2010 avoca report executive summary
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What Does the Future Hold for Clinical Service Provider-Sponsor Relationships?
Executive Summary of Results from the Avoca 2010 Industry Survey
June 2010
2
CONTENTS
Introduction:
Objectives of the Industry Survey
Methodology
Respondents
Key Findings
Conclusions
3
OBJECTIVES OF THE INDUSTRY SURVEY
Each year, The Avoca Group polls industry management to understand trends in the outsourcing of clinical research.
2010: How outsourcing relationships are expected to change between the present and 2014.
4
OBJECTIVES OF THE INDUSTRY SURVEY
Questions were posed about:
Drivers of change in sponsor-clinical service provider relationships
Changes companies plan to make to increase the efficiency and quality of outsourced clinical trials
Strategies for successful implementation of new outsourcing strategies and tactics
How planned changes will impact outsourcing strategies, vendor selection priorities, and the management of outsourcing relationships.
5
METHODOLOGY
Invitations to participate were emailed to selected executives and managers of sponsor and service provider companies during Q1 2010.
Links within the emails directed respondents to the appropriate web-based survey instruments:
sponsor perspective
provider perspective
Respondents who completed the survey were offered an executive summary of the survey results.
For questions in which participants were asked to respond on behalf of their companies, only one respondent per company (the most senior) was used in the analysis in order to avoid over-representation of companies with multiple participants.
6
RESPONDENTS
285 surveys
109 sponsor surveys
73 companies
72% pharmaceutical companies; 22% biotech; 6% other
48% self-described “Top 20”
70% executive/middle management
174 service provider surveys
88 companies
71% full-service CROs
59% self-described “Top 20”
79% executive/middle management
7
Sponsor Respondent CompaniesAbraxis Bioscience Cardiokine GlaxoSmithkline Orion Pharma
Achaogen CareFusion Research Services Global Alliance for TB Drug Development OSI Pharmaceuticals
Actavis South Atlantic Celgene Grunenthal OtsukaActelion Celtic Pharma Development Hoffmann-La Roche Pain TherapeuticsActivX Biosciences Chugai Pharma Europe Incyte RatiopharmAdnexus Cognizant Intendis RegeneronAllergan Collins Johnson & Johnson SanofiAllon Therapeutics Cordis Corporation Knopp Neurosciences SantheraAmarin Technologies Coughlan Kowa Research Europe Shire Pharmaceuticals
Amgen Dainippon Sumitomo Pharma America Lexicon Solvay Pharmaceuticals
Amylin Deltanoid Pharmaceuticals Lilly Teva PharmaceuticalsAstellas Pharma Dey LP Lundbeck TibotecAstraZeneca Eisai MedImmune Vicus TherapeuticsBaxter Endo Merck Wyeth Research
Bayer Schering Pharma Ferring Millennium
BIAL Five Prime Therapeutics Mitsubishi Pharma Europe
Biogen Idec Forest Laboratories NovartisBMS Fresenius Biotech Novo Nordisk
Cadence Pharmaceuticals Genentech, Member of Roche group Ocasio
8
Provider Respondent CompaniesAagami DCL Medical Laboratories KLIXAR QED Clinical ServicesAcurian Eurofins Medinet Kromite LLC QuanticateAepodia Eurotrials Kuantum CRO Quest DiagnosticsAsia Global Research ExecuPharm Laboratorio Hidalgo Quintiles
Asiatic Clinical Research FOCUS Clinical Drug Development LatAm Clinical Trials Radiant Research
Averion Forma Life Science Marketing Manipal Acunova Limited RadPharmAxiom Marketing Gagnon Medpace REGISTRATAXIS Clinicals GFA MedPoint Communications ResearchPointAxis Group GVK Biosciences Private Limited MRC RH Bouchard & Associates
Beckman Coulter Genomics Harrison Clinical Research Group Myoderm Ronald Fehst Research Consultants
Biomedical Systems Harte Group Ockham RxResearch StaffingC3i i3 Research Omnicare Sariola-HeinerClinForce ICON Paragon Biomedical SQV Clinical Research ServicesClinical Financial Services INC Research PAREXEL Stiris ResearchClinical Research Management IndiPharm Pharma Medica Research TFS Trial Form SupportCogent Performance Management InsightRx Consulting LLC Pharma Services Network TKL Research
COMSYS Clinical Integrium PharmaNet TooneConsentSolutions invivodata PharmaWrite US OncologyCovance IRB SERVICES Pharm-Olam Vantage BioTrialsCRS Clinical Research Services Iris PPD VirtualScopicsCyncron John R Vogel Associates PRA Woodley Equipment CompanyDatatrial Kendle PSI ZeeCRO
Key Findings
10
0 5 10 15 20 25 30 35 40 45 50Better measurement of provider performance
(Key Performance Indicators [KPI])
Increased use of preferred providerships
Better methods of/criteria for provider selection
Better internal information sharing regarding clinical research provider performance
Reduced number of providers
Better delineation of expectations
Implementation of a functional "Lessons Learned" program
Improved outsourcing models
Better capturing of relationship metrics (Key Relationship Indicators [KRI])
Increased use of technology platforms to improve communications
Change in specific providers used
More functional outsourcing
More full-service outsourcing
Increased incorporation of performance bonuses into contracts
Increased incorporation of performance penalties into contracts
Increased number of providers
What changes has your company recently (last 2 years) made, or is it currently making, to
improve the efficiency of its outsourcing
relationships?
