Outsourcing: Contractual Framework to Study Execution Barry Silverstein Executive Director, UK Clinical Operations, Chiltern International

Qualified Pharmacist (1992, Strathclyde) with MBA (2003, Imperial) 5 Years as Clinical Trials Pharmacist, CRA, and PM at Boehringer Ingelheim 5 Years as Clinical Development Consultant and Project Manager at Parexel 10 Years in CRO General Management at Chiltern International – UK Country Management – Head of UK Clinical Operations – Global Commercial Operations – Executive Lead for Business Development Barry Silverstein

Execution Agenda (A Vendor’s Perspective) The pharma industry: $38B in outsourcing The CRO industry

Execution Agenda 1.Contract Finalisation – The next hurdle 2.Budget Management – Defining the service fees and assigned resources 3.Relationship Building – Developing the vendor / client relationship 4.Preferred Provider Status – Why is it so important to vendors 5.3 rd Party Vendor Management – Managing the dynamic between sub-contractors, clients, and CROs

Contract Finalisation Why does it take CROs so long? Steps 1.Notification of Verbal Award (Business Development) 2.Letter of Intent (Contracts and Legal) 3.Master Services Agreement (Contracts and Legal) 4.Work Order (Budgets and Proposals) Obstacles to finalisation ×Finalised Protocol (Project Management) ×Country and Site level feasibility (Clinical Monitoring) ×Division of responsibilities (Project Management) ×Agreed legal terms impacting vendors (Contracts and Legal) ×Access to Key Stakeholders

Contract Finalisation Post vendor selection/winning the business LOI MSA WO OOS(s) NDA SponsorVendor3 rd Party Contractor 3 rd Party vendor LOI MSA WO OOS(s) NDA  NDA - Non-disclosure Agreements  MSA - Master Service Agreement  LOI - Letter of Intent  WO - Work Order  OOS - Change Orders

Budget Management Payment structure – Units of activity or fee for time – payments must be related to key milestones over which vendors have some control (e.g final protocol, recruitment, ) Budget Incentives – are these achievable – are these really penalties in disguise – competition to win work

Relationship Building What is the definition of a successful project? Pharma: The objectives of the project were achieved and reported Vendor: The CRO secures the opportunity for repeat business Team: The team members performed well and complimented each others skills

What are CRO PMs trying to do? Develop all relationships Understand deadlines Give assurance through trust What is the stated goal of our CRO PMs? -”We want to make our sponsor PMs shine” -”....budget efficiency, make money.”

Measuring Success Project Success FactorsProject Fail Traits Bid Defence Meetings aligning PMsKO meetings where teams are changed Open honest communicationIntimidating interrogation Experienced PMs leading the teamsInexperienced PMs pushing the teams Natural and trusting relationship between PMs Forced PM relationship In our experience, its easier for the CRO to change

Preferred Provider Status AKA Strategic Partnership Business Alliances Key Customers Relationships Functional Service Provision

Adopting a preferred provider strategy Benefits for CROAdvantages for Sponsors Established contract terms and conditionsMinimal contractual delays Resource PlanningKnown team members Recruitment StrategyCorrectly qualified staff Budget efficiencies and rate cardsBudget planning Shared working practices/systems/SOPsLimited retraining required Metrics and reporting expectationsAligned with internal requirements Agreed incentives and penaltiesTested incentivisation Investigator relationshipsTrusted representation Established Steering CommitteeOversight by vendor senior management

Managing Vendors (from a vendors’ perspective) “Managing vendors is the single most time- consuming element of project management.” Small issues matter – seek internal escalation 3 rd party contractual issues restricted by sponsor/CRO agreement

Successful Execution Trust Communication Understanding Shared responsibility Building relationships

Thank you Questions?