Drug development sponsors are beginning to adopt best practices from other industries. These best practices include increasing
coordination and centralization of capacity planning and forecasting, and enhancing vendor integration and collaboration.
A growing number of companies are recognizing that resource and capacity planning and management is a strategic competency.
Biopharmaceutical and medical device companies are increasingly coordinating and standardizing inputs across functions, and
centralizing capacity planning and forecasting activity, typically within clinical operations. Based on interviews with pharmaceutical
and biotechnology companies, Tufts CSDD finds that organizations expect to make strong investments in planning and forecasting
capabilities in 2011 with the goal of achieving higher performance and reduced variance between planned and actual performance
The vast majority of companies recognize the need to address inefficiency and fragmented operating structures, as well as
the unsophisticated ways that they plan and forecast their capacity and resources. The few companies that are ahead of the
curve have centralized their capacity planning and forecasting capabilities and have achieved a higher level of efficiency
and coordination across functions.
The importance of company culture cannot be understated. For many years it was easy for pharmaceutical and biotechnology companies
to succeed historically with siloed functions and fragmented decision making, in part because the companies were resource
rich. In addition, the underlying focus of pharmaceutical and biotechnology companies was on the science of drug development.
Over the last decade or so, operating effectiveness and efficiency have entered the management mindset. Only recently, as
resources have become far more finite, and economic and operating conditions have become more difficult, are companies being
forced to take a step back and approach capacity planning and forecasting in a more rigorous and strategic way.
Integration of Relationships
Tufts CSDD research has noted a rising level of integrated vendor relationships driving program-level and portfolio-level
planning and forecasting. A growing proportion of pharmaceutical companies are entering into more extensive relationships
with CROs in order to integrate systems and processes and achieve higher levels of efficiency. As such, pharmaceutical companies
are sharing more operating risk with their contract service providers.
Key foundational components common to these approaches are:
» Transparency: Prenegotiated billing rates have become more common, and this transparency is moving toward CROs sharing their study approach
with sponsors, including staffing, design, and assumptions of effort required.
» Trust: A professional recognition of the other party's needs, replacing the traditional approach of arms-length and heavy-handed
demands on supplier approach. Enlightened sponsors recognize that CROs should make a fair profit, while CROs recognize that
study sponsors should get lower rates if they can lower the CRO's cost to serve and sell, or else commit to a large number
» Operational Integration: Many sponsors and CROs are moving to link their systems and share the clinical planning and performance tracking function
via a collaborative system, operating as one team. The goal is to increase efficiency and reduce the operating costs for both
parties by eliminating duplicate activities.
Given the current state of the drug development enterprise, pharmaceutical and biopharmaceutical companies need to retain
a growing collection of variable resources to handle capacity and to provide expertise. More integrated relationships are
a key to successfully managing a growing team of resources based internally and externally among full- and niche-service CROs.
Such alignment can pay dividends. Tufts CSDD research has demonstrated that higher levels of CRO usage are associated with
faster development speed at comparable quality. Another study revealed that higher growth rates in operating profit are associated
with higher levels of outsourcing. In addition, more integrated relationships are associated with faster study startup and
higher levels of satisfaction with the sponsor-CRO relationship.
What's in Store
Respondents in the recent Tufts CSDD survey believe that a more standardized approach would go far in establishing more predictable
fee-for-service costs that can be compared more easily between contract service providers.
It's clear that capacity planning and forecasting has reached an inflection point—driven in large part by economic and operating
conditions, and by the growing reliance on the integration of outsourced capacity. Many companies have implemented, or are
in the process of implementing, initiatives to improve and centralize their fragmented capacity planning and forecasting approaches.
Finally, the movement to better integrate sponsor-CRO partnerships will help guide efforts to create greater transparency
and more coordinated resource allocation and management.
Stella Stergiopoulos is a Project Manager at the Tufts Center for the Study of Drug Development. She can be reached at firstname.lastname@example.org
Ken Getz is a Senior Research Fellow at the Tufts Center for the Study of Drug Development. He can be reached at email@example.com
Mike Soenen is the CEO of ClearTrial. He can be reached at firstname.lastname@example.org