(73 companies)
Sponsor Data
11
0 10 20 30 40 50 60 70 80Enhanced focus on repeat business
Improved relationship management
Increased pursuit of preferred providerships
Better capture of customer feedback
More senior management involvement
Better delineation of expectations
Better measurement of performance (Key Performance Indicators [KPI])
Increased use of technology platforms to improve communications
Better internal information sharing regarding sponsor expectations
Improved outsourcing models
Different resourcing models
Implementation of a functional "Lessons Learned" program
Better capture of relationship metrics (Key Relationship Indicators [KRI])
Increased incorporation of performance bonuses into contracts
Increased incorporation of performance penalties into contracts
What changes has your company recently (last 2 years) made, or is it currently making, to
improve the efficiency of its work with
sponsors?
(88 companies)
Provider Data
12
Themes
For sponsors:
Consolidation of outsourced work with a restricted number of preferred providers
Changing criteria for selection of providers and preferred providers
Investment in formal programs for measuring and managing performance and relationship quality
For providers:
Increased focus on pursuit of long-term “preferred” client relationships
Investment in formal programs for measuring and managing performance and relationship quality
Future Direction #1
Sponsors: Consolidation of outsourced work with preferred providers
Providers:Increased focus on pursuit of long-term “preferred”
client relationships
14
Where are we now?
69% of sponsors currently have preferred provider arrangements.
More than ¾ of providers are increasing their pursuit of repeat business, and more than half are increasingly pursuing preferred provider relationships in particular.
15
Sponsor Data
What approximate percentage of your clinical research outsourcing spend went
to your preferred providers in 2009?
How has this percentage changed between 2007 and the present?
N=45 N=47
11%
25%
22%
42%
0% - 25%
26% - 50%
51% - 75%
76% - 99%
Don't know
70%
4%
26%Increased
Decreased
Stayed the same
Don't know
16
N=71
Provider Data
What approximate percentage of your annual revenue came from preferred
clients in 2009?
How has this percentage changed between 2007 and the present?
N=67
35%
31%
23%
11% 0% - 25%
26% - 50%
51% - 75%
76% - 99%
Don’t know
55%
14%
31%
Increased
Decreased
Stayed the same
Don’t know
17
Is there evidence that increased allocation to preferred providers results in higher quality work or
greater value? If so, why?
18
Sponsor Data
In general, how satisfied are you with the work that has been done for you by Clinical Service Providers?
5%
52%
64%
58%
24%
16%
32%
24%
20%
5%
0% 20% 40% 60% 80% 100%
No preferred providers
0 - 75%
76% - 99%
Very satisfied - 5 4 Neither satisfied nor dissatisfied - 3 2 Very dissatisfied - 1
% spend to preferred providers
N
21
25
19
19
In general, how satisfied are you with the value that you have received for the money spent on your Clinical Service Providers?
