As the life science industry increasingly adopts outsourcing as a business strategy, the nature of the CRO-sponsor relationship has also matured, transitioning from tactical to a more strategic partnership arrangement. No longer are CROs primarily considered extra pairs of hands for fleeting, one-off transactions. Sponsors are relying more heavily on CROs as partners in collaboration to achieve long-term development goals, improve productivity, and conduct research more efficiently and effectively.

Forging a long-term partnership is a major commitment. But once you have done your due diligence, selected a CRO, and signed all the appropriate documents, how do you ensure a successful, value-creating relationship? Like a marriage, success in a business relationship depends heavily on the human elements — the mutual trust, commitment and tone of interactions between partners. These things can be open to interpretation and difficult to define; however, there are structured ways to improve the odds for long-term success.

Define Criteria for Success
A successful relationship requires competent partnership management, effective communication and issue management, and a strong commitment to achieve the sponsor’s goals. Both parties usually understand this intuitively, but each has different motivations, which can lead to misunderstandings.

The sponsor aims to achieve progress on the development timeline and meet commercial commitments, such as fulfilling their responsibility to shareholders. They expect their partner to improve development effectiveness and operating efficiency. CROs aim to meet or exceed client expectations in order both to maintain a long-term relationship and to build their reputation in the industry. To accomplish this, they must create value for the sponsor, by delivering benefits (such as faster cycle times) and offering specialized skills, expertise or capabilities. In turn, a CRO needs certain commitments from sponsors to plan and efficiently run its operations — such as timely approvals and shipment of samples or other client-provided materials.

Rather than assume both parties are on the same page, it can be important to formally acknowledge each other’s goals and define what each party considers success. Some companies go as far as to establish a set of shared metrics, or milestone achievements, as program goals. They may use tools with incentives and penalties to motivate and keep track of program execution, or set up a plan that defines the critical quality indicators for each development project and measure progress against those standards.

Setting the Ground Rules: Digging into the Details
The most important step in launching an effective partnership is establishing clear expectations. One way to do this is with a comprehensive agreement that includes specific performance expectations and program priorities, clearly defined roles and responsibilities, and how communications will take place. Both parties should have a solid understanding of the objectives and priorities at each project stage and actively manage projects. The sponsor should also provide the CRO with the resources and support necessary for a productive program.

An effective Quality Agreement includes not only lines of responsibility, but also whose procedures will be used. If the sponsor requires using its procedures, they must be written to manage outsourcing. Otherwise, there is a potential for inconsistent compliance, training complexities, and possible errors. Consider, for example, whether you want the CRO to explain your procedures to the FDA during an inspection. Generally it is best to minimize demands to use sponsor procedures, although the CRO should understand them, even if they are not used.

The CRO’s procedures must allow for sponsor needs and meet the requirements of the Quality Agreement. The CRO should be flexible, using the sponsor’s procedures when applicable, and understand the needs of the sponsor’s customers. Keep in mind that the CRO’s procedures are designed to meet the needs of many clients.

Here is a case where failed outsourcing resulted from a mismatch in expectations and relationships, and ineffective interaction between the CRO and the sponsor.

Case Study #1: A start-up company with a very challenging product experienced many problems in development. The company had regulatory expertise and a strong academic background but lacked analytical experience. After working unsuccessfully with many CROs, the company partnered on a full-time basis with a new lab that had the appropriate technical expertise to provide support for methods, stability, release and other sponsor needs. At the outset, both parties fulfilled all the appropriate due diligence — the Quality Agreement, MSA, arrangements for visits and audits, etc., so it appeared all was in order. However, the CRO’s project management and internal and external communication practices lacked consistency, and the lab appeared disorganized. On the sponsor side, the company was slow to respond, often failed to remember what was previously discussed with the CRO, and unfairly monopolized the time of the lab team. The result, of course, was a dysfunctional partnership that did not last.

Building the Team
At the outset, it is important to set up an effective governance system and oversight structure. Both partners should staff the program team to minimize points of contact and assign backups. Each partner should also appoint a team leader, the primary contact who meets with its internal team regularly to monitor and manage the program, and communicates progress and issues to the partner’s team manager.

To ensure the right people are in place to manage the relationship, keep in mind that good performers at the tactical level will not necessarily make good overseers at the strategic level. When staffing to manage the relationship, choose someone who has the appropriate management skills and experience. Direction should come from a manager with a good working knowledge of all functional areas involved in the program and the skills to generate team commitment. For a lab program, for example, choose someone who currently manages lab work effectively. Purchasing agents or scientists experienced in the service may be unprepared for the challenges of managing outsourcing relations and may focus excessively on tactical details. A good personality match between team leaders will work best.

When choosing team members, understand what talent is available. Typically, both the sponsor and CRO will have greater expertise or lack expertise in different aspects of the program. Outsourcing is most effective when the sponsor and the CRO do what they do best. While CROs may have experience with hundreds of compounds, sponsors may have more extensive regulatory experience. Both partners should openly communicate their strengths and weaknesses, and plan programs capitalizing on each other’s strengths.

A major benefit of partnering with a CRO is that the CRO most likely is familiar with many other companies that have approached issues or development pathways similar to yours. With deep insight into different ways to approach the same problem, the CRO can transfer the knowledge of what works best to the sponsor’s program. Ask your CRO how other companies have approached similar situations.

Maintaining the same core team for the entire project and similar future projects is preferable, but when sponsor expectations and requirements change, team members will likely change. The CRO should explain why team changes are in the sponsor’s best interest.

Nurturing the Team
Like any other long-term relationship, the outsourcing partnership requires considerable effort, compatibility, frequent and open communications, and a clear understanding of mutual needs and priorities. Other essential elements are mutual respect, honesty, trust and cooperation.

