. 7. Perception of relationship: Customer CRO Perspective Perspective Strategic Consultative Tactical
  8. 8. Defining value: What is value?
  9. 9. Defining value: Value = Benefits – Costs Strategic Consultative Tactical Enterprise Problem Solving Transactional(Neil Rackham, Malcolm MacDonald)
  10. 10. The Priceberg:Total Value of Service Price Quality systems Management Downtime Hidden costs Servicing costs of service Training Re-work Governance Waste Performance Acknowledgement: Todd Snelgrove SKF
  11. 11. The value pyramid: Co created Value Value ($) Solution Offer (packages) Component or Transactional
  12. 12. Drivers for strategicpartnership: Drivers to develop better drugs faster and more efficiently Procurement maturity  Supplier Segmentation  Focus on high strategic value and high supplier dependency accounts  Strategic supplier development initiatives  “Joint value creation” to drug development
  13. 13. Value in supplier relationshipsHigh Strategic Strategic Value Transactional ConsultativeLow Low Supplier Dependency High
  14. 14. Value in supplier relationshipsHigh Strategic Strategic Value Transactional ConsultativeLow Low Supplier Dependency High
  15. 15. Relationships: Tactical Consultative PartnerPhilosophy Customer is The service is We jointly agree always right customer led the service to be providedResponse Yes Yes but… What we could do is…Horizon Do what were told Fixing failures Continuous and problems improvementAcknowledgement Rob Maguire, ProcurementConsultant
  16. 16. Ground rules for embarkingon strategic relationship: Both parties should understand and agree what success looks like Joint commitment to achieve it Requires excellent communication Investment in time… Honesty and openness A focus on continually challenging conventions
  17. 17. Tools of a strategicrelationship: Mutually agreed quantifiable success plan defined by an MSA and price models Formal governance structures KPIs Performance assessments Challenges processes and continuous improvement Reward system  Share rewards of great performance
  18. 18. Importance of governancestructures: Executive leadership team Joint operational team Study management team
  19. 19. Governance structures: Executive leadership team Annual Meetings Joint •Top level direction and future plans for both operational parties team •Discussion of future needs Study management team
  20. 20. Governance structures: Executive leadership team Regular meetings Joint (quarterly) operational team •Ensure ensuring compliance and delivery •KPI reporting and evaluation Study •Process improvements management •Challenge resolution team
  21. 21. Governance structures: Executive leadership team High level communication Joint operational •Ensuring adherence to team specific KPIs •Milestones •Real time management of study challenges Study •Feedback on a study by study basis management team
  22. 22. KPIs: managing performance
  23. 23. KPIs: managing performance “The aim of KPIs is to manage performance not manage failure” Rob Maguire, Procurement Consultant Demonstrate that the relationship is working Effective metrics can be incisive and help drive the relationship forward Challenge work flow and bottle necks Metrics should be useful and easily measurable for both parties activities  Challenge the KPIs
  24. 24. KPIs: managing performance Metrics should constructive and positive in nature  Positive outcomes, “number of days saved”, “costs saved” Negative metrics  100% on time..creates a could do better mentality  A retrospective focus rather than a going forward approach
  25. 25. Example 1: Partnering for Patients
  26. 26. Partnering for patients: Consultative relationship with US based Pharmaceutical Company  Providing safety assessment, bioanalytical and clinical support...  Governance Structures, MSAs, KPIs etc  Long term relationship...
  27. 27. Partnering for patients: Orphan designated drug candidate for genetic disease Phase III studies ongoing... Carcinogenicity studies were on plan and still in life-phase Board level decision “Do what it takes” Establishment of joint partnership committee of senior scientists
  28. 28. Micro- Scheduling Statistical Parallel Evaluation Activities Transferred Near Co CollapsingContemporaneous Created Serial Peer Review processing Pathology Value Novel Shift Joint Process Work re-mapping Approaches Joint QA Teams
  29. 29. Co-created solution: Agreed strategy to reduce post life reporting by 30 days  This at a time of peak workload  Already with challenging KPIs Establishment of strict and newly defined service-level agreements and governance Micro scheduling and pro-active vigilant monitoring of timelines against the new plan
  30. 30. Co-created value: The partnership delivered the final data set 54 days early! NDA submitted 63 days early Drug launched successfully launched 90 days early Co-created solution brought drug to market quicker  Patient need for life enhancing therapy  Faster revenue stream for both parties
  31. 31. The new value relationship: Game changing opportunity created a new way of working and developing solutions The joint value mapping exercises opened up innovative ideas of a new working partnership  Consultative to strategic thinking Creating a “Challenger” culture in a relationship that was mature Defined value creation ($) for both partners
  32. 32. Example 2: Integrated risk-managed co- created solutions
  33. 33. Integrated risk-managedsolution: European Pharmaceutical company Described as a “strategic relationship” Integrated development services  In reality a consultative model Governance, KPI’s, RAG reports, fully defined service protocols and reporting. Shared pipeline & resource planning Open long term relationship
  34. 34. The Challenge Strategic steering Committee meeting:  First into man packages were taking between 12 and 15 months to complete  Challenged to improve efficiency Nature of outsourcing approach too restrictive and created “large time gaps” Could we co-create a new way of working?
  35. 35. Traditional programmedevelopment strategy: Customer Touch PointsLate Stage Candidate Safety Regulatory Phase I PhaseIIDiscovery nomination Assessment Affairs Timeline
  36. 36. Co created solution: Joint process team established Value mapped the milestones, decision points in the development programme Aim to reduce customer touch points and “stop zones” Risk transfer to partner
  37. 37. Integrated risk development:Customer Touch PointsLate Stage Candidate Safety Regulatory Phase I Phase IIDiscovery nomination Assessment Affairs Timeline
  38. 38. The new value relationship Integrated programmes now run with reduced touch points  Reduction in package time ($)  Streamlined package ($)  Improved scheduling ($)  Reduced resource duplication ($) Next stage:  Further value mapping  Vertical integration into discovery, CMC etc
  39. 39. Conclusions: Ensure partners are using the same language  Partners have the same vision  Focus on value creation not cost reduction  Value has $ sign attached! Define what success looks like and measure it Define governance structures and role, and escalation procedures
  40. 40. Conclusions: Utilise positive KPIs to manage performance Challenge the relationship  Establish ways to continually improve the partnership
  41. 41. Final Thought: Trust, openness and a “challenger mentality” creates value and sustainable partnerships
  42. 42. Thanks for listening Paul Overton, PhD Group Director, Corporate Development Tel: +44 1480 892174 overtonp@ukorg.huntingdon.com

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