whitepaper managing fluctuating demand through a scalable FSP model. randstad life sciences

Transcription

1 whitepaper managing fluctuating demand through a scalable FSP model. randstad life sciences

2 Pharmaceutical companies and the Contract Research Organizations (CROs) that serve them are no strangers to the fluctuations in demand that often accompany drug trials. Just 11.3 percent of drugs that enter the trial phase make it to FDA approval. This is hardly news to anyone in the industry, but pharma companies shouldn t accept it as simply the cost of doing business. In fact, as of 2016, the average cost of a Phase 2 clinical trial ranged from $7 to $19.6 million, while the average cost for a Phase 3 trial ranged from $11.5 to $52.9 million. But regardless of phase, more than 74 percent of those dollars went to administrative staff, clinical procedures, site monitoring and site retention. That is, human resources are the most expensive part of the drug development process. estimated average per-patient clinical trial costs, by phase. phase 0 $16,500 phase I phase II phase III $38,500 $40,000 $42,000 phase IV $16,500 average, all phases $36,500 $0 $20,000 $40,000 $60,000 image source: Biopharmaceutical Industry-Sponsored Clinical Trials: Impact on State Economies, PhRMA.org The burden of these fixed costs is what leads many sponsor organizations to outsource to partners like Functional Service Providers (FSPs) and CROs. But there are key differences between the offerings of FSPs and CROs, and for sponsors that want to conduct better, faster clinical trials, it is critical to understand these differences so they can align with the partner that best serves their needs. 2

3 the high risk of shifting demand When clinical trials end abruptly, the teams working on them suddenly find that they have much less or in some cases nothing at all to do. For those pharma companies that handle much of their own clinical operations in-house, this means wasting money on the fixed costs of idle manpower. The biggest impact of a failed trial is on your people, said John Ebeid, Senior Vice President of Randstad Life Sciences. A 20-year veteran of the life sciences industry, Ebeid emphasized the high costs associated with fluctuating demand. When you have to terminate a compound or project, the first thing you re going to ask yourself is, Where else can I reassign them? But if there s nothing else in your pipeline, what do you do with those people? In many cases, Ebied pointed out, the answer is nothing. Worse, underutilized employees are likely to become themselves dissatisfied or disengaged, which can have lingering effects like lower morale and higher turnover down the line. Or they may worry about job security and begin looking for opportunities elsewhere. Either way, competition for qualified talent is fierce in life sciences, and losing even one employee with the required skills and experience as well as insider knowledge of your company and its culture can be massively costly to organizations. To address how pharmaceutical companies can mitigate the risks associated with fluctuating demand, it is necessary to look at some of the key differences between the CRO and FSP models. important differences in how FSPs and CROs allocate talent There are important differences in the ways that FSPs and CROs approach the allocation of human resources. For starters, when working with CROs, the Clinical Research Associates (CRAs) who begin work on a study are often not the same individuals who finish it. The cause is twofold: high turnover combined with resourcing practices. Indeed, studies show that turnover for clinical monitoring jobs at CROs has remained high, even as average salaries have gone up and in fact, it has been reported that turnover rates for some CROs are as high as 50 percent. For sponsor organizations working with a CRO, a terminated study means that the CRO s clinical research associates move on to other clients and projects. If, later, the sponsor wants to begin work on a different compound, the CRO must onboard an entirely new team, familiarize them with the sponsor s processes and tools and get everyone up to speed which can take weeks or even months. When you re working with a CRO and you lose a team, you ve likely lost them for good, Randy Kehrmeyer, Managing Director of Outsourcing at Randstad Life Sciences, explained. With an FSP, however, that s not the case. Because the monitors are typically working across multiple studies in the sponsor s portfolio, resources that become available due to one study ending are readily assigned to other needs within the organization. Therefore, the sponsor retains the people who know their systems, processes, business priorities and culture for the long term thus increasing productivity and quality. 3

