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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

2010 Avoca Report Executive Summary

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Page 1: 2010 Avoca Report Executive Summary

What Does the Future Hold for Clinical Service Provider-Sponsor Relationships?

Executive Summary of Results from the Avoca 2010 Industry Survey

June 2010

Page 2: 2010 Avoca Report Executive Summary

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CONTENTS

Introduction:

Objectives of the Industry Survey

Methodology

Respondents

Key Findings

Conclusions

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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.

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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.

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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.

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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

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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

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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

Page 9: 2010 Avoca Report Executive Summary

Key Findings

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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

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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

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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

Page 13: 2010 Avoca Report Executive Summary

Future Direction #1

Sponsors: Consolidation of outsourced work with preferred providers

Providers:Increased focus on pursuit of long-term “preferred”

client relationships

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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.

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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

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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

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Is there evidence that increased allocation to preferred providers results in higher quality work or

greater value? If so, why?

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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

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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

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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

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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

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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

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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.

Page 24: 2010 Avoca Report Executive Summary

Future Direction #2

Sponsors: Changing criteria for selection of

preferred providers

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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?

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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

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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

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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

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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

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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

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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.

Page 32: 2010 Avoca Report Executive Summary

Future Direction #3:

Increased use of formal performance and relationship management

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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.

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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

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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.

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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.

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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.

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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.

Page 39: 2010 Avoca Report Executive Summary

Conclusions

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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.

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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.

Page 42: 2010 Avoca Report Executive Summary

Contact Avoca at:(609) 252-9020

[email protected]

179 Nassau StreetSuite 3A

Princeton, NJ 08542

Thank you

Improving the Health of Critical Business Relationships