The Changing Outsourcing Paradigm from Service to Strategic Partnership – A Sponsor View October 7, 2008

1. The Changing Outsourcing Paradigm from Service to Strategic Partnership – A Sponsor View • October 7, 2008 • Marion Lorden, PMP • Customer Care Manager • Professional Services

2. Sponsor Point of View • In the changing Clinical Outsourcing environment, what is the Sponsor going through? • The need for a clear understanding of requirements and a planned path to obtain them

3. Changes In How Sponsors Outsource • Changes in the industry are driving new trends in outsourcing paradigms • We are changing how we resource clinical trials … Why?

4. Changes in the Biotech & Pharma Industry

5. Changes In Industry • High rate of investigative product failure • Fewer blockbusters • Products coming off patent • Generics flooding the market taking market share and revenue • Downsizing of organizations

6. Changes In Industry • We are under intensifying political, consumer and scientific attack about the safety and high cost of our products • Causing an increased effort in our pre-clinical and clinical programs to meet escalating regulatory requirements

7. Changes in Industry • “Drug and Biotech companies are increasing their R&D budgets to build out their product pipelines which will increase their use of outsourcing “ (Moody’s Global Corporate Finance August 2008)

8. Understanding Our Expertise • The rules of drug development are changing and so are the questions being asked • It isn't enough for a Sponsor to merely consider how to improve what it’s doing – A Sponsor initially needs to determine exactly what they should be doing in the first place

9. Understanding Our Expertise • What do we do well? • Research? • Expertise in a specific field? • Buying and developing technology? • Financing the development?

10. Constraints & Climate

11. Company Constraints • Biotech firms which concentrate on discovery often lack the infrastructure or the expertise to: • Conduct clinical trials efficiently • Take a product to approval and beyond • Smaller virtual companies may not have the time or the financial resources for full time staff

12. Company Constraints • Mid-size Pharma may not have the pipeline to support full time departments • Large Pharma is trying to keep costs in line while expanding their development arena

13. Current Climate • Expanded volume and scope of research has increased 6% in global development annually since 2002 • Holding growth on internal resources Getz, K., Zuckerman, R. Contract Pharma June 2008

14. Changes in Sponsor Outsourcing

15. Changes in Sponsor Outsourcing • Clinical Trials are: • Increasing in complexity • Difficulty meeting patient enrollment goals • Driving us to find treatment naïve populations in regions such as Asia and Eastern Europe

16. Changes in Sponsor Outsourcing What are we looking for? • Outsourcing solutions that result in: • Cost savings • Better utilization of internal/ external resources • High quality outcomes

17. Changes in Sponsor Outsourcing • Obtain experience and expertise that otherwise is unavailable to hire • Sponsors need personnel with skill set to provide guidance and manage outsourcing of projects – shift from previous execution mode • Quickly ramp up as pipeline matures or….. down if it fails

18. Outsourcing Models

19. Standard Outsourcing Models Preferred Providers Benefits Risks Not getting the newest/best technology Stuck in a poor relationship Higher price due to lack of competitive bids • Preselected • Efficient/fast start up • Previous relationship • Understands our needs

20. Standard Outsourcing Models Single Resource/Contractors • A short duration spike in workload beyond internal capacity Expansion of resources is limited • Adds single resources as needed Benefits Risks

21. Standard Outsourcing Models Full Functional Outsourcing or Multisourcing • A outsourcing landscape that has moved towards using one of multiple suppliers, selecting specialist providers to make the most of the available outsourcing options.

22. Full Functional Outsourcing or Multisourcing Standard Outsourcing Models Benefits Risks • ‘Best of breed' • Completes work on all projects • Build a long term relationship with each group • Continue to work with favorite vendors • Higher vendor management needs • Complex communications • Competitors will need to work together

23. Standard Outsourcing Models Full Service Outsourcing • All services outsourced for a given project/protocol Misunderstanding of customer requirements across multiple functions Lack of control All your eggs in one basket Benefits Risks • Hands off approach – vendors do it all • Ease of vendor management – one contract, one Project Manager

24. Standard Outsourcing Models Off-Shoring • Running your trials in another country for cost and/or operational benefit Concerns with quality Communication difficulties Culture differences Hidden costs Benefits Risks • More cost effective • Access to patient populations

25. New Outsourcing Model Strategic Partnerships • A formal alliance between two commercial enterprises, usually formalized by one or more business contracts but falls short of forming a legal partnership. Benefits Skill set may change Conflict in corporate cultures Locked into partnership Risks • Looking for efficient fast partners • Complimentary skill set • Expertise • Risk sharing

26. Outsourcing Process

27. Outsourcing Process • Determine requirements • Meet with Stakeholders • Vendors identified • Research, database, recommendations • Initial contact • Documents developed • Request for Proposal containing: information not included in protocol i.e. timelines; Study protocol and/or study summary; Study schematic; Bid grid; Intent to Respond Form; • Evaluation process/forms

28. Outsourcing Process • Timelines set • Proposal due date • Vendor questions • Expected award date • RFP released • Vendor questions • Proposals received

29. Outsourcing Process • Evaluation • Identify evaluators • Set evaluation milestones/timelines • Gather and assimilate proposal information – scoring • Meet to discuss outcome and gather additional information/make initial cut • Meet with potential vendors • Evaluate study teams interaction • Final decision and award

30. Outsourcing Process • Contract monitoring and Control • Cost & scope control • Quality control • Timeline/milestone vigilant • Contract closeout • Contract reconciliation • Termination letter

31. Outsourcing Flowchart

32. Outsourcing Examples

33. Example 1: Full Functional Model • Safety Reporting department reduced to one • Needed to outsource majority of tasks with oversight from Sponsor • Requirements • Receive SAE documentation • Enter SAEs into Oracle AERs database remotely including preliminary MedDRA coding. • Write SAE narrative. • Quality Control will be preformed on the source information.

34. Example 1: Full Functional Model • Requirements • All source documents, memos, Medical Review Form, etc., will be scanned and posted electronically • Prepare completed draft MedWatch Report • Make corrections to database and MedWatch per the Medical Review. • Receive, process and QC all follow-up information as described above. • Prepare weekly reports • Prepare SAE tables for Annual Reports, IB updates, etc.

35. Example 1: Functional Model • Difficulties • Evaluators new to Outsourcing • Education of process needed • Evaluators went into great detail • Time consuming

36. Example 2: Full Service Clinical Trial • Ph III trial initiated – limited internal resources • Study details – global, 1300 pts, 120 sites • Requirements: • Project Management • Global Clinical support • Global Regulatory support • Biostatistics • Data Management/EDC • Medical Affairs

37. Example 2: Full Service Clinical Trial • Difficulties • Cross company input to determine requirements • Evaluated 12 CROs • 12 evaluators covering all aspects of requirements • Education of evaluators and vendors to process • High level of logistics required to meet timelines • Additional step in evaluation created to quickly reduce vendor numbers for more detailed look

38. Summary • Though the Outsourcing paradigm is changing to acquire speed and efficiency by leveraging CRO expertise, the choice of a partner still needs a clear, well defined process to make the right decision