The survey examined how clinical research outsourcing relationships between sponsors and service providers are expected to change between 2010-2014. 285 respondents participated, including 109 sponsors and 174 service providers. For sponsors, the top changes made/planned to improve efficiency included better measurement of provider performance, increased use of preferred providerships, and better methods for provider selection. Respondents were asked about drivers of change and how planned changes may impact outsourcing strategies and relationships over this time period.

1. What Does the Future Hold for
Clinical Service Provider-Sponsor Relationships?
Executive Summary of Results from the
Avoca 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 SURVEY
Questions 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. RESPONDENTS
285 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 Companies
Abraxis Bioscience Cardiokine GlaxoSmithkline Orion Pharma
Global Alliance for TB Drug
Achaogen CareFusion Research Services OSI Pharmaceuticals
Development
Actavis South Atlantic Celgene Grunenthal Otsuka
Actelion Celtic Pharma Development Hoffmann-La Roche Pain Therapeutics
ActivX Biosciences Chugai Pharma Europe Incyte Ratiopharm
Adnexus Cognizant Intendis Regeneron
Allergan Collins Johnson & Johnson Sanofi
Allon Therapeutics Cordis Corporation Knopp Neurosciences Santhera
Amarin Technologies Coughlan Kowa Research Europe Shire Pharmaceuticals
Dainippon Sumitomo Pharma
Amgen Lexicon Solvay Pharmaceuticals
America
Amylin Deltanoid Pharmaceuticals Lilly Teva Pharmaceuticals
Astellas Pharma Dey LP Lundbeck Tibotec
AstraZeneca Eisai MedImmune Vicus Therapeutics
Baxter Endo Merck Wyeth Research
Bayer Schering Pharma Ferring Millennium
BIAL Five Prime Therapeutics Mitsubishi Pharma Europe
Biogen Idec Forest Laboratories Novartis
BMS Fresenius Biotech Novo Nordisk
Genentech, Member of Roche
Cadence Pharmaceuticals Ocasio
group
7

8. Provider Respondent Companies
Aagami DCL Medical Laboratories KLIXAR QED Clinical Services
Acurian Eurofins Medinet Kromite LLC Quanticate
Aepodia Eurotrials Kuantum CRO Quest Diagnostics
Asia Global Research ExecuPharm Laboratorio Hidalgo Quintiles
FOCUS Clinical Drug
Asiatic Clinical Research LatAm Clinical Trials Radiant Research
Development
Averion Forma Life Science Marketing Manipal Acunova Limited RadPharm
Axiom Marketing Gagnon Medpace REGISTRAT
AXIS Clinicals GFA MedPoint Communications ResearchPoint
Axis Group GVK Biosciences Private Limited MRC RH Bouchard & Associates
Ronald Fehst Research
Beckman Coulter Genomics Harrison Clinical Research Group Myoderm
Consultants
Biomedical Systems Harte Group Ockham RxResearch Staffing
C3i i3 Research Omnicare Sariola-Heiner
ClinForce ICON Paragon Biomedical SQV Clinical Research Services
Clinical Financial Services INC Research PAREXEL Stiris Research
Clinical Research Management IndiPharm Pharma Medica Research TFS Trial Form Support
Cogent Performance
InsightRx Consulting LLC Pharma Services Network TKL Research
Management
COMSYS Clinical Integrium PharmaNet Toone
ConsentSolutions invivodata PharmaWrite US Oncology
Covance IRB SERVICES Pharm-Olam Vantage BioTrials
CRS Clinical Research Services Iris PPD VirtualScopics
Cyncron John R Vogel Associates PRA Woodley Equipment Company
Datatrial 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 providerships
What changes has your Better methods of/criteria for provider
selection
company 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 expectations
improve 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 management
What changes has your Increased pursuit of preferred
providerships
company recently (last Better capture of customer feedback
2 years) made, or is it
More senior management involvement
currently making, to
improve 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. Themes
For 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 quality
For 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 changed
clinical 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%
Don't know
Don't know
22%
N=45 N=47
15

16. Provider Data
What approximate percentage of your How has this percentage changed
annual 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 to
preferred providers results in higher quality work or
greater value? If so, why?
17

18. Sponsor Data
In 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 Data
In 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 N
from preferred
clients*
25
37
8
* p<.01
20

21. PROVIDERS: Do you feel that your company performs more effectively for its
preferred 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 processes
preferred 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 providers
moving forward?
25

26. Sponsor Data
What 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 Data
What 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 provider
Formal 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 Data
What 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 Data
What 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 Data
If 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 Report
In 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