Outsourcing and the Affiliate Model Streamlining Processes and Emphasising Strategy

Outsourcing and Consulting Services for Life Scienceswww.productlife-group.com

REPORT

3

Outsourcing and the Affiliate Model: Streamlining Processes and Emphasising Strategy

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

The Shift to Outsourcing ..................................................................................................................................2

Adopting a Smart Approach to Affiliate Outsourcing ...........................................................................3

Preparing for Change .........................................................................................................................................4

Contributors ..........................................................................................................................................................4

Table of Contents

© ProductLife Group

44 5

Outsourcing and the Affiliate Model: Streamlining Processes and Emphasising Strategy

Executive SummaryThe pharmaceutical industry has lately had to modify its business model to find ways of cutting costs and improving efficiencies. As a result, companies are focussing on their core capabilities and assessing which aspects of the business they should outsource. That model affects not only the operations of corporate headquarters but also the functions carried out by the international affiliate companies.

As global markets grow in importance for pharma companies, the role of the affiliate has become a lot more strategic. Affiliates in larger markets increasingly need to acquire even deeper knowledge of regulatory developments and expectations in their countries and feed those insights back to the parent company. And affiliates in all markets must continue to enhance and build long-term relationships with their national health authorities.

At the same time, demands by regulators in all markets have increased. Indeed, regulatory experts say country authorities in Africa, for example, are starting to demand the level of documentation expected in European markets. Such demands place undue burdens on affiliates that lack the infrastructure and resources to manage large, complex applications. In addition, more markets are moving towards electronic submissions, which again puts increased administrative burden on affiliates.

It is in this changing and more demanding commercial and regulatory environment that the outsourcing of submission documentation, safety reports, and updates to chemistry, manufacturing, and control starts to make more sense. But before companies outsource operational tasks, they need to move towards a global authoritative source of information and start to harmonise their processes, systems, and capabilities.

This paper covers best-practice approaches to a head office’s management of outsourcing at the affiliate level, including (1) being structurally prepared to outsource, (2) knowing the scale and reach required from an outsourcing partner, and (3) recognising the importance of working closely with affiliates to prepare them for their changing roles.

The Shift to OutsourcingA growing number of pharma companies have been outsourcing certain functional regulatory tasks at the affiliate level. According to findings from Gens and Associates’ 2014 Life Sciences Industry Survey, 57% of surveyed companies are doing some type of outsourcing of affiliate marketing submissions. That number is expected to grow to 75% in the next two years. The increase has been dramatic: in 2011, just 35% outsourced marketing submissions at the affiliate level, and in 2013, the figure was 45%. Survey findings show that overall satisfaction with outsourcing is high, with 80% citing positive experiences.

The ability of service providers to deliver the needed capability is another factor influencing outsourcing trends at the affiliate level. (NOTE: Click on graph to enarge.)

A few years ago, several companies began looking at outsourcing the full local national submission package and simply having affiliates submit and follow through with the health authority. But as those companies got down to making final decisions, the activities got largely taken out of the scope of request for proposal—partly because of perceived lack of service providers’ capability for mature expertise regionally and locally and perhaps because the industry felt it wasn’t ready to go that far.

2011

35%

2013

45%

2014

57%

2015–16

75%

A�liate Outsourcing Trends

66 7

Outsourcing and the Affiliate Model: Streamlining Processes and Emphasising Strategy

and elevate the roles of regulatory affiliates in those markets.

Preparing for ChangeOutsourcing functions and capabilities and changing people’s roles can be hugely unsettling to those affected. Managing such changes requires dedicated planning, the involvement of resources experienced in change management and stakeholder engagement, and corporate ownership at the highest level in the company.

All stakeholders—from the affiliate managing director to local regulatory personnel—must have a good understanding of what the business is trying to achieve and of the business rationale. Successfully preparing affiliates for change requires alignment across the business—from the head office through to the affiliates— on a country-by-country basis.

Outsourcing functions always has the potential to cause concern, but the percentage of companies recognising the cost and efficiency benefits is growing. Preparing the business to make the most of this trend will be essential if those benefits are to be fully realised.

