Unlocking hidden value within regulatory affairs

Transcription

1 Unlocking hidden value within regulatory affairs By Denis Berry, Paul Saias, and Brian Williams, KPMG in the U.S. These are chaotic times for life sciences organizations, rife with opportunities and risks. The industry is crackling with innovation as the convergence of life sciences, physical sciences, and engineering research yields new medicines and drug delivery systems. Industry focus is shifting from medicines to outcomes, adding complexity to the balance of scientific and marketing demands. And while growth has slowed in mature markets such as the United States and Europe, new markets are opening up in developing countries. But there are also challenges. Competition from generics and biosimilars is heating up; healthcare systems and governments are driving hard bargains, putting more pressure on prices; and the push into new markets is bringing an increase in the volume and complexity of regulatory requirements. Pharmaceutical companies have to be ready to do more with less. That means a greater focus on operational efficiency and cost cutting, a greater need to speed new drugs to market, and, therefore, a greater emphasis on achieving first-pass approvals from health authorities. In other words, it is time to unblock the potential strategic advantage constrained within the regulatory affairs (RA) function. Building a best-in-class regulatory affairs organization is not merely a way to reduce operational expenses and time to market; done right, it is a strategy for achieving competitive advantage. Defining best-in-class regulatory affairs In our work with life sciences organizations, KPMG LLP (KPMG) has found that RA organizations vary in effectiveness from simple compliance functions to sophisticated, strategic organizations that add measurable value to their companies. The maturity process involves developing and deploying optimal processes and tools, and empowering people to become strategic, proactive business partners. At their best, RA organizations are strategic, lean, and nimble. They are not viewed as passive order takers and crisis managers. They are proactive, ready and able to take calculated risks, and actively engaged with regulators. As a result, dialogue is open, and issues are identified and addressed earlier in the review process. In a mature, strategic RA function, people are aligned to achieve strategic goals, with global resources supporting an integrated RA strategy. Processes are streamlined to speed the path to market across products and geographies. Service delivery is optimized so lower-cost resources are assigned to routine tasks, while higher cost, strategic resources are focused on interactions with regulators and managing regulatory strategy. IT systems enable and enforce a global RA work flow and provide a single source of truth for key information. IT and RA have a collaborative relationship that fosters innovation. To illustrate the transformation path from a complianceoriented RA function to a strategic, agile, and innovative source of competitive advantage, KPMG created a Regulatory Affairs Maturity Curve (see next page). In this issue brief, we examine some of the issues and the decisions an organization must make to move up the maturity curve.

2 Regulatory Affairs Maturity Curve Maturity Level Empowered & Enabled Emerging set of standardized tools and processes, defined roles, and empowered resources 3 Effectiveness Focus Strategic & Agile Strategic and innovative with globally deployed, optimized set of tools and processes Value Focus 4 Reactive Traditional RA, playing role of Post Office 1 Efficiency Focus 2 Process Focused Some processes optimized and/or outsourced, no seat at the table Transformation Path RA processes and delivery models Any discussion of RA processes should also touch on outsourcing. Over two-thirds of pharmaceutical companies now outsource some of their RA activities. 1 In fact, the global pharmaceutical outsourcing industry is expected to grow at CAGR of about 12 percent by The argument for outsourcing can be compelling. Outsourcing reduces the fixed costs of in-house talent, facilities, and technology; increases an organization s access to the expertise on demand; and can speed new market approvals. But there are also inherent risks. Potential buyers of RA outsourcing services cite concerns about data security, system access, third-party performance, increased compliance risk, loss of control, and unsustainable cost savings. They may also be reluctant to tackle the inevitable organizational change issues that go along with a major structural change. Ultimately, the RA organization needs to differentiate between the noncompetitive or commodity processes that can be outsourced and the strategic or scientific processes that should remain in house. This assessment can often be difficult, but is critical to maintaining a sustainable organization in light of all the cost/margin pressures on pharmaceutical companies today. The end goal should be an optimized delivery model with lower cost resources responsible for transactional type activities, and strategic resources focused on health authority interactions. 1. January 2013, Cutting Edge Information 2. December 2011, Pharmaceutical Online, Jim Zhang, Ph.D.

3 Regardless of whether outsourcing is pursued, RA organizations are prime candidates for process optimization due to their inherent focus on collaboration, document handoffs, and information management. Typically, the most important process within an RA organization (or at least the one that gets the most attention) is the dossier/submission development process. With an emphasis on time to market and achieving first-pass approvals from health authorities, pharmaceutical companies are focused on identifying the operational efficiencies that can provide the most value toward meeting these goals. Delays to approval can result in millions of dollars in lost revenues. Designing consistency into the process of developing the global dossier as well as in product messaging, is critical to achieving rapid review and first-pass approval. Consistency must begin with a flexible, scalable set of processes and tools that enable product team members to focus on quality dossier development, rather than on recreating the wheel each time a regulatory submission is planned. RA organizations should be focused on providing team members with an easy-to-navigate toolset that places all the relevant policies, procedures, process definitions, and templates at their fingertips for ensuring data consistency, integrated messaging, effective document authoring, and quality reviews. Key questions about work flows & delivery models Which services are core to our success? Which are noncore? What are our delivery goals for each of our service offerings: flexibility, scalability or cost reduction? Where will we get the resources we need to support our RA processes? In which regions will local knowledge be critical? Where are there opportunities to improve cost efficiency? Where are there opportunities to standardize and improve service delivery quality? Has your organization implemented consistent dossier development processes? Are you leveraging lessons learned in subsequent submissions efforts? Value-driven optimization of process across products and geographies. Optimized delivery model with lower-cost resources responsible for post-office type activities, and strategic resources focused on health authorities interaction. Global processes govern key activities. Aligning technology and tools to support RA processes objectives From an RA perspective, the goal of any technology and information architecture strategy is to ensure that the right information is easily accessible to the right audiences at the right time. Currently, however, many pharmaceutical companies find themselves unable to deliver on this vision. In the absence of an end-to-end software solution for the RA function, most companies have been forced to build discrete, siloed, and often regional capabilities in their system portfolio. Frustrated by the available systems, many RA professionals resort to using unofficial tools such as spreadsheets and SharePoint sites, to track the information they need for their everyday responsibilities. The presence of independent, discrete solutions has also resulted in a lack of data harmonization and governance in the many RA organizations. Typically, systems within the portfolio have overlapping, redundant data that in some cases may reflect different versions of the truth. Users within RA (and other parts of the company) are then unsure which system is the authoritative source for certain information. In order to mature, RA organizations should focus on the following key objectives: Quickly move to integrate their system portfolio. Harmonize key data elements. Transform RA data into a corporate asset by releasing captive information to key consumers within the organization. Enforce a common, global RA work flow (enabled by systems).

