Spend a little time listening to people talking about pharmaceutical outsourcing and you will repeatedly hear the expressions “win-win situation,” “partnerships,” “teamwork” and “communication is key.” (In fact, these expressions have become so cliché that the editor has forbidden their use in Contract Pharma articles.) With all of this focus on the relationship between the sponsor and the contract service provider (CSP), one would suppose that outsourcing relationships would almost always be productive and simple to manage. In fact, this is not the case; while most such relationships eventually achieve the majority of the project’s goals, management of the relationship is frequently difficult. This difficulty in managing the sponsor-CSP relationship results in an inefficient and tortuous process that reaches its goals as much by chance as by design.

A fundamental cause of sponsor-CSP difficulties is the failure of the sponsoring organization to assume its share of the responsibility for the conduct of the project. While it would seem axiomatic that this responsibility should be divided, the sponsor frequently hands the project off to the contractor and moves on to other tasks. When issues arise with the project, the sponsor is often taken by surprise and frequently overreacts, exacerbating the situation. If sponsors become more intimately involved with the conduct of the project, there will be fewer surprises and issues can be resolved quickly, efficiently and well. What can the sponsor do to minimize the occurrence of these issues and the surprises that come with them?

There are four things that a sponsor must do to in order to maximize the effectiveness of an outsourcing program. These are:

• developing an outsourcing strategy that is both useful and effective;

• properly choosing and training personnel to be involved in the outsourcing process;

• understanding of the full spectrum of issues involved choosing a contractor, and

• knowing how to be a “good customer” to the contractor.

The Outsourcing Strategy
The very first thing a sponsor should do when considering outsourcing part or all of a pharmaceutical development program is determine the precise reason for outsourcing. Some companies outsource to reduce expenditures on personnel, while others wish to reduce the amount of fixed infrastructure costs. Still others outsource to allow themselves to concentrate on the things that they do best, or to take advantage of the speed and flexibility provided by contractors. There are a number of other equally valid reasons why companies choose to use CSPs, and many companies outsource for more than one reason.

The reason(s) that a company chooses to outsource should be the basis of its outsourcing strategy. This strategy does not need to be a complex document. A simple statement of objectives is sufficient and ultimately much more useful than a drawn-out, complex one. When evaluating an outsourcing opportunity, the sponsor’s personnel can use these objectives to determine if it is appropriate to contract out the project.

The strategy should also spell out the type of corporate relationship that the sponsor expects to have with the CSP. Some companies want the relationship be at arms’ length, while others look for “preferred supplier” relationships, in which a small number of CSPs receive the majority of their business. A few sponsors are investigating the concept of a long-term “strategic partner,” where the CSP is privy to the details of the sponsor company’s development strategies and may even aid in the formulation of these strategies. These relationships are being explored between large sponsors and very large CSPs, but it is not clear how effective these relationships will be in the long term. Regardless of the type of relationship, it should be clearly stated in the outsourcing strategy document so that the project teams will understand the limits that should be placed upon the corporate relationship.

The outsourcing strategy document should also outline the general composition of the outsourcing project team. While it cannot and should not attempt to rigidly define the structure of the team, it should serve as a checklist to make certain that all functional components (commercial, technical and compliance) are represented, and that the personnel assigned to the team have the appropriate training and qualifications to represent the sponsor effectively to the CSP. It is particularly important that the qualifications of the project team leader be defined, as this person will be key to a successful outsourcing experience.

The strategy document should contain some method of measuring the contractor’s performance. This can be difficult, as different types of projects are measured by different standards. It is, however, certainly possible to measure timeliness, actual vs. budgeted costs and achievement of objectives for all projects. These measurements should be recorded and kept as part of the file on each CSP.

Finally, it is critical that the outsourcing strategy document be made available to the personnel who will be implementing it. Only in this way will all parties be operating with the same set of guidelines.

Choosing and Training Personnel
Sponsor companies frequently select the members of their outsourcing project team based solely on their technical abilities. While no one questions the need for technical competence on the project team, this is not sufficient qualification to be a member of a team charged with building and maintaining a productive relationship with a CSP. Ultimately, the relationship is not between two corporate entities, but between two groups of people. It is therefore critical that the sponsor appoint team members who are not only technically competent but who also have the interpersonal and communication skills to interact effectively with the CSP’s personnel.

