smart outsourcing and strategic partnerships emerge as key...

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Smart Outsourcing and Strategic Partnerships Emerge as Key Trends in Search for Regulatory Efficiencies

Outsourcing and Consulting Services for Life Sciences

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Smart Outsourcing and Strategic Partnerships Emerge as Key Trends in Search for Regulatory E!ciencies

Executive Summary ............................................................................................................................................1

A Starting Point: De"ning Need .....................................................................................................................1

Continuing the Journey: Understanding Roles ........................................................................................3

Filling Gaps and Emerging Interfaces ..........................................................................................................4

Role of the A!liate .............................................................................................................................................5

The Next Level: Combining Competencies ................................................................................................7

Balancing Risk .......................................................................................................................................................7

Changing and Managing Expectations .......................................................................................................9

Conclusion ..........................................................................................................................................................10

Authors .................................................................................................................................................................11

Table of Contents

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Executive SummaryThe years since pharmaceutical companies "rst began outsourcing parts of the regulatory submission process have seen a marked shift in attitude and expectation: away from an unstructured approach and towards a more-strategic approach. Companies now expect far more than simply a service provider to handle isolated tasks and instead are seeking strategic partnerships to manage whole functions or processes.

The shift in emphasis is being prompted by a need to refocus a company’s own resources on strategic aspects of the business and away from the day-to-day operational tasks. Nevertheless, the move to have service providers manage much larger parts of the regulatory business relies on an element of trust, which suggests that the relationship between a pharmaceutical company and its service providers is evolving.

According to Steve Gens of Gens and Associates, there has been a signi"cant increase in the number of companies seeking strategic partners. Gens says the shift went from a third of the top 60 companies seeking strategic partners in 2012 to 59% wanting such partnerships in 2013—especially among the top 15 and small midtier companies.

A Starting Point: Defining NeedCompanies are of course at di#erent stages in the outsourcing journey, but almost all of the large companies are either already actively outsourcing regulatory functions or considering doing so. Gens says European and US-based companies are engaged in the highest percentage of outsourcing—especially the top 15 multinationals. Small companies usually depend on their outsourcing partners because they lack the internal human resources to undertake the functions themselves, says John Joseph of Bristol-Myers Squibb.

Within research and development (R&D), clinical is the most established area in terms of outsourcing, with repetitive tasks such as case report form processing dating back around 15 years, experts say. Larger companies have been outsourcing report and submission publishing for a number of years, says Steve Hasler of Originex. And in fact most of the large companies have for many years conducted some level of regulatory outsourcing to correct a lack of internal capabilities or competencies—even dating as far back as the 1980s, says Sandrine Courtheoux of Merck Serono.

More recent, though, is the outsourcing of pharmacovigilance and clinical safety data, with companies starting to consider this area in only the past seven years, according to Charles Arnold of KPMG. Before that, such data had been regarded as too sensitive to outsource.

“Drug safety and regulatory are the areas that can cause a shutdown in a pharma company, yet it went from ‘no way are we going to outsource that’ to everyone’s becoming involved in some subset of external service provision in these areas,” says Vicki Phelan of KPMG.

While important, maintaining a product on the market does not require the attention of a company’s core resources—its scientists and regulatory a#airs strategists. “There is a disconnect between on one hand, resources you need for developing new medicines, which are the R&D scientists, and those people who need to keep the product on the market, where the focus is geared more towards processes and e!ciencies,” says Katrin Spaepen of ProductLife Group.

Companies are increasingly looking for partnerships or strategic alliances to outsource whole business processes of lower scienti"c or innovative value. This allows innovative companies to focus on their key activity: the development of new medicines.” ~ Katrin Spaepen, Chief O!cer Client Services, ProductLife Group

Companies now expect far more than simply a service provider to handle isolated tasks and instead are seeking strategic partnerships to manage whole functions or processes.



Even though companies have been outsourcing the maintenance of their marketed products for some years, more often than not that kind of outsourcing has involved speci"c tasks. For example, the service provider might receive "les for compilation into dossier format, such as electronic Common Technical Documents (eCTDs) or non-eCTD electronic submissions, which are then sent back to the sponsor.

“The goals were to absorb peaks and troughs in the workload, to reorient internal forces towards more-complex publishing activities, and sometimes to fully outsource an activity that was not felt to be a core one,” says Erick Gaussens of ProductLife Group.