ContributorsErick GaussensChief Scientific Officer, ProductLife Group

Steve GensManaging Partner, Gens and Associates

Adam SherlockChief Executive Officer, ProductLife Group

Those concerns are now receding, and many tier 2 companies are starting to put this back into scope—primarily because of the external environment the industry faces in terms of cost constraint and head count control or restriction as well as the desire to increase capability, such as being able to prepare submissions for new markets or new procedures that companies might not be able to do in-house. Indeed, a small number of midtier companies are experimenting with outsourcing the full life cycle of their legacy products to service providers from both operational and regulatory affairs standpoints. Full-life-cycle outsourcing is freeing those companies to focus on creating and developing new and innovative products both centrally and at the affiliate level.

Another driver for outsourcing at the affiliate level is capacity, particularly in light of regulations such as the Identification of Medicinal Products (IDMP) that require affiliates to accomplish more with the same number of people. Linked to capacity is an organisation’s desire to get its highly skilled, technically capable people doing value-added work rather than operational tasks.

Adopting a Smart Approach to Affiliate OutsourcingOne barrier to improving efficiencies—whether they’re managed internally or through an outsourcing partner— is lack of systems consistency. In its analysis of 43 affiliates representing 72 countries from a number of the top 15 biopharmaceutical companies, Gens and Associates found that, typically, affiliates use a wide variety of tools—sometimes as many as seven—just to manage local information. Having multiple regulatory systems and processes makes it difficult to do any kind of centralised or coordinated planning—and very difficult to analyse what can be outsourced—all of which reduces the effectiveness of execution.

When companies consider outsourcing the maintenance of their portfolios, they must make sure their processes and structures are well positioned to manage strategic outsourcing in order to gain true efficiencies and cost savings.

At the local level, roles and responsibilities can vary from country to country, which can make it difficult to have a single process in the first place. Outsourcing requires that a company be more efficient and define its processes, ensuring there is some level of harmonisation for managing and reviewing an activity. To ensure greater consistency, companies need to review their current processes at the affiliate level and determine who undertakes each activity, their skill levels, and the number of people involved. It is also important to evaluate each activity and the deliverables involved: documentation and its quality, the internal review process, the tools used for managing data and documentation, and the volume of activity at each affiliate. In the assessment of an outsourcing project, the responsibilities of all parties—affiliates, head office, and the outsourcing partner—have to be delineated; deliverables and input must be clearly specified; and an efficient method for ongoing communication must be determined, stipulated, and put in place.

Smart outsourcing approaches identify the outsourcing’s strategic objectives, as well as midterm and long-term visions. At the outset, the company needs to determine (1) the volume of deliverables currently produced at the affiliate level, (2) how many people undertake the roles involved, and (3) the quality level of the deliverables. The findings should then be used as the basis for defining the outsourcing expectation. In addition to defining the project objectives, companies have to decide which parties—in the forms of individuals and committees—will implement reporting measures covering expectations and requirements and which parties will manage oversight of the outsourcing service.

Some companies have undertaken steps to better understand and define their organisational models so they can improve operational efficiencies, acquire a deeper understanding of the regulatory landscape in major markets,

Outsourcing and Consulting Services for Life Sciences

ProductLife Group is a trusted partner that helps clients stay ahead of the changing R&D landscape. We provide support across all stages of the product life cycle and have experience in working with companies in all segments of the life sciences industry.

With an established presence in five European countries, extensive capabilities in key markets, and more than two decades of serving the industry, ProductLife Group has a solid platform from which to provide clients a range of services, consulting, and outsourcing solutions. We empower clients to focus on innovation and business growth strategies and to make strong, informed decisions every step of the way. What’s more, we wrap it all up with partnership flexibility, for a truly custom experience that helps clients scale their initiatives cost-effectively.

By leveraging the power of deep domain expertise, relationships, collaboration, and a flexible delivery framework, ProductLife Group delivers exceptional service to clients. Our goal is to develop long-term relationships by being responsive and relevant and by consistently delivering value. We cultivate a trusting, consultative environment and are positioned to operate as an extension of clients’ businesses, with a shared interest in their long-term success.

ProductLife Group Head Office24 rue des Moulineaux, 92150 Suresnes, France

Tel. +33 1 41 44 22 11 • info@productlife-group.com

BELGIUM • FRANCE • GERMANY • SWITZERLAND • UNITED KINGDOM