EXECUTIVE INTERVIEW - Parexel: Simplifying the Journey to Market

Pressures from rising operating costs and decreasing economic returns have forced biopharmaceutical companies to rethink their approach to developing drug compounds. One approach is strategic outsourcing of clinical research to increase R&D productivity and cut overall operational costs. Research has demonstrated that Strategic Partnerships are changing the way biopharmaceutical companies meet the challenges of today’s drug development environment. Drug Development & Delivery recently spoke with Carol Collins, Corporate Vice President, Strategic Partnerships, PAREXEL, to clarify how Strategic Partnerships differ from other outsourcing approaches – and what makes them more effective.

Q: What is a Strategic Partnership? Does this description accurately reflect the industry’s perspective?

A: As biopharmaceutical companies continue to seek opportunities to increase efficiencies, drive greater flexibility, extend expertise, reduce costs, and leverage limited resources, they are increasingly turning to outsourcing services offered by biopharmaceutical service providers. In particular, growing numbers of Sponsors are adopting a Strategic Partnership model. These multi-year, highly integrated engagements are proving to accelerate development cycles, create cost efficiencies, and ultimately enable important new treatments to reach patients more quickly. PAREXEL, a pioneer of the Strategic Partnership model between biopharmaceutical companies and service providers, continues to invest in revealing insights on the value this model delivers. Biopharmaceutical service providers and drug developers that leverage Strategic Partnerships have a compelling opportunity to collaborate effectively to make this possible. Our recent research reports, Strategic Partnerships 2013 and Strategic Partnerships 2014, confirm that this is how industry leaders define these integrated engagements.

Q: If the biopharmaceutical industry is embracing the Strategic Partnership model, then why did PAREXEL commission this research?

A: As one of the world’s leading CROs and a leader in creating and implementing Strategic Partnerships, PAREXEL has made a major research investment to gain an independent understanding of how biopharmaceutical executives view Strategic Partnerships, the value alignment of these partnerships, including which drivers executives consider critical, and industry evolution trends. While PAREXEL’s in-depth engagement with its current partners offers a rich source of information, there is also value in expanding our understanding beyond current clients via an independent third party who can probe areas that might otherwise be sensitive or difficult to explore.

Q: What value does a Strategic Partnership provide a biopharmaceutical company? Couldn’t companies experience this value through a traditional transactional model?

A: The duration, depth, and mutual investments that characterize a Strategic Partnership create value opportunities that traditional transactional outsourcing cannot achieve. For example, mutual investments in aligned processes and systems, along with robust multi-level governance, significantly reduce required sponsor oversight while retaining quality. Furthermore, early pipeline visibility and awards associated with Strategic Partnerships enable timely expertise sharing to improve effectiveness and efficiency of development plans, protocols, and operational plans.

Lastly, incentive alignment, both de facto from the depth of the mutual commitment as well as direct commercial incentive alignment from appropriately structured master service agreements, is a hallmark of Strategic Partnerships that is not possible to create with transactional approaches. Among the industry executives interviewed in our research in 2013, the majority (85%) have seen that Strategic Partnerships improved the Sponsor-CRO relationship. These executives stated that the Strategic Partnership model reduces oversight level, decreases fixed costs, and provides access to capabilities not found internally. A traditional project-by-project agreement can help a biopharmaceutical company reduce fixed costs and improve flexibility to a limited degree, but cannot deliver the level of operational efficiencies needed to help the industry meet the challenges of a changing R&D landscape. We have seen that, in fully established Strategic Partnerships, time-to-market and development efficiency can be improved significantly relative to transactional outsourcing. These improvements can be driven by compound outsourcing, in which early engagement, study optimization, and reduction of down-time between phases generate cost and time savings. The internal cost for a sponsor to manage a CRO is also reduced through partnership-level processes and infrastructure. The internal cost for a sponsor to manage a CRO is also reduced through partnership-level processes and infrastructure. These investments decrease the average sponsor full-time employee (FTE) to CRO FTE oversight ratio from the 1:3 seen in transactional relationship to 1:8 or less. In more advanced partnerships, the oversight ratio can decrease further to levels of 1:15 or less – all while maintaining quality.

Q: PAREXEL recently launched a new report in 2014. Can you tell our readers more?

A: PAREXEL has released Strategic Partnerships 2014: Driving Biopharmaceutical Outsourcing Effectiveness, which provides compelling insights that highlight the value of these multi-year, highly integrated engagements between sponsors and CROs. In particular, the report reveals that the Strategic Partnership model is perceived as the most effective biopharmaceutical outsourcing approach in meeting key sponsor needs. The model is considered particularly effective in enabling greater cost predictability, strategic management of the R&D portfolio, and management of capacity gaps. In addition, the report showed that among companies surveyed, more than half now use a Strategic Partnership model: 54% of North American biopharmaceutical companies engage in Strategic Partnerships, while 50% in Europe and 53% in Asia now use this approach. The report also found that positive perceptions of outsourcing effectiveness within the biopharmaceutical industry have increased significantly in the past 3 years. This increase has occurred across all geographies and with sponsors of all sizes.

Q: What is the future vision of Strategic Partnerships, and how does that differ from where the model is today?

A: The 2014 Strategic Partnerships report reveals that the Strategic Partnership model holds untapped potential to yield additional value and meet future biopharmaceutical industry needs. Sponsors surveyed clearly believe the next generation of Strategic Partnerships has the potential to deliver additional value through several additional features.

Continuous study optimization is considered the top opportunity for added value, followed by additional focus on shared knowledge and greater integration among partners. Enhancements in these areas will continue to accelerate the industry’s ongoing shift from in-house development and transactional outsourcing to Strategic Partnerships. For a full copy of the Strategic Partnerships 2014 report, please visit www.PAREXEL.com.

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