Today companies frequently outsource the regulatory activities associated with the maintenance of marketed products: annual reports, renewals, manufacturing changes, and labelling changes, Hasler says.

Courtheoux says Merck Serono has moved from outsourcing speci"c activities because it lacked competencies in a certain area to outsourcing larger volumes of operational activities in order to become able to focus resources and sta# on strategic elements. “Outsourcing is now de"ned at a higher level within the organisation, where we de"ne what is core to the business and ensure we have developed the competencies and focussed the resources on those core activities while determining what is noncore and seeking external resources to manage those activities,” Courtheoux says.

The need to rationalise arose, at least in part, because of demands from regulatory authorities that are causing more internal resources to be bound up in activities that don’t progress the pipeline, says Susan Bhatti of Merck Serono.

The result is that more companies are outsourcing at least some aspect of their regulatory activities, and the need is growing.

“Dossier outsourcing has reached 76% of the top 50 companies and is expected to exceed 84% in 2014,” Gens says. “Dossier publishing is viewed as a commodity, and you’re going to outsource either part of it or all of it; very few companies do it themselves exclusively.”

The trend more recently has been towards outsourcing full processes. This changes the role of the service provider, which is now expected to understand what is needed for a submission, plan the submission content in detail, liaise with the authors in the company, do some authoring itself, put the content together, and actually manage the whole process of generating the submission from the point at which the client company says, “We need this done,” all the way to providing it for the a!liates for them to submit, Hasler says.

This increased entwining of business processes between the pharma company and third parties opens the door to added value and increased $exibility for pharma companies and to a concept that might best

The trend more recently has been towards outsourcing full processes. This changes the role of the service provider, which is now expected to understand what is needed for a submission, plan the submission content in detail, liaise with the authors in the company, do some authoring itself, put the content together, and actually manage the whole process of generating the submission from the point at which the client company says, ‘We need this done,’ all the way to providing it for the a!liates for them to submit.” ~ Steve Hasler, Chief Executive O!cer, Originex

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2007 2008 2009 2011 2012 2013

Currently outsourcing

Outsourcing analysis

(new + expanded)

No plans to outsource

Top 50: Sourcing Trends (2007–13)

Source: 2013 Gens and Associates RIM Study



be described as smart outsourcing but one that requires the service provider with which they engage to provide the necessary quality, Gaussens says.

The value of acquiring or developing information technology (IT) solutions to manage regulatory operations is also being questioned more frequently. “We spend a lot of money on IT and a lot on developing in-house regulatory systems, but when someone has a software system out there to do that function, we need to look at it critically and say, ‘If they’re using it to do submissions and provide regulatory information for the organisation, why is it so di#erent from what we’re doing?’” Joseph says. “It usually comes down to what the internal process or even the custom is within the regulatory group.”

Pharma’s evolving needs, along with the push away from transactional types of support and towards more-functional outsourcing, have led service providers to try to gain a stronger foothold in areas that weren’t previously within their scope.

“We’re seeing CROs [contract research organisations] expand their capabilities and try to go more end-to-end from a life-cycle perspective, while the business process outsourcing [BPO] companies are trying to go more vertical from a functional perspective,” Arnold says. “All of them are trying to move up the value chain—away from a pure-play transactional support perspective that’s about labour costs and towards more-functional support that’s about ownership and presumably can drive e!ciency.”

Gaussens adds that pharma companies are increasingly balancing innovative R&D with a search for ways to extend existing product portfolios, such as (1) "nding other indications for marketed products, (2) in combination with devices and diagnostics, (3) by using new chemistry, manufacturing, and control (CMC) forms, (4) through nutraceuticals, or (5) moving to over-the-counter. This necessitates determining what is strategic and core to the business and what is important but could potentially be managed externally.

“This business challenge raises a resources and skills con$ict within the business, and it creates opportunities for partnership in order to manage the multiple needs that arise across regulatory, safety, and CMC when managing complex postmarketing portfolio extension strategies.”

Continuing the Journey: Understanding RolesSome in the industry raise questions as to the e#ectiveness of the full-outsourcing model, cautioning that companies can’t expect to simply outsource without continued oversight. “You can’t micromanage whatever it is you’re outsourcing, but you need to closely monitor it,” Joseph says. “There’s huge disappointment when the product coming out doesn’t match expectations, but I don’t believe companies have put the due diligence in up front.”