4 Achieving these objectives in the near term will not be easy. Many of the RA solution vendors still lack the scale and maturity to quickly help deliver on any of these objectives. Also, functional budgets within all pharmaceutical organizations are being heavily scrutinized, and it s often difficult to pursue significant capital investment projects. This puts pressure on RA organizations to evaluate some alternative approaches. In order for the overall RA ecosystem to operate more efficiently, the companies, system vendors, and health authorities have to be better aligned. One way to improve alignment in the ecosystem may be to establish a critical mass of companies, in the form of a partnership or consortium that can influence the health authorities and invest alongside the system vendors to help them quickly mature. At a minimum, RA organizations should seek out system vendors who are willing to support end-to-end, integrated capabilities through either expanded product offerings or partnerships with other vendors. Key questions to ask about your current information technology How can we streamline our RA system portfolio, reducing the number of systems with overlapping data? What functionality should we integrate? How do we use our systems to efficiently support a global operating model? How do our systems support our need to react quickly to changing policies and regulatory requirements? How do we increase end-user adoption of our systems? How do we lower our total cost of ownership? RA has a tightly integrated system portfolio with one access point. A single source of truth exists for key information. Systems enforce and enable a global RA work flow. RA and IT have a strategic relationship and collaborate on innovative ideas. Empowering your regulatory affairs team In order to increase the value of the RA function, companies must start with a hard look at their basic organizational structure. RA reporting structures have a direct impact on RA priorities, so it is critical to get the organizational design and governance right. However, there is not a one-size-fits-all right answer when it comes to organizational design and governance decisions. Our discussions with global pharmaceutical companies indicate that when responsibilities and reporting hierarchies are not well aligned, the result is friction between affiliates and corporate RA. While the role of affiliates is important to both commercial and regulatory interests, most organizations are vocalizing the need to strengthen affiliate reporting to RA for improved submissions and meeting long-term strategic goals. Leading practices suggest that when organizations are highly decentralized, governance processes need to be clear and consistently enforced. And among stakeholders, there s an emerging consensus that RA should report directly to a C-level executive rather than to a head of R&D or Commercial Development, especially as RA becomes more integral to pipeline management strategy and the pharmaceutical organization s reputation and brand. However, less than 25 percent of the RA organizations at large and midsize pharmaceutical companies currently report to a C-level executive. 3 The benefits to having an empowered RA organization are immense. High-performing RA teams help their organizations gain early mover advantage, expedite submission approval time lines, increase the number of first time approvals, and increase their ability to shape regulatory policies in emerging markets. Key organization and governance questions for your RA organizations How do we best design a global governance process across RA to allow it to become a strategic function in the company? Have we provided RA with visibility at the executive and board level so the team can make the right long-term decisions? How do we sponsor, make, and enforce decisions across a globalized RA function? How do we balance the corporate need to have a cohesive global RA strategy with regional autonomy? How do we manage staff development to ensure support for key capabilities? How do we cultivate a culture of promoting consistent and continuous improvement? Resources are aligned and enabled to achieve strategic regulatory costs. Strategic resources are allocated properly to support integrated RA strategy. RA is viewed as a key cross-functional collaborator on global product teams , Cutting Edge Information.

5 Conclusion This is a critical time for many RA organizations, as internal and external forces are pressuring them to transform their business models. In order to become lean, nimble, and strategic, RA organizations must quickly move up the maturity curve. Doing so will require finding ways to unlock value evaluating new organizational structures, adopting alternative delivery models, and developing end-to-end, integrated capabilities through software vendor partnerships or a consortium with other pharmaceutical companies. KPMG LLP is a leader in convergence, assisting organizations across the Healthcare and Life Science ecosystem to work together in new ways to transform the business of healthcare. With more than 1,500 U.S. partners and professionals supported by a global network in 150 countries, we offer a market-leading portfolio of tools and services focused on helping our clients adapt to regulatory change; design and implement new business models; and leverage technology, data, and analytics to guide them on the paths to convergence. Denis Berry Principal, Advisory dberry@kpmg.com Paul Saias Principal, Advisory psaias@kpmg.com Brian Williams Manager, Advisory bewilliams@kpmg.com Related Links For more perspective on the convergent marketplace in the United States and in other countries, please see: Convergence is Coming: A Brave New World for U.S. Healthcare provides perspective on the broader implications of operating in a more collaborative and coordinated U.S. healthcare delivery model. Volume to Value reports on a KPMG-sponsored study that provides perspective on future business models spanning major industry segments. More than Medicine examines opportunities for life sciences companies to position themselves as a partner in the system rather than a supplier. kpmg.com