Transforming Drug Development: A Lilly–Covance Case Study - Pharmaceutical Executive


Transforming Drug Development: A Lilly–Covance Case Study

Pharmaceutical Executive

Announcement day and the transition phase

The strategic partnership was announced on August 6 and completed on October 3, 2008. The scope and complexity of the deal was unprecedented for Lilly as was the transition of a R&D site that was never previously anticipated to be outside of Lilly's control. Complex integration issues like the separation of information technology (IT) systems, utilities, site security, and facility maintenance needed to be quickly and effectively planned by a joint oversight committee. Closure of the Lilly Clinic also needed to be executed in an efficient manner. Regular operational briefings allowed Covance personnel to understand the current systems and processes, highlight issues, and begin to develop a gap analysis for the transition plan. Once the announcement was made, a joint transition team was formally introduced and expectations and priorities were set. The leaders of the transition team were responsible for integrating and coordinating a complex set of workstreams ranging from facilities and human resources to IT and in vivo pharmacology. In order to demonstrate their commitment to employees and ease their transition into a new corporate culture, Covance developed an on-boarding program that paired existing Covance employees with affected Lilly employees from their area of expertise. The effectiveness of this program was evident immediately. The retention rate of employees by Covance was 98 percent after the announcement and after one year, 95 percent of former Lilly employees remained.

Overall, the success of the joint transition team was due to essentially three key activities: clear and unambiguous objectives, support of the transition leaders by senior leadership, and rapid issue resolution.

In order for a partnership of this magnitude to continue to succeed, a governance structure was created to provide oversight on the objectives both companies had set forth in their partnership agreement. The governance structure was designed to promote clear communication and establish trust between staff members at multiple layers within the two companies. The governance structure was comprised of an executive steering committee (ESC), a business operating committee (BOC), and a business unit steering committee (BUSC) that monitors each of the operational groups.

The objective of the ESC is to set the mission, vision, and direction of the strategic alliance. The BOC monitors KPIs, implements the strategic aim of the partnership, and oversees critical initiatives such as cycle time improvements for study conduct. The BUSC forecasts future work demand, develops KPIs, and oversees project execution for each of the eight business lines.

Evolution of the partnership

Lilly-Covance Partnership Economic/Fiscal Impact Analysis
Covance was concerned with their ability to retain employees through the transition in order to meet the needs of the contract. Employees were given the opportunity to apply for positions at Covance that were similar to their previous positions with Lilly. As previously mentioned, a majority of employees, the most critical resource to the transition, remained at the Greenfield site, allowing this partnership to smoothly transition.

To gauge the progression of the partnership each year, voice of the alliance (VOA) surveys are distributed to employees from Covance and Lilly to gain insight on many elements of the alliance. Questions are asked in 13 areas related to cultural, operational, and strategic fit to address strengths and weaknesses of the alliance.

Data from the 2009 survey showed a variance of more than 10 percent in three areas of employee answers: roles, team coordination, and skills/competence. In the other 10 areas, the difference between the two results was smaller than 10 percent, indicating that both parties were in agreement in how they viewed each other. By 2012, there was no variance of more than 10 percent in any category surveyed and the gaps in each area narrowed relative to 2009, demonstrating that both companies had made great strides in improving the site operations. Additionally, in 2012 the response of the percent favorable for each area was =70 percent which according to Lilly's historical data sets indicates a highly functioning partnership. Based on this analysis and trends of the previous three surveys, the next area of opportunity lies in making both sides more satisfied.


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