Companies often struggle to de"ne their roles and responsibilities compared with the activities undertaken by the outsourcing partner, and they fail to demarcate objectives and key performance indicators, Spaepen says. This requires good governance over projects—a concept unfamiliar to companies largely accustomed to operating through managerial control. “Pharma companies and their service providers need to de"ne the processes and interfaces between one another in an open and transparent way,” Spaepen says.

Setting clear expectations for repetitive tasks—such as document publishing, regular monitoring of originally well-de"ned service-level agreements, and good management and monitoring of hando#s—is integral to successful outcomes, Joseph says. “You have to have visibility into what your service provider is doing,” he says. “I don’t think we spend enough time ensuring that service providers have executed against standard operating procedures [SOPs].”

One of the di!culties can lie in ensuring smooth handovers between what’s being done internally and what’s being done externally. “The risk during a handover is that things might not get looked after properly, and if there isn’t enough expertise at your provider to handle activities in a timely manner, you can run into crises,” Bhatti says.

Global expertise is another sought-after area—especially regulatory expertise in certain niche areas and/or countries—and !nding outsourcing support in those areas is still very di"cult.



Both Bhatti and Courtheoux emphasise the importance of planning and allowing enough time to adapt from an internal to an external operation during a transition phase. “We’ve learned from experience that you have keep your in-house resources on board until your partner is fully able to take over; you can’t expect a partner to take the activities on board straight away and think everything will run smoothly, because it probably won’t,” Bhatti says.

Conducting thorough change management will help alleviate resistance or disruption from dissatis"ed pharma company employees. One of the issues companies have encountered involves helping employees adapt to their changing roles. “Employees don’t prepare the submissions any longer. They don’t do all the coordination. It’s now done by the vendor,” says Susanne Andreae of EMD Serono. “Their role is now more strategic, and they have to be able to let go yet ensure oversight.”

On the other hand, Bhatti says employees sometimes switch quickly, from resistance to outsourcing, to assuming everything can be managed by the service provider. “It’s not easy to manage expectations there,” she says.

A tendency from the service provider side has been to overcomplicate the deliverable: “They might produce too rigorous an eCTD when it wasn’t needed, which added to the exchanges between customer and service provider; or write a CMC document in highly complex, pure-science language, which might not "t the needs or culture of the company,” Gaussens says.

Filling Gaps and Emerging InterfacesThe push by pharma companies to outsource end-to-end business processes, thereby extending service providers into areas that previously weren’t within their range of capabilities—as BPO providers dipping into the CRO realm and vice versa—has raised questions and caused uncertainties. And as a result, many outsourcing companies may not yet be fully equipped to provide across-the-board service.

Andreae says she has experienced a gap in expertise and that when Merck Serono began a major vendor selection project in 2012, very few companies had the capabilities the company sought. “I found the availability was quite thin in terms of expertise to manage a full-scale collaboration for regulatory submissions,” she says. “It’s being built, but gaps remain.”

“It’s di!cult for most service providers to cover the global remit we have,” Bhatti says. “We cover the whole world, and some of the markets outside the United States and the European Union [EU] have complicated requirements, which have to be met; but having that level of detailed knowledge of what’s required in those countries is quite challenging.”

Arnold agrees, adding that no one can do everything, but many service providers are attempting to. “The de"nition of more value added is ambiguous: what is more valuable? That’s where people are struggling,” he says. “The buyers are hunting for the right answer, but the answers they’re getting are divergent, so it’s di!cult to articulate the next best step. And I don’t think buyers want to go all the way down the path that the respective providers are advocating as the next best step.”

From the provider’s point of view, the problem is that the low-hanging fruit has been picked, thereby taking cost out of the business through o#shoring and managing for peaks and troughs. The question is, Now what? “The way you make it cheaper is to bolt bits onto the side,” Arnold says. “Providers perceive their clients as being after ongoing improvements, and pharma companies are; but how to solve for that is what’s causing this scattershot approach.”

As the scope of those outsourcing processes gets more and more into di#erent parts of regulatory—into CMC and labelling as well as regulatory operations—then I think vendors are linking up more and more, partly to make sure they have the expertise and partly to make sure they have the scale required.” ~ Steve Hasler, Chief Executive O!cer, Originex

In Europe alone, 28 countries make up the European Union and are subject to European guidelines, but typically, they implement and interpret those guidelines in very di#erent ways.