Sponsor Data
5% 14%
48%
58%
48%
28%
37%
33%
24%
5%
0% 20% 40% 60% 80% 100%
No preferred providers
0 - 75%
76% - 99%
Very satisfied - 5 4 Neither satisfied nor dissatisfied - 3 2 Very dissatisfied - 1
N
21
26
19
% spend to preferred providers*
* p<.05
20
In general, how satisfied are you with your relationships with the sponsors with which you work?
Provider Data
% revenue from preferred
clients*
* p<.01
N
25
37
8
21
PROVIDERS: Do you feel that your company performs more effectively for its preferred providers than it does for its other clients?
43% yes
41% no
16% don’t know
22
Provider Data
If you feel that your company performs more
effectively for its preferred providers than it does for its other clients, what do you feel are the
reasons?
(70 responses)
0 5 10 15 20 25 30 35 40 45
Better understanding of expectations/standards
Increased trust/less micromanagement
Greater volume allows for more efficient processes
Increased level of senior management involvement
Higher staff satisfaction leads to better performance
Relationship management systems improve
performance
Performance management/governance systems add motivation
Higher staff satisfaction leads to less turnover
Superior staff assigned to preferred provider
studies
Increased organizational motivation
23
Summary
Currently, nearly half of sponsors concentrate at least 75% of their outsourced work with preferred providers, and this fraction is on the rise.
Those sponsors that concentrate their outsourcing spend with preferred providers enjoy enhanced satisfaction with performance and value.
Similarly, providers that concentrate their business with preferred clients have a much higher level of satisfaction with their client relationships.
Future Direction #2
Sponsors: Changing criteria for selection of
preferred providers
25
What have sponsors expected from their preferred providers until now?
What do sponsors expect from their preferred providers moving forward?
What do providers believe that sponsors expect from their preferred providers moving forward?
26
What did your company expect of its preferred providers in the recent past? (2007-2009)
Sponsor Data
58%
42%
26%
24%
24%
23%
9%
37%
51%
62%
45%
51%
53%
53%
5%
7%
12%
31%
25%
25%
39%
0% 20% 40% 60% 80% 100%
Discounted rates
Increased level of oversight by provider’s senior management
Preferred access to specific staff members
Formal relationship management program from provider
Formal performance measurement/management by provider
Formal governance structure
Advice/input regarding strategic planning
Always expected - 3 Sometimes expected - 2 Did not expect - 1
N
59
57
58
58
59
57
57
27
What does your company expect from its preferred providers in 2010 and beyond?
Sponsor Data
72%
64%
61%
51%
50%
50%
31%
25%
33%
29%
36%
47%
45%
56%
3%
3%
10%
13%
3%
5%
13%
0% 20% 40% 60% 80% 100%
Discounted rates
Increased level of oversight by provider’s senior management
Formal performance measurement/management by provider
Formal relationship management program from provider
Preferred access to specific staff members
Formal governance structure
Advice/input regarding strategic planning
Always expected - 3 Sometimes expected - 2 Did not expect - 1
What does your company expect from its preferred providers in 2010 and beyond?N
61
61
62
61
62
60
62
28
Biggest movers:
Formal performance measurement
24% 61% say always expect
25% 10% say do not expect
Formal relationship management
24% 51% say always expect
31% 13% say do not expect
Formal governance structure
23% 50% say always expect
25% 5% say do not expect
29
Provider Data
55%
31%
29%
19%
14%
12%
9%
42%
66%
67%
64%
72%
57%
64%
4%
4%
4%
17%
14%
31%
26%
0% 20% 40% 60% 80% 100%
Discounted rates
Increased level of oversight by provider’s senior management
Preferred access to specific staff members
Formal performance measurement/management by provider
Formal governance structure
Formal relationship management program from provider
Advice/input regarding strategic planning
Always expect - 3 Sometimes expect - 2 Did not expect - 1
What do you feel that sponsors expected from their preferred providers in the recent past (2007-2009)?
N
139
140
139
137
132
136
138
30
What do you feel that sponsors expect from their preferred providers in 2010 and beyond?
Provider Data
75%
53%
46%
41%
38%
30%
30%
23%
41%
53%
50%
59%
59%
60%
2%
6%
1%
9%
3%
12%
11%
0% 20% 40% 60% 80% 100%
Discounted rates
Formal performance measurement/management by provider
Increased level of oversight by provider’s senior management
Formal governance structure
Preferred access to specific staff members
Formal relationship management program from provider
Advice/input regarding strategic planning
Always expect - 3 Sometimes expect - 2 Did not expect - 1
N
122
121
121
115
121
121
121
31
Summary
Sponsors have come to expect much more investment in and formalization of the management of their preferred provider relationships than they did even in the recent past.
