Kenneth A. Getz
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Market conditions are ripe for the formation of alliances between sponsors and service providers. Facing a difficult global
operating environment characterized by capacity constraints, rising portfolio demands, cost containment, and depressed revenue
and profitability, biopharmaceutical companies are looking to extract consistently higher levels of efficiency and performance
from their contract research organizations (CROs) and investigative sites.
Alliances are no longer simply hopeful concepts; they are emerging structures whose impact on development performance is not
yet known. They hold promise, however, in delivering higher levels of performance and efficiency, fewer management surprises,
and cost reduction.
Several sponsors have been supporting alliances with their CROs for a number of years (e.g., Daiichi-Sankyo, Bristol Myers
Squibb, Elan Pharmaceuticals). A growing number of biopharmaceutical companies now report that they are planning to include
alliances among the various outsourcing relationships that they will support (e.g., Otsuka Pharmaceuticals, Merck-Wyeth).
At the present time, sponsor–CRO alliances with investigative sites are nascent. Only a small number of organizations (e.g.,
Sanofi-Aventis, Quintiles) have announced or have implemented plans and programs to support these alliance relationships.
Underlying attributes, drawing primarily from the more evolved sponsor–CRO alliances, offer insight into new ways that these
relationships might operate and the support required to nurture them.
Good 'ol outsourcing
Traditionally, sponsors have contracted with their CROs on an ad hoc per project basis, driven by the need for personnel capacity
to perform a given task or function. Under these transactional relationships, sponsors typically interact with a large number
of service providers, including contract full-time staff and CRO staff.
Sponsors typically solicit a minimum of three bids and select the lowest bid-provider. In many instances, sponsors have established
preferred lists of specialty and full-service CROs in order to expedite selection and contracting and to secure more favorable
services pricing. Although cost control is a major goal of transactional relationships, frequently CROs must perform out-of-scope
activity on their projects resulting in cost overruns.
Once CROs are selected, sponsors tend to micromanage the relationship in order to oversee the project team, and to ensure
communication and coordination, and adherence to the sponsor's own standard operating procedures. Middle managers typically
serve as the primary parties involved in outsourcing planning and governance.
Functional tasks outsourced in transactional relationships are typically those that are performed once the development plan
and protocol are completed. Recently, a number of drug development companies (e.g., Wyeth, Amgen, Lilly) have supported broad
functional outsourcing. These relationships give greater responsibility for an entire function to a single CRO, but that outsourced
function still must be integrated with the rest of the sponsor's development activities. For this reason, full functional
outsourcing appears to be an interim or "bridge" step toward a "true" alliance.
Sponsor–CRO alliances
Alliances between sponsors and CROs begin with a detailed and honest assessment of the sponsor's core competencies in order
to determine what functions are performed best in-house versus those that can be best undertaken by a CRO. Most experienced
CROs have managed a much higher volume of activity in many areas of clinical research than have many of the sponsors with
which they partner.
The goal of alliances is to build a team of internal and external resources to perform complementary competencies in order
to take full advantage of the expertise and operating efficiency that each member brings to the table. Under alliances, sponsors
look to retain senior-level expertise, but they reduce the number of internal staff involved in those functions deemed most
suitable for outsourcing and they reduce the amount of project oversight, thereby promoting higher levels of autonomy and
accountability.
The identification and selection of alliance partners is a critical success factor and is based on many criteria, including
CRO-company expertise, capacity, positioning, and culture. Once a sponsor has determined the scope of work that will be undertaken,
and has selected a partner CRO, the companies together constitute a senior-level committee.
The executives on the committee, from both sponsor and CRO companies, get together periodically (once or twice annually) to
review prospectively the portfolio of projects on which they will partner.
Governance in alliances is a shared responsibility. The sponsor and the CRO rely on a set of Coordination Operating Procedures
(COPs) to ensure that each party's own respective SOPs is consistent, integrated, and compatible. When there are conflicts
to resolve, they are addressed by the senior level committee. This approach affords the CRO greater autonomy to leverage its
expertise, operating practices, and efficiencies.
Under alliance relationships, sponsors tend to work with only a few full-service CROs who assume the responsibility of managing
niche and specialty service CROs. As a result, the sponsor devotes little time to managing and coordinating a disparate collection
of contract service providers.