Given the gaps, industry insiders would support or even encourage partnerships between service providers. Andreae outlines two scenarios, wherein such partnerships would potentially add strategic value. “A geographic partnership between a low-cost, o#shore vendor and a vendor that brings the interface and on-site access of a European/US-based vendor could bring value; and some vendors already aim to o#er both within a single company,” she says. “The other area has to do more with expertise. So, rather than aiming to build the entire value chain in a single company, I could also see value in saying, ‘We know we’re regulatory specialists, and we will o#er everything around regulatory submission,’ or ‘We know we’re not that strong in [say] safety or medical writing, so we’ll partner with another vendor to be able to o#er the full range of services.’ In recent years, the goal has been to gain that expertise via acquisitions, but I can see that partnerships between vendors would be as e#ective in achieving it.”

According to Hasler, some bids were made wherein service providers got together to look at the scope of what’s being outsourced, and they considered working together to provide broader capabilities for the pharma company. “As the scope of those outsourcing processes gets more and more into di#erent parts of regulatory—into CMC and labelling as well as regulatory operations—then I think vendors are linking up more and more, partly to make sure they have the expertise and partly to make sure they have the scale required,” he says. “This is particularly true among niche players that have the expertise in certain areas but not the scale to deliver to a top-tier pharma company.”

As every function across the R&D continuum extends its reliance on the building of partnerships with service providers, there comes a point at which vendors start interacting with one another. Andreae says such interaction raises a question as to whether pharma companies need to oversee and control that interface or just have the service providers interact. And that in turn raises more questions about the remaining value of the pharma company. “While these interfaces are just emerging because of the larger scale of outsourcing, it raises the question, How do we manage multiple outsourcing partners for a single project at the same time?” she says. Role of the Affiliate

In Europe alone, 28 countries make up the European Union and are subject to European guidelines, but typically, they implement and interpret those guidelines in very di#erent ways. “To deal with the national authority, you need to be aware of those tiny di#erences and speak the language or at least understand the language of the country in which you wish to submit,” Spaepen cautions. “So it’s di!cult to work in a more-centralised or clusterlike mode, which is what is needed to improve e!ciencies and $exibility.”

Hasler says there is growing interest in the outsourcing of operational tasks at the a!liate level. However, approaches to handling the a!liate role di#er across the industry. And some experts say that because of country-speci"c requirements in regard to content and language, the outsourcing of a!liate activities may be more complex than the outsourcing of a central function.

Merck Serono keeps that direct contact between the a!liate and the health authority internal to ensure strong relationships with regulators. However, the company is considering outsourcing more operational activities related to products that are managed at a local level. “The key challenge is that you need a

A geographic partnership between a low-cost, o#shore vendor and a vendor that brings the interface and on-site access of a European/US-based vendor could bring value; and some vendors already aim to o#er both within a single company.” ~ Susanne Andreae, Head of Regulatory Informatics and Submission Management, EMD Serono, US subsidiary of Merck KGaA

As companies expand their global presence, one of their great challenges is the management of a"liate o"ces and whether—and how—to outsource those activities.



vendor with a very strong and extensive network of regulatory experts,” Andreae says. “We have a strong international commercial base with marketing authorisations in nearly every country worldwide. This would require the vendor to be capable of providing detailed local regulatory expertise in every single country, to have local-language expertise, and to potentially be able to deliver the local dossier in every country. That’s quite a challenge.”

“I don’t think we could envisage running a global company without adding company representatives at the a!liate levels,” Courtheoux says. “We apply the same decision matrix when considering outsourcing at the local level. It’s about what is strategic compared with what is not strategic, and for us, the more strategic aspect is the relationship with regulatory agencies.”

Hasler agrees. “There aren’t many vendors that have enough global presence to have hubs close to each country to perform the a!liate role,” he says. “If an outsourcing supplier built the capability to perform that local health authority role in a country—even in just the whole of Europe, for example—then I suspect some companies would hand over a portfolio of less-important marketed products and have those managed end-to-end.”

Many a!liate o!ces are very small—sometimes only one person—raising questions as to what to outsource to gain value. Few companies are ready to outsource interaction with health authorities, which interaction can be a major part of the a!liate’s regulatory a#airs role. However, many who participated in this paper say there could be true bene"ts to outsourcing some of the a!liate activity, based on the eCTD’s becoming mandatory in Europe for decentralised and mutual recognition procedures.