Providers appreciate many of sponsors’ expectations of preferred relationships, but may under-recognize the importance of formal relationship management programs.
Future Direction #3:
Increased use of formal performance and relationship management
33
Where are we now?
54% of sponsors currently have Formal Relationship Management Programs in place with at least one of their clinical service providers.
66% of providers currently have Formal Relationship Management Programs in place with at least some of their clients.
34
Sponsor and Provider Data
If your company has a formal relationship management program in place with any of its vendors/clients, what does the program include?
Sponsors Providers
% %
Formal governance structure 89 66
Lessons Learned Meetings 86 85
Performance metric assessment and review 84 79
Issue documentation and resolution program/escalation procedure 76 79
Systematic ways of gathering relationship metrics from internal staff (e.g. surveys) 57 47
Systematic ways of gathering relationship metrics from partner staff 32 55
35
Of those who have experience with formal relationship management programs:
68% of sponsors report having had primarily positive experiences.
An additional 30% report a mix of positive and negative.
61% of providers report having had primarily positive experiences.
An additional 31% report a mix of positive and negative.
36
Formal Performance Measurement: Sponsors
55% of sponsor companies currently use Key Performance Indicator measurements (KPIs) to evaluate clinical service providers.
30% of respondents from these companies feel that their KPIs are adequate.
So 17% of sponsors are doing this AND doing it satisfactorily.
23% of sponsor companies currently use Key Relationship Indicator measurements (KRIs) to evaluate their relationships with clinical service providers.
68% of respondents from these companies feel that their KRIs are adequate.
So 16% of sponsors are doing this AND doing it satisfactorily.
37
Formal Performance Measurement: Providers
71% of provider companies currently use Key Performance Indicators (KPIs) to evaluate their own performance.
49% of respondents from these companies feel that their KPIs are adequate.
So 35% of providers are doing this AND doing it satisfactorily.
31% of provider companies currently use Key Relationship Indicators (KRIs) to evaluate their relationships with sponsors.
62% of respondents from these companies feel that their KRIs are adequate.
So 19% of providers are doing this AND doing it satisfactorily.
38
Summary
Although most companies report having positive experiences with relationship management programs, many face challenges in operationalizing the metrics component to formal performance and relationship management.
Clinical service providers appear to have been more aggressive about, and more successful at, implementing formal performance metrics than have sponsor companies.
Conclusions
40
Conclusions
Both sponsors and service providers appear to recognize the benefit of focusing on long-term, preferred relationships and alliances, and of investments in increased monitoring and management of the performance of these relationships.
It appears that careful selection of a restricted number of “preferred” outsourcing partners and increased investment in formal management of relationships with those partners leads to increased efficiency and quality of outsourced clinical research.
Companies that invest in establishing excellent sets of metrics, comprehensive and formal relationship management programs, and effective change management strategies are most likely to benefit from this approach.
41
2010 Avoca Report
Topics include the future of companies’:
overall approaches to outsourcing
priorities in the selection of all providers and preferred providers
strategies and tactics for measuring and managing outsourcing relationships
planned use of risk-sharing and alternative resourcing outsourcing models
The report also examines companies’ experiences and satisfaction with the outsourcing management approaches to date, and investigates whether “early adopters” are in fact experiencing better outsourcing outcomes. Further, the report explores the challenges faced by companies in introducing new approaches and requirements for successful implementation. Material differences between “Top 20” and smaller sponsor companies, and between CROs and other types of provider companies, are presented and discussed. The report is approximately 70 printed pages and contains 48 tables and figures.
If you are interested in obtaining a copy of the full 2010 Avoca Report, please visit our website at www.theavocagroup.com.
In the 2010 Avoca Report, The Avoca Group presents the complete data obtained in the 2010 Industry Surveys.
Contact Avoca at:(609) 252-9020
179 Nassau StreetSuite 3A
Princeton, NJ 08542
Thank you
Improving the Health of Critical Business Relationships