Some time ago, during a seminar on “Effective Outsourcing,” I was challenged by an audience member who stated that he “had a problem” with CSPs. He went on to state that, in his opinion, all employees of CSPs were “second rate;” his logic was, “If they were any good, they would be working in big pharma.” While I have no doubt that this gentleman is expert in his field, an attitude such as his almost certainly guarantees problems when working with CSPs. Simply put, he would not be a prime candidate for a member of a project team.

Potential project team members should be chosen based upon their technical abilities, interpersonal behavior and communication skills. In addition, they should be the sort of people who are willing to accept responsibility for the success of the interaction with the contractor. They should all receive additional training in the mechanics of the outsourcing process; specifically, they should learn how to select CSPs effectively and how to be a good client once the project is underway. Ideally, all members of the team should receive additional training in communication, negotiation and dispute resolution. The team leader must certainly possess these skills.

Choosing The Contractor
Most CSPs are chosen on the basis of technical competence and regulatory compliance. These issues are certainly critical to the success of a project, but they are not the only key factors. To obtain the best possible outcome from an outsourced project, it is equally critical that your project team be able to work effectively with the contractor’s project team. Most problems with a CSP can be traced to a breakdown in the interaction between the sponsor and the CSP. What the sponsor requires is that combination of communication, honesty and respect that is often referred to as “customer service.”

Unfortunately, while most sponsors invest a great deal of time and money in assessing a contractor’s technical ability and compliance with the appropriate regulations, little effort is generally expended in assessing the CSP’s attitudes toward customer service. This is unfortunate, because these attitudes are generally revealed during the assessment of technical ability and regulatory compliance.

For example, the CSP’s ability to communicate effectively with clients can be evaluated at every stage of pre-project discussions. Is it easy to locate the proper person who can answer a particular question? Do they provide responses to questions within the agreed-upon time frame? Are these answers complete and helpful?

When dealing with people or companies, the single best predictor of future behavior will be past actions. If a CSP communicates poorly when trying to obtain a sponsor’s business, there is no reason to expect their communication patterns to improve once the project is underway. Failure to meet timelines when providing a proposal is an excellent indication that the CSP’s attitude toward delivering reports on time will be equally casual. All of these lapses in customer service can have serious implications for the success of both the relationship and the project. For this reason, all pre-project interactions with the CSP should be viewed with attention to service as well as to technical and regulatory issues.

Being a “Good Customer” to the CSP
One of the greatest frustrations for CSPs is the client that fails to hold itself to the same standards as those to which it holds the CSP. For example, sponsors rightly insist that reports and other communications be delivered in adherence to a strict schedule; after all, these reports are part of the larger product development matrix. Paradoxically, many of these same sponsors behave quite differently when the CSP is waiting for something from them. Time-critical documents can take weeks for review and approval. Additionally, the CSP is frequently expected to make up the time spent in the sponsor’s review process elsewhere in the project.

Sponsors expect that the CSP’s personnel treat them with courtesy, honesty and respect. Unfortunately, they sometimes lose sight of the fact that they must treat the contractor’s personnel in the same way. The sponsor’s team must adhere to timelines in the same fashion that the contractor does. Just as the sponsor requires access to the CSP’s project leader, there must also be a method for the CSP to contact the sponsor’s team leader or an appropriate substitute.

At the earliest stages of a project, the sponsor must make its expectations clear to the contractor. This should be done in the form of a written document so that there can be no question of ambiguous meaning. This document should outline contact points, communication routines, schedules for formal and informal reports and sponsor/CSP meetings and any other issues that are critical to the success of the project. It is also advisable to include a glossary of terms in this document in order to minimize the opportunity for misunderstanding. While this seems trivial, I have seen at least one instance where two groups within the same sponsor company used totally different vocabularies when dealing with the same contractor; as might be imagined, this engendered an immense amount of confusion at the CSP and seriously damaged the relationship between the sponsor and the CSP.

Ultimately, a sponsor should govern its dealings with the CSP by asking the question, “Is this how I would want them to treat me?” When a sponsor makes the commitment to take a share of the responsibility for the success of the project, the sponsor finds that the relationship with the contractor becomes more successful, difficulties are minimized and more easily resolved, and projects are successfully completed more rapidly than before.