This would require a lot of back and forth between a!liates and the corporate group and would add to a!liates’ workloads, so that’s an area where we could see some bene"t to outsourcing, experts say. Another example is with the Association of Southeast Asian Nations CTD, which requires some pure reformatting of the dossier. Experts note that rather than having each of the a!liates handle this, it might be logical to outsource on behalf of the a!liates.

Joseph maintains that a company’s headquarters needs to drive and monitor what happens at the a!liate level, including work with vendors, but that would also depend on the level of expertise of the service provider. “If you pick the right partner and that partner has done multiple submissions in a country, you’d rely on its advice and its expertise there,” he says.

Balancing what is centralised and what stays local is dynamic, and it’s a#ected not only by the di#erent regulatory bodies’ di#ering requirements but also by the growing challenges around transporting patient data, Arnold says. The real value to cohesion around the role of the a!liate—and then to having an outsource partner put a global operating model in place—lies not in a value proposition but in the fact that regulatory bodies are pushing in that direction, particularly with regard to safety, he adds.

Pharmacovigilance requirements vary signi"cantly from region to region, but the European and US regulatory authorities increasingly are requiring that adverse reactions are identi"ed around the world and reported back to the European Medicines Agency and the US Food and Drug Administration. “So, while Latin American countries don’t necessarily want to or need to do the same work as their US and EU counterparts, they’re increasingly becoming required to,” Arnold says. “The regulatory pressures are leading the enablement of a global model.”

The key challenge is that you need a vendor with a very strong and extensive network of regulatory experts.” ~ Susanne Andreae, Head of Regulatory Informatics and Submission Management, EMD Serono, US subsidiary of Merck KGaA



The Next Level: Combining Competencies

In practice, some of the tactical elements of regulatory and safety are closely interwoven, because among other things, they’re reporting to the same bodies, Arnold says. Some of the documents required for pharmacovigilance—Periodic Safety Update Reports (PSURs), risk management plans, and the pharmacovigilance system master "le—are exchanged with the agency during the submission process.

At Merck Serono, regulatory a#airs receives the periodic safety reports from pharmacovigilance and generally handles the interface with the regulators. However, even though the company outsources individual case safety reporting and database entries, it has not yet outsourced to the same provider. “The next step might be to look at synergies in terms of outsourcing some of these tasks jointly,” Andreae says.

Keeping the two separate raises certain challenges, experts point out. “If regulatory and pharmacovigilance are not outsourced together, then the sponsor company must be even more vigilant about its business processes so that both of the outsourcing partners can operate e!ciently,” Gaussens says.

However, Arnold says, a barrier exists in terms of pharma companies’ own internal operations, because they aren’t necessarily blending regulatory and safety organisationally. “There is a bit of resistance to having

a single provider span both areas, but even that is shifting somewhat,” he says.

Courtheoux recognises a bene"t to greater melding of regulatory and safety but says there are also risks. “Having only one partner covering both areas may bring us into a situation if we have some issues, and because we’re linked to this partner in extensive ways, we may not be able to move as easily as we could if we had several partners. On the other hand, having a preferred partner has a lot of positives in terms of overall negotiation and the ability to really develop a relationship with your partner.”

One area where it makes sense to outsource regulatory and safety together is a company’s choice to outsource the work done by a!liates, Gaussens says. “Generally, when a company has a single a!liate managing a country, the person handles both regulatory and pharmacovigilance. So if a company decides to outsource that role, it makes economic sense to have one partner manage both activities,” he says.

The real bene"t of bringing regulatory and pharmacovigilance together will be realised when the Identi"cation of Medicinal Products standard becomes implemented, industry insiders say. “Then we’ll need to have all the medicinal product information that is governed by regulatory—in most cases—very much linked to the individual case safety reports from drug safety,” Andreae says. “And that development will push safety and regulatory to move much closer together and link the databases.”

Hasler says some companies are starting to think about big outsourcing projects that involve adverse-event management, coding, quality assurance, and even some analysis of the causality of the adverse events. “It’s very early days, and I know of only one company that’s looking at outsourcing pharmacovigilance and regulatory a#airs together; but at this stage, very few service providers can do both to the standard top pharma would want,” Hasler says.