4 This is possible because FSPs typically work across multiple studies aligned by function, not project and so their CRAs are assigned to more than one study. Workloads are established, and can always be adjusted, to keep the resources consistently engaged on projects where they are functionally adept and already know the lay of the land. Another resource-allocation challenge of working with CROs is that they normally prioritize larger pharma companies over smaller life sciences organizations because they recognize there is greater overall business potential with bigger clients. As a result, these clients receive the CRO s best talent (and customer service), while smaller biopharma companies are likely going to see their studies staffed by junior, far less experienced employees. That means, for smaller companies and startups, an FSP model has distinct benefits. It allows them to bring in new expertise across a variety of therapeutic areas or functions without increasing risks, such as having to outsource an entire study or committing to full-time hires. As opposed to having full-time employees, which represent fixed costs, a functional service provider can flexibly scale up or down to reflect increases or decreases in demand. This can significantly expedite growth. For instance, what if a smaller company needed to scale quickly for a new development program? Working with a CRO, Kehrmeyer said, you wouldn t be able to secure the best people fast enough for your priority project even if you already knew where to find them. However, for a true FSP organization one that specializes in delivering this model rather than simply attempting to unbundle a full service offering talent acquisition is a core competency. strategies for reducing the risks and costs associated with fluctuating demand One way that pharma companies can limit the risks and costs of fluctuating demand is to change how and what they outsource. Most CROs require that sponsors outsource every aspect of a clinical trial, rather than allowing them to choose which functions to outsource and which to keep in-house. On the other hand, the FSP model allows sponsors to outsource only the functions they choose, such as site identification and initiation, medical writing, site monitoring and a range of other critical functions. This is an important strategic consideration. Structurally, there are other advantages that FSPs offer for sponsor organizations. For instance, since functional outsourcing gives pharma companies the ability to outsource a single function across multiple trials or projects, they have an opportunity to gain consistency in processes and reporting. This means it is possible for all of a sponsor s studies to operate on consistent platforms and use consistent forms, which enables other departments to support multiple projects more effectively. Working across multiple projects and therapeutic areas also allows regional clinical monitors to be proactive about data and reporting when there are lulls in their other studies. Taken together, these efficiencies help sponsors be leaner, faster and better able to overcome the obstacles that can occur during every phase of clinical trials. Kehrmeyer also observed that, because FSPs are often working across multiple programs, they possess key insights regarding operational best practices which can benefit their customers. 4

5 how to identify the best FSP partner There are risks inherent in outsourcing any business function, so identifying a provider you trust to consistently deliver quality output and thoughtful, strategic guidance is critical. But how do you select the right partner? A two-part needs assessment can help sponsors separate the functions that should remain internal from those that are best to outsource. 1. Determine which functions are strategic and which are tactical. Consult with a wide range of stakeholders on this, and make sure there is broad-base alignment and consensus between all parties before proceeding. In general, tactical functions like site selection and monitoring should be outsourced, as providers can deliver these functions faster and more cost effectively. 2. The second step is to assess your organization s level of expertise across specific functions. According to Ebeid, the key is to be honest and transparent about the areas in which you lack expertise. An FSP with the right capabilities can help plug these gaps. Once the assessment is complete, you should have a clear picture of the functions that should be outsourced. Your organization is now ready to begin the process of vetting FSP providers. What should you be looking for? For starters, you should try to get a feel for the FSP s working style, values and approach to problem solving. The goal, after all, is to develop a shared culture with mutual commitment, according to Kehrmeyer. Ultimately, the sponsor-fsp relationship should represent what is best about both organizations not simply any old vendor-client relationship. To be truly effective, it should be a win for both companies. Finally, turnover is a massive problem for CROs and it can be for FSPs, as well. So it is a good idea to ask potential FSPs about their employee retention and turnover rates. It is not unusual to request hard numbers. You might also consider asking if they have any retention initiatives in place, such as bonuses, professional development opportunities and vacation policies. Many sponsors look to create SLAs around employee retention within key functions. If an FSP is unwilling to do so, it is probably wise to look for a partner elsewhere. an outsourcing model that makes sense for today s life sciences landscape The frequent failure of clinical trials may be inevitable, but all the risks they pose to pharma companies do not have to be. By working with an FSP, life science companies can dramatically reduce the dangers associated with fluctuating demand while gaining efficiency and expertise. Meanwhile, traditional CROs with their high turnover rates, inflexible approach to outsourcing and unwillingness to make smaller sponsors a priority seem increasingly outdated and ill-equipped to service the resourcing needs of today s life sciences organizations. Consequently, many companies in the drug development space today are turning to FSPs and forming robust partnerships that better mitigate risks and drive superior outcomes. 5

6 human forward. Randstad Life Sciences is a trusted provider of customized resourcing solutions that help your business succeed. randstadlifesciences.com Randstad North America, Inc. 2018