One of the leading causes of issues in a relationship is the lack of effective communication. At the outset of a partnership, sponsors should share pertinent information about their company’s business goals and requirements in an open, transparent manner. Throughout the relationship, both parties must proactively voice upcoming needs, share information and expectations, and provide mutual support to achieve project goals. As a partner, the CRO is responsible for making many decisions and offering recommendations.

Sometimes issues arise because members of the sponsor’s internal team are not communicating effectively with one another, and team members from both parties are unclear about priorities. Here is an example of how poor lines of communication can result in failure to meet the project timeline.

Case Study #2: The stability manager of a pharma company contacted a chemist at its CRO to request testing of a certain set of samples. In a separate request, a manufacturing team member indicated that release of raw materials was top priority. In an effort to comply, the CRO unknowingly began testing the wrong samples. As a result, the priority sample testing was not completed on time, which caused a costly timeline lag and upset the sponsor’s program coordinator.

The cause of the problem was poor communication on both sides, both internally and between partners, and lack of understanding of priorities. Assumptions by the CRO complicated the situation. To avoid such problems, it is critical to establish an effective, streamlined system of communication to manage the sequencing of activities and dependencies of key tasks. In the most effective system, the pharma company and CRO should designate a single point of communication. This eliminates multiple channels of communications, which can lead to competing priorities. At the start of each project, the sponsor team should meet with its team manager to set priorities and deadlines, and communicate them to the CRO’s program manager. Both parties should agree to a schedule for regular project updates, and must operate in a timely manner, without placing unrealistic expectations on each other.

In addition to ongoing communication for project management, CRO-sponsor relationships benefit from periodic face-to-face meetings for an open and honest review of performance, and brainstorming on how to improve the relationship. Ideally, these periodic meetings will alternate between sponsor and CRO sites and include representation from senior management. Be prepared to present suggestions and new ideas, and discuss program progress and issues, both positive and negative, especially any incidents that involved disagreements, confusion or errors. Set achievable process improvements, such as ways to communicate more effectively. Most importantly, be flexible — learn from mistakes and successes, listen to each other’s ideas and be open to change.

Be sure to give credit for accomplishments — a well-deserved pat on the back works wonders for morale. Direct incentives also provide job satisfaction and motivation. Celebrate successes with group lunches, an annual dinner meeting, contests, sales promotion items bearing the company logo, or other types of incentives.

Case Study #3: A CMO making more than 500 batches of a company’s drug per year and responsible for managing its product complaints and issuing reports, was receiving reports from the field at a fairly constant rate indicating a low level of visual defects on plastic vials. The sponsor considered this a major issue and an area for improvement, and scheduled a business review meeting with the CMO. The sponsor presented to the manufacturing staff a detailed summary of the situation, including product sales, manufacturing defect rates and product complaints, and an explanation of how those defects could impact customers. Having gained a full understanding of the situation, the CMO’s team researched and discovered the root cause of these occurrences and remedied the problem. In the following quarter, defect rates dropped by 75%.

Building CRO Commitment and Responsiveness
A strong CRO commitment stems from a solid partnership foundation. In an ideal relationship, the CRO is as committed as the sponsor to achieve program goals, and willing to go the extra mile, proactively making suggestions to avoid potential delays or save the sponsor money.

Case Study #4: A shipment of more than 100 very important validation samples that needed to be tested was delayed, and was expected to arrive on a Friday, a major holiday. The sponsor’s four previous requests to expedite sample analysis had been fulfilled by the CRO, and the sponsor was reluctant to ask people to work on a holiday again. The sponsor’s team leader contacted the lab manager on Thursday and asked if they could have the results by the end of the following week. To the team leader’s surprise, the laboratory manager assured him the sample testing would be completed by Monday. Realizing the importance of meeting the sample testing deadline, the laboratory staff had volunteered to work over the weekend.

Managing Issues: When Mistakes Occur
Issues and errors in the laboratory setting are inevitable. When problems occur, avoid quick judgment and hasty, reprimanding responses — sharp e-mails can become part of a permanent record and the ensuing resentment can damage the relationship. If mistakes are made, the CRO must be forthright and relay bad news to the sponsor quickly before the situation worsens. Ideally, the CRO will suggest steps to remedy the situation. Engaging the best technical resources from both sides, the team should collaboratively identify the root cause of the problem and develop a solution. When treated respectfully, the outsourcing partner will typically bend over backwards to resolve the issue.

Case Study #5: When a CMO experienced batch rejection in commercial manufacturing, the sponsor’s QA manager wanted to withhold payment for the rejected batch. Opposing such action, the head of manufacturing insisted on paying for the CMO’s costs since the manufacturer, a productive partner consistently doing good work for the sponsor, had a very low batch rejection rate. The sponsor had many projects planned with the CMO for the coming year and wanted to maintain the productive relationship. The goodwill was well worth the expense, solidifying a good partnership. In future, if the sponsor was responsible for issues, the CMO might be more understanding.

In the current business climate, life science companies are transforming their approach to outsourcing, increasingly building long-term partnership arrangements to reduce costs, and improve quality and productivity. The key to maintaining an effective, lasting outsourcing partnership is the human element — mutual respect and support, trust, cooperation, honesty and commitment. A successful outcome requires choosing the right members for a harmonious team, understanding each party’s needs and expectations, establishing effective program procedures, and defining governance and responsibilities. Other critical components for a high-performing team are leveraging expertise, communicating openly, and proactively managing the relationship. Being open to change and new ideas, and recognizing successes and improvements will also bring great benefits to the collaboration.