Balancing RiskThe issue that continues to worry many companies when undertaking outsourcing is the protection of

One area where it makes sense to outsource regulatory and safety together is a company’s choice to outsource the work done by a!liates.” ~ Erick Gaussens, Cofounder, Principal Consultant, and Chief Scienti"c O!cer, ProductLife Group

As regulatory outsourcing continues to evolve, one notable trend is companies’ desire to combine functional areas. Although not widely undertaken at present, companies are looking more closely at the relationship between regulatory and pharmacovigilance.



their intellectual property, Hasler says. “I still hear companies asking, Will it work? How do we keep control? Will the performance be good enough? and What about our data and document con"dentiality?” he says.

Gens agrees, saying companies are particularly concerned about the CMC section, which contains details about their compounds. “They want to make sure there are clear security "rewalls with their third parties, so a lot of auditing goes on to ensure everything is set up securely,” Gens says.

However, Arnold says that data security is not necessarily an outsourcing risk as much as a global operating risk.

More problematic is the issue of $exibility in outsourcing. “Companies agree to an approach that is applicable for the term length of a deal—be it 3, 5, or 10 years—but every time there is a change, even something as mundane as a change in SOPs, it becomes harder to manage when you’re in a contractually bound, output-based service delivery model,” Arnold says. “What happens if you no longer wish to work with that partner? How do you get out? What happens to the data? Is it safe? Did we get it all back? The exit strategy is probably the biggest barrier to entry and the biggest risk point that people get hung up on.”

Andreae agrees, noting that with larger-scale outsourcing it can take a year or more to build and establish a partnership to a level where it’s functional. “It’s di!cult then to just say, ‘I’m not happy with the performance anymore, so I’ll take it to the next vendor,’” she says.

Concern about future cost savings is another potential source of disquiet, Hasler says. “As regulatory outsourcing matures, the prices have hardened a bit, and savings aren’t what they were,” he says. “So, some things that may have added to concerns are, Will we get the cost savings we want? and If I can get it now, then when I renew the contract, will I still get those savings?”

Another risk companies are noting is the loss of content knowledge inside the company. “Once you’ve outsourced a larger piece of your portfolio and its full

maintenance, no one in the company knows all the details of what you’ve submitted, because although you still have oversight, you’re not doing the work internally, so that detailed expertise on the product gets signi"cantly reduced,” Andreae says. “If you need to answer questions or there are any issues on the product and if at some point you want to take things back, it’s a big challenge to rebuild.”

That challenge reinforces the importance of good governance and good oversight. Merck Serono, for example, requires its outsourcing partner to do the work within the company’s regulatory systems so that Merck Serono can have full visibility of what’s registered where, can know where each submission stands, and can keep the archive in-house and easily accessible.

Nevertheless, it remains a challenge to maintain detailed expertise without simply mirroring what the outsourcing vendor is doing, Andreae says. “Having that e!ciency gain means that by default you’re losing some of the details in the process,” she says.

It’s gone from ad hoc project outsourcing to very much wanting a strategic partnership because outsourcing has become a core aspect of the way pharma companies operate.” ~ Steve Gens, Managing Partner, Gens and Associates Inc.

At this level, service providers o#er not only management of pure operational, day-to-day tasks in a standardised way but also expertise at a more strategic level. In other words, your partner not only delivers your routine regulatory submissions but also challenges your internal activities to increase the quality of the output.” ~ Susanne Andreae, Head of Regulatory Informatics and Submission Management, EMD Serono, US subsidiary of Merck KGaA



Changing and Managing ExpectationsSponsor companies’ requirements and expectations are changing rapidly, with many seeking to outsource whole activities, such as a process or part of a process, rather than on a project-by-project basis.

Merck Serono has moved away from the outsourcing of single tasks aimed at covering bottlenecks and towards handing out the full life cycle of a marketed product—or entire pieces of a process. The point has been to create a strategic outsourcing partnership rather than work more sporadically with a service provider.

“It’s gone from ad hoc project outsourcing to very much wanting a strategic partnership because outsourcing has become a core aspect of the way pharma companies operate,” Gens says.

That raises the question, What is meant by strategic partnership?

Having a partner to manage activities may have a direct value, but there could also be indirect value from having a service provider help pharma companies improve and streamline their own processes.

Spaepen says that de"ning the interfaces and level of collaboration with an outsourcing partner also re$ects on the pharma company’s nonoutsourced processes, which urges the pharma company to think about those processes as well to make them more e!cient.Improving processes, or at least adapting them to

an outsourcing model, is essential if companies are to realise true bene"ts. That takes the partnership beyond simply resourcing—whereby pharma companies take advantage of synergies o#ered by service providers to manage peaks and troughs— and to another level.

