By Stephanie Gaulding, managing director, Pharmatech Associates
Outsourcing strategy plays a lead role in a company’s business strategy. Large companies may outsource limited components related to research, development, or manufacturing; some smaller organizations see outsourcing as a more fundamental part of their business plan. And vice versa. Size, though, is not the issue. Transparency and leadership must factor into this special partnership — the softer side of the business – and communication is mission critical.
When considering outsourcing strategies, develop the right kind of checklist that considers human dynamics. This is not a script, nor is it static. Flexible enough to meet the needs of the project and the personnel, this spec will help you create frameworks, master service agreements, and quality agreements and modulate your oversight of your supplier through all the phases. In this article, we discuss CDMO assessment in this context and show how to construct an agreement between partners that favors fluid communication and alignment of business objectives — crucial for a fruitful sponsor-CDMO relationship to diminish overall risk for both.
What Is Meant By The Right Kind Of Checklist?
Many of us are familiar with the standard checklists that focus on assessing a potential partner’s financial, technical, or compliance aspects. While these aspects are important to evaluate during our selection process, there is often a missing component – cultural fit.
Too often, drug sponsors don’t consider cultural fit with their potential outsourcing partners, especially those new to the process. They get hyper-focused on technical capabilities or compliance concerns and overlook what the ongoing relationship will be and how that might affect their drug development program. This omission becomes glaringly apparent when the pressures of solving critical production challenges or navigating product approval escalate, straining relationships without a good cultural fit.
Developing the right kind of checklist starts with assembling the right types of inputs. Drug sponsors should add evaluation dimensions that focus on cultural aspects and oversight strategies, alongside the categories depicted in Figure 1.
Figure 1. Inputs for building “the right kind of checklist”
Drug sponsors must be able to articulate their own cultural hallmarks and define the desired outcomes of the relationship. Formulate questions along these lines:
- Are you looking to have this partner support the entire development and commercialization process? Or are you interested in only support for a portion of your development process?
- Are you solely sourcing all production to this partner? Or will they be part of a larger network of partners to meet your anticipated capacity needs?
- What does the ideal relationship with this outsourcing partner look like, in terms of communication, escalation, day-to-day operations?
- How involved do you want to be in critical decisions or issues? Which events or decisions do you feel are critical?
- With what level of risk-taking are you comfortable? Do you need to know about all risks immediately?
- What level of flexibility and transparency are you expecting from your outsourcing partner? How responsive do you need them to be?
- What does success look like for this potential partnership? For your partner? For your company? For your patients? For your investors?
CDMOs in turn should be able to articulate similar attributes about a potential customer. After all, the outsourcing relationship is a two-way street. Finding customers that align with their organization’s natural working styles and values leads to a productive and long partnership.
Lastly, understand that you can’t design a single checklist and apply it to all scenarios. Your checklist should be flexible enough to meet the needs of the specific development project and the personnel active in the outsourcing partner evaluation process.
Assess Cultural Fit And Build A Relationship
Taking stock of a potential outsourcing partner’s culture begins with the due diligence assessment. Assessing cultural fit also requires the right assessment team. Persons skilled at reading the human element can watch or listen to how questions are answered, picking up on the more subtle clues that, when pieced together, paint a picture of an organization’s culture. While we strongly recommend having some “people readers” on your assessment team during your selection process, it’s crucial to include them in face-to-face interactions, such as technical visits and compliance audits. They can provide you with valuable insight into how the relationship will likely function and advise on potential pitfalls to watch out for if the partner is selected.
Navigating the selection stage for a potential outsourcing partner gives a drug sponsor important clues that show how the human dynamics in the potential partnership might evolve as the relationship matures. If a potential partner is slow and cryptic in responding to your inquiries during due diligence, you might want to move on if you are looking for someone to be transparent and responsive. If you don’t have another option, start an internal discussion on oversight strategies to reduce the risk of surprises and increase the communication speed. Consider if you’re willing to invest in the necessary mitigations to overcome the cultural and oversight shortcomings as part of the overall costs of your drug development program.
Too often drug sponsors focus on speed and cost as the primary deciding factors in selecting an outsourcing partner, overlooking the clues gleaned in the assessment process that indicate a significant risk of having to repeat studies or delayed approvals. They may avoid discussing these concerns with a potential partner during the due diligence process, yet the foundations of the relationship are forged during this process. We all know that good communication is central to a successful relationship. Without it, relationships fracture and break down over time. Put emphasis on good communication early on. Opt for in-person or video meetings over phone calls. Work to establish connections between the people on both sides of the negotiating table.
Continue building the relationship throughout project kick-off with your selected outsourcing partner. Without strong and routine communication, teams may follow a “no-news-is-good-news” approach to communication, tantamount to neglecting the issue. Avoid ignoring a problem or not asking for information in favor of a strong collaboration strategy, at the center of which lies an appropriate level of transparency. All team members should be familiar with the contractual requirements, communication expectations and escalation pathways, as well as where the boundaries are regarding transparency. Team members who are known for their success at building strong partnerships are indispensable for mission-critical relationship building. They understand how to build rapport between partners that facilitates fluid communication and allows for alignment of business objectives.
Master Service And Quality Agreements Work Together
While drafting a master service agreement with a new outsourcing partner, consider drafting the quality agreement at the same time. In well-architected frameworks, the master service agreement handles many core contractual requirements, such as dispute resolution. Instead of creating a different framework for dispute resolution or other core requirements, developing the two agreements in parallel allows you to cross-reference fluidly and intentionally between them and create a common lexicon. Make sure the team understands these agreements that are intended to guide the project and the relationship.
One big challenge in architecting the quality agreement is determining whose template to use. The drug sponsor may push for its own paper because it has already been reviewed by its legal team or it may just be more comfortable with the wording. For the outsourcing partner, this can elicit feelings of anxiety and dread because templates are lengthy and may require significant time – and legal costs – to review. These feelings are real and can put a newly forming relationship in danger of derailing. Instead, consider starting with a blank page and have each team articulate the important elements and guiding principles for the relationship. Before circulating a quality agreement template, talk through and gain agreement on each element. Then, do an internal review and make sure the agreed-on elements get incorporated into the template. This type of thoughtful approach can go a long way in furthering a new outsourcing relationship and maintaining a strong partnership.
About The Author:
Stephanie Gaulding, Pharmatech Associates’ managing director, has more than 25 years of experience in the pharma, biotech, medical device, and related life science industries developing and delivering sustainable quality management systems that assure compliance with global regulatory requirements and industry best practices. She is an ASQ-certified quality auditor and ASQ-certified pharmaceutical GMP professional. She holds a M.Sc. in biotechnology from Johns Hopkins University and a B.Sc. in biology from Virginia Tech.