How To Build Resilience Amid Dynamic Biopharma Vendor Relationships
By Richard Moroney, Ph.D., Stat Consulting
We all need vendors to deliver on our business ambition. They are the lifeblood of any modern business, providing essential goods and services that enable our operations, extend our capabilities, and may even drive our innovation. In many cases, they become more than just vendors; they are strategic partners, integral to our success.
These vendors may contribute a little (a single component or service) or a lot (the full-scale manufacture of your drug). In all cases, our vendors help us achieve more than we could without them. When going well, it is easy to see the win-win relationship together with them.
Unfortunately, we have all seen how these crucial relationships can go wrong. A missed deadline, a quality issue, a communication breakdown — the consequences can be significant, impacting everything from project timelines to bottom lines (on both sides). This raises the question: is there a general approach to managing the inherent risks in vendor relationships, a way to proactively address the issues we inevitably encounter?
A Dynamic Outsourcing Landscape
The key to effective vendor management lies in understanding how these relationships can derail. In this article we will first classify the common causes of friction and failure. We then outline targeted systems and strategies to mitigate those risks. Then, instead of simply reacting to problems as they arise, we can anticipate potential challenges and build resilience into our vendor partnerships. This proactive approach begins with recognizing the dynamic nature of these relationships and the many factors that can influence their trajectory.
Our vendor relationships rarely exist in a static environment. Change is constant, and these shifts can significantly impact the health and stability of the partnership. These changes can be broadly categorized as internal (relating to the sponsor organization), external (relating to the vendor organization), or environmental (relating to both of us).
Internal: Sponsor Changes To The Relationship
People are the key to any relationship, and team turnover is inevitable. When the people managing the relationship change, valuable knowledge and rapport can be lost. This can lead to misunderstandings, miscommunication, and ultimately a decline in trust — particularly when these happen on the sponsor side of the relationship.
I worked on a program development for a major biopharmaceutical manufacturer to create a companion app that would support their existing patients. The business case was clear, and great partner companies were engaged to deliver the parts of the app the manufacturer was unable to create internally. All started well, but unfortunately the sponsor’s commercial lead left nine months after the program began. The new lead did not share the same passion or vision for the program, and over time the program floundered without further clear direction for the vendor.
Our internal capabilities also continuously evolve, and as they do we may require different skills or expertise from our vendors. Are they equipped to adapt to our changing needs? A vendor who supported us during clinical product development, for example, may be (or may not be) the best to continue with us on to commercial product development. This might have been obvious from the start, for example when we are acquiring a new molecule and the commercial production plan was always to bring it in-house. But we all understand that every change in production scale brings new challenges, and it is never appropriate to presume a scale-up or process-transfer step in the schedule will be easy.
Scope changes are another common impact to the sponsor-vendor relationship. As our product or service evolves, the needs from both parties will usually change to some degree. Are we still aligned together in our new direction? Are the contractual terms still relevant and complete? Some of these may be anticipated, for example I have never worked on any device that required user testing that did not update design requirements in some way after the initial product testing. The ones we don’t anticipate can be more disruptive, e.g., uncovering the need for a new quality attribute to support the manufacturing line.
Finally, and less frequent perhaps, are changing objectives as our business evolves. These may quickly get converted into changes in scope or resources, but will initially appear as much more of a strategic change than a tactical change in the business. For example, the sponsor deciding to bring the product into a new region might increase the commitment required from some vendors and require others to support new technology transfer activities.
External: Vendor Changes To The Relationship
Just as we (as sponsors) will have business impacts on the relationship, so will our vendors. In most cases, these follow themes similar to those we saw above, but they naturally impact the relationship differently. The primary difference is they are not “us” and, at times, it may be hard for us to see or understand what is impacting the vendor. Almost as important is the implicit power difference between sponsor and vendor companies (which might be flipped if you happen to have only one supplier for a key ingredient in your process).
Again, though, people are the key to any relationship, and team turnover is inevitable. I had a long-established vendor that needed to replace our project manager who had left their company. They installed a new project manager with a rather bristly personality and some strong opinions on past decisions that our team considered closed. In fairness, the new PM was capable, and we did uncover a few new points of learning. It took several months, however, for the combined sponsor-vendor team to work through these new interpersonal dynamics and resume our effective performance.
Our vendors’ capabilities also continuously evolve, and often sponsors will only use a limited set of offerings from any particular vendor. This naturally happens, since when we first onboard a vendor there is a specific (usually limited) role for them to fill in the program. A sponsor may be unaware of additional capabilities, or possibly even unwilling to expand the vendor’s role. A client of mine asked for an independent review of a creative process upgrade their vendor offered for their production. While the suggestion was technically brilliant, the sponsor’s team reviewing the changes was unwilling to take on the regulatory filing changes that would be required and abandoned the potential improvement opportunity.