“At this level, service providers o#er not only management of pure operational, day-to-day tasks in a standardised way but also expertise at a more strategic level,” Andreae says. “In other words, your partner not only delivers your routine regulatory submissions but also challenges your internal activities to increase the quality of the output. That becomes a real strategic partnership, which might include challenging the ways of working, the content, the interaction with other outsourcing companies—leveraging that cross-functional and cross-pharma experience that the vendor gains from working with a variety of pharma companies,” she says.

In the past two years, there has been a growing emphasis on key performance indicators (KPIs) that measure overall end-to-end business process performance, Hasler says. “I’ve seen a lot of service providers working with pharma companies to develop KPIs across the whole process. Some of the KPIs measure the part of the business process that is still in the client company, so there is an end-to-end view on the process performance,” he says. “And more and more I see pharma companies asking their service providers to bring their business process improvement capability into play in the outsourcing scope, so the vendor is proposing changes to business processes that would improve e!ciency and cost performance; and sometimes those proposals are not just for the process the vendor runs but also for what the client still retains.”

Smart outsourcing relies on business process sharing between the third party and the pharma company—by the third party, at the interface, and inside the pharma company—with the expectations of the outsourcing model clearly de"ned through good governance and driven forward through a commitment to continuous improvement by both the company and the service provider.” ~ Erick Gaussens, Cofounder, Principal Consultant, and Chief Scienti"c O!cer, ProductLife Group

If companies truly go into outsourcing as a partnership and see the vendor as almost an extension of their organisations and if both parties build a partnership that strives to improve the way the service is delivered—to the bene"t of the pharma company, then things work.” ~ Steve Hasler, Chief Executive O!cer, Originex



There are challenges to that larger role in the current operating environment. Gaussens says that when companies handled most of the regulatory and safety tasks internally, they could quickly contact the relevant department to discuss any problems that arose. But a third party doesn’t have access to those resources without calling the company, which isn’t an e!cient operating model.

Rather, what is needed in an era of systematic outsourcing is what Gaussens calls smart outsourcing. In that model, the outsourcing partner understands the speci"c needs and operating model of the company in question—its economic model, processes, available resources, and so forth— and adapts accordingly.

“A smart outsourcer is able to anticipate change: for example, (1) when the regulatory authorities issue a new ruling on the PSUR, a smart outsourcer warns the company that this could happen; or (2) when writing very technical material such as a CMC document, a smart outsourcer is smart enough to write it in a way that "ts the company culture,” Gaussens says. “Smart outsourcing relies on business process sharing be-tween the third party and the pharma company—by the third party, at the interface, and inside the pharma

company—with the expectations of the outsourcing model clearly de"ned through good governance and driven forward through a commitment to continuous improvement by both the company and the service provider.”

ConclusionAs the role of the service provider evolves and grows, partnership is the only way for functional or systematic outsourcing to work. For it to succeed, there must be transparent communication and performance management between both parties regarding the expected outcome of the outsourcing relationship.

“If companies truly go into outsourcing as a partnership and see the vendor as almost an extension of their organisations and if both parties build a partnership that strives to improve the way the service is delivered—to the bene"t of the pharma company—then things work,” Hasler says. “If pharma companies throw things over the wall or the service provider doesn’t deliver as promised, it becomes a lot less like a partnership and a lot more like an us-against-them scenario, and it starts to fall apart.”



Authors

Susanne Andreae, PhDHead of Regulatory Informatics and Submission Management EMD Serono, US subsidiary of Merck KGaA

Charles Arnold Principal KPMG

Susan Bhatti, PhD Head of Strategic Partnership, Global Regulatory EuropeMerck Serono

Sandrine Courtheoux, PhDVice President and Head of Global Regulatory Europe Merck Serono

Erick Gaussens, PhDCofounder, Principal Consultant, and Chief Scienti"c O!cer ProductLife Group

Steve GensManaging PartnerGens and Associates Inc.

Steve HaslerChief Executive O!cerOriginex

John JosephExecutive Director, Global Dossier ManagementBristol-Myers Squibb

Vicki PhelanDirector, SSOA KPMG Life Sciences Advisory

Katrin SpaepenChief O!cer Client ServicesProductLife Group

Outsourcing and Consulting Services for Life Sciences

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