STRATEGIC OUTSOURCING
along with associated penalties for References
Box 3: Learning from other
non-performance. Unfortunately, such
1. G Tyson & T Dietlin. ‘Working with CROs’,
industries
metrics are selected primarily because they
Pharmaceutical Executive, Vol 24, June 2004.
can be measured with a high degree of
Conventional wisdom suggests that companies
objectivity and precision (the ability to
2. CenterWatch Monthly. ‘Global Growth Story
should outsource non-core activities. As outsourcing collect penalties being a key design point),
Remains Strong for CROs in 2008, Beyond’,
practices mature, however, many executives are
rather than because they reflect the
March 2008.
looking at their organisations and concluding that
customer organisation’s true goals and
3. Frost & Sullivan Webinar. ‘CRO Outsourcing to
even core activities – if they are not an area of
needs. Again, customers need to work
Grow 40%’, August 13th, 2008.
expertise or a key competitive differentiator (eg,
jointly with suppliers to ensure a clear 4. J Carroll. ‘CRO Crowing About Their Growth’,
finance and accounting, management of procure to
pay transactions or manufacturing), should be
articulation of outsourcing objectives, and Biotechnology Healthcare, December 2005.
outsourced. Southwest Airlines, which owns nearly
to define performance metrics clearly
5. Tufts CSDD Approved NCE Database, PhRMA,
three quarters of its fleet, outsources heavy aligned to those objectives. Measuring
2005.
maintenance of its aircraft – inarguably a core what is actually important almost always
6. W Claypool. ‘Full Service EDC as an Alternative
business function that is critical to maximising the
entails accepting a degree of subjectivity
lifespan of its planes and managing costs, as well as
to Outsourcing’, Next Generation
and approximation into the measurement
ensuring passenger and crew safety. Since employing
Pharmaceutical, Fall 2007.
process. Better, though, to measure
its outsourcing model, Southwest has maintained (or 7. CFO Research Services & AT Kearney.
improved) the safety and reliability of its aircraft while
imperfectly what matters, than to measure
‘Outsourcing Among Pharmaceutical and
reducing costs by more than 30% on engine
with great precision things that are not
Biotech Firms: The Growing Imperative for a
maintenance and 18% on component repairs.
15
actually important.
More Aggressive Approach to Outsourcing’,
In the area of data management, the pharma
• Make performance management a two-
September 2004.
industry is beginning to follow suit. In the past year, way activity. In successful outsourcing
pharma companies around the world have hired
partnerships, both sides approach
8. H Glass. ‘Outsourcing: Where it is now and
leading IT services companies such as Accenture,
performance problems jointly. That is, they
where it is going’, Partnerships in Clinical Trials
Cognizant, and Tata Consultancy Services (TCS) to
work together to diagnose problem causes
Conference, 2006.
process and manage all of their clinical trial data, and
to manage other technology-driven services as well.
and contributing factors, and then work
9. ‘EquaTerra Study Concludes Direct Correlation
According to Vasudeo Ginde, managing director of
together to develop and implement
between Outsourcing Satisfaction and
Mumbai-based CRO iGATE Clinical Research, “This is
solutions. Issues of who will bear the cost of
Investment in Outsourcing Management/
definitely a trend. More may follow.”
16
solving or remediating problems are
Governance’, Business Wire, May 2006.
Meanwhile, inside and outside the pharma industry, resolved separately, and on the merits. As
10. L Knudson. ‘Finding the R&D Sweet Spot’, Next
the traditional view of suppliers as simple providers
with any high-performing team, customer
Generation Pharmaceutical, July 2007.
of goods and services (where minimising costs is
and supplier staff focus on improving
11. D Webber. ‘Partnerships in Clinical Trials’,
the overriding objective) has been supplanted by
performance and learning, without the static, Partnerships in Clinical Trials Conference, 2006.
the realisation that key suppliers are, and should
distraction, and misplaced energy associated
be treated as, business partners who have assets,
12. H Atkins. ‘Outsourcing Virtually Everything:
expertise, and capabilities that can be leveraged
with efforts to assign (or defend against)
Making the Semi-Virtual Model Work’, The
for competitive advantage. A well-publicised
blame. Key performance indicators and
BioPharm International Guide, April 2007.
example of this new way of thinking is Procter & performance management systems need to
13. K Getz. ‘CRO Shifts in the Outsourcing Market’,
Gamble’s Connect and Develop initiative – in which enable both sides to regularly share
Applied Clinical Trials, May 2007.
suppliers are seen as key partners in driving new
feedback with each other, and focus on the
product innovation.
performance and success of the relationship
14. Everest Group. ‘Leading Causes of Outsourcing
Supplier relationships need to be viewed and
– rather than simply focusing on whether
Failures’, August 2004.
managed as critical assets of the extended
the supplier has met its obligations or not.
15. AT Kearney. ‘Creating Value through Strategic
enterpriser, and this requires re-thinking approaches
Supply Management’, 2004.
to working with suppliers. Leading companies now
The pharma industry is unique in many
recognise that relying primarily on competitive
16. G Kamath. ‘IT Firms Pop the Pill’, Businessworld,
ways, and the outsourcing of a highly complex
bidding to drive down costs and ensure quality
Issue 23, February 2008.
and strategic business function like clinical
delivery is inadequate, and must give way to a more
balanced approach – one that emphasises
development poses special risks and challenges.
Jonathan Hughes is a
developing and maintaining closer, more
But the question is not whether pharma
partner and Jessica Varni is a
collaborative relationships with key suppliers.
companies should outsource clinical development consultant at consulting fi rm
– they have already made that choice. The issue is Vantage Partners.
• Measure what matters, not what’s easy to
how to outsource. The sooner sponsors embrace
measure. Having negotiated outsourcing
a comprehensive, rather than a task or project-
agreements in a manner that breeds based approach to outsourcing, the sooner they
misunderstanding and mistrust, many can focus on learning from the experiences of
customers then try to protect themselves companies in other industries, and building the
by defining service level agreements that capabilities required to collaborate with CRO
comprise literally hundreds of metrics, partners in a strategic manner.
The Cost of Adverse Drug Reactions
Sign up for your FREE trial today to Litt’s
Drug Eruption Database – the defi nite
In England (2006) 6.5% of admissions to hospital were for patients suffering from
and regularly updated guide to drug
the bad effects of prescribed medicines – that’s 1, 040,000 patients!
reactions, eruptions and interactions
www.drugeruptiondata.com
104
www.scripnews.com/supplements Scrip 100
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