Every program is ultimately limited by the resources sponsors invest, and every vendor is clearly sensitive to this issue. Budget constraints, market response, or shifting priorities can all impact what we dedicate to a particular vendor relationship. This will strain the relationship if it comes as a surprise, and in some cases may lead to compromises on quality or service.
With a good relationship and open dialogue, though, even large problems can be managed. I helped a vendor plan for the staged roll-out of a new product into multiple geographies following the sponsor’s extensive marketing plan. The early sales projections were not realized, however, which slowed the product’s growth significantly. The sponsor and vendor did not panic, and instead worked closely together to evolve both the marketing and manufacturing plans and ensure success for both parties with the product.
Changes in scope or objectives are less frequent from the vendor side in my experience, but not entirely absent. For example, good vendors are always working to provide more value to their sponsor companies, but good intentions do not always equal good design. A manufacturing vendor once invested in some apparently successful design for manufacturing cost reduction activities. Unfortunately the new process failed validation, but it did expose some fixed parameters in the original method that had been improperly specified during the original process installation.
Environmental: Shared Changes To The Relationship
Finally, we don’t work in a vacuum and environmental factors may impact both sponsor and vendor at the same time. Both sponsor and vendor will typically need to coordinate together in responding to these issues. For example, a regulatory change might put a new requirement on the sponsor that is impacted by the vendor’s contributions. Or a new biosimilar product entering into your market might significantly impact both your product goals and the relationship with your manufacturing vendor. More subtly, after a product launch, customer feedback (or other real-world evidence) might introduce important new information that requires a coordinated response from the sponsor-vendor team.
Building Resilient Systems
So, what systems can help us manage these identified risks? The answer lies in a multifaceted approach that emphasizes communication, transparency, and proactive planning. The good news is, you are probably already doing much of the right work if your relationship was in a good position prior to the derailment event.
Ensure your vendor management work includes focus on the following four features to make you resilient to the inevitable disruptions in your relationship:
Regular communication and check-ins: You have likely already established clear and effective communication channels with your vendors just to get the work done efficiently. Be sure these channels allow and maintain open dialogue between sponsor and vendor personnel. Regular business reviews, informal check-ins, and proactive information sharing will all help both sides to identify potential issues early on. That alone, though is not enough. Be sure to go beyond discussing only the work and regularly check in with your vendors about the relationship itself. What challenges are they facing? How can you better support them? What best-practices do they see in their other sponsors that we should emulate?
Internal advocacy: Sometimes we trust our vendors too much. Remember — we can delegate the responsibility for the vendor’s work, but we retain accountability for their outcome. Ensure you have an internal resource invested in, and knowledgeable about, your vendor’s work and decision-making processes. This internal advocate will be a key contributor during your check-ins, and also act as a liaison helping to navigate any potential sponsor-vendor conflicts. How much oversight is required will depend on your risk assessment of the specific situation. Some situations are particularly critical, such as when your drug is part of a combination product.
Contingency planning and flexibility: Don’t wait for problems to arise; you already know preventing problems is much more cost-effective than fixing them after the damage is done. Develop contingency plans for potential disruptions, such as vendor financial instability or supply chain bottlenecks. This proactive approach can minimize the impact of unexpected events. Ideally, your negotiated contracts will allow for some flexibility in scope and objectives for both the vendor and the sponsor, recognizing that business needs may change over time. I have seen several situations where it made sense to separate the quality agreements out from the contract agreements, which allowed for more efficient administration of changes as the quality agreement evolved.
Performance monitoring: You, of course, already have some sort of system for tracking and monitoring vendor performance against the agreed-upon metrics. Make sure this system includes data that will help you identify early warning signs of potential problems. This might include trending of the basic performance metrics, correlations of the vendor performance metrics with other systems (complaint handling or risk management), or other soft metrics identified during the check-in meetings (a subjective evaluation of the relationship status).
Conclusion
Even after doing a great job selecting and onboarding your vendors, there is more work to be done. Inevitably the forces of change will rock even the steadiest of sponsor-vendor relationships. As leaders, we must ensure our vendor management procedures and systems are not only robust but also adaptable. They must be aware of, and responsive to, the potential relationship pitfalls we have discussed above. By proactively addressing these risks and fostering strong, collaborative partnerships, we can minimize disruptions, maximize value, and ensure our businesses thrive, even when the inevitable reset is required.
About The Author:
Richard Moroney got his Ph.D. in electrical engineering from UC Berkeley and brings an additional 20 years of practical experience helping clients in pharmaceutical and med tech development and manufacturing. He specializes in debugging measurement and quality systems to ensure great decision making (Six Sigma Black Belt) and ensuring your quality systems are not a burden on business (Certified Pharmaceutical GMP Professional). Richard has worked on both the sponsor and supplier sides of the vendor relationship, with clients ranging from start-ups through Fortune 100, as well as the U.S. government. He founded Stat Consulting in 2024.