Vendor Selection For Small Sponsors: An Approach That Works

By Katie McCarthy, managing director, and Connacht Peterson, senior consultant, Halloran Consulting Group

The number of small biotech and pharma companies continues to increase and, predictably, outsourcing across the industry is on the rise. Finding the right external vendor is a critical challenge for any sponsor company, and it can be especially challenging for a small sponsor.

Small sponsors are faced with unique challenges, including smaller-scale trials, limited budgets, fewer personnel, and small pipelines that depend on the success of the lead program. Small sponsors must compete with companies that have multiple programs and trials, more robust budgets, and large in-house teams all vying for top-quality resources from CROs and other vendors. Most life sciences companies will elect to outsource at some point, so how does a small sponsor go about finding a vendor that is right for them? Through our work with dozens of small sponsors, we have refined several approaches to support selection of the right high-quality vendor.

THE CHALLENGES AND NEEDS OF SMALL SPONSORS WHEN WORKING WITH CROs AND VENDORS
Small sponsors have different constraints when outsourcing. They have limited employees wearing many hats who may not be expert vendor managers. Some of these companies may even lack people or processes to select and qualify vendors. Decision making is critical for any company, but for a small sponsor, every decision can feel like it’s a make-or-break choice for the company — a wrong vendor decision could have future implications for the company’s success or failure. Often there are executives from the company involved who are new to the nuances of clinical development, but because the decision is so pivotal, will insist on being involved at all stages. This adds complexity and must be recognized and accommodated by all parties, and there often needs to be executive- level involvement by the CRO from day one. The funding available to small sponsors is often sparse, tightly budgeted, or unpredictable, and every dollar must be carefully managed.

3 KEY STEPS FOR VENDOR SELECTION
We have found an effective process that works when it comes to selecting the best vendor for a small sponsor company. All involved must first agree on three key things:

• the process used for selection
• the criteria to select the vendor
• the decision of who has input and who makes the final determination

Making decisions around these key pieces in advance of starting the vendor selection process may seem both obvious and tedious, but doing so will help to lay the groundwork for successful management of a high-quality process.

The Process
Selection should start with identification of qualified vendors — a complex task even for veterans. Although we have a wide network of CROs and vendors with whom we’ve worked, the landscape changes and evolves constantly so we still make a point to reach out to our colleagues for timely referrals or recommendations. Vendors and teams change quickly in this industry so it’s best to have up-to-date reviews across multiple sources. Once a list of potential vendors is compiled, the rest of the traditional process applies: request for proposal (RFP), proposal review and analysis period (with open and honest communication), bid defense meetings, due diligence capabilities audits, negotiation, scope work, final selection, and transfer of obligations. The most critical but subjective goal at this stage is to identify a short list with the right fit from both a scale and cultural perspective.

The Criteria
In order to swiftly move through the vendor selection process, the team must agree on the selection criteria before the process begins. This must be managed within the sponsor team and clear expectations aligned internally before focusing outwards. Although the detailed criteria will be protocol-specific, CRO- and vendor- selection criteria should be based on three key areas:

1. VENDOR CREDIBILITY: experience with small sponsors and programs, proven expertise in the desired therapeutic area, expertise in the geographic area, and specific technical experience
2. VENDOR CAPABILITY: customized planning and feedback on the protocol, plan, and timelines; right-sized technology and reports; issue identification and resolution; team chemistry; strategic fit; and CRO executive involvement on a routine basis
3. BUDGET: clear and direct methods for budget management, straightforward process for handling budget or schedule changes, fair prices for services, willingness to negotiate

Additionally, small sponsors must maintain open and honest communication with potential CROs or vendors throughout the process. Honest communication about existing gaps within the sponsor company should be shared to ensure these gaps are adequately filled by the potential vendor.

The Decision
Prior to making a final choice, the sponsor company must determine who will participate in the vendor selection process and how the final decision will be made. Will all team members individually rate each vendor based on the agreed-upon criteria? Will the team make the final decision together democratically? Will the team make a recommendation to a single decision maker? There are many ways to get to a decision, but how the final selection will be decided must be determined before the process even begins.

THE RELATIONSHIP MUST BE A PARTNERSHIP
Carefully selecting the right CRO or vendor is critical for small-sponsor success. Following our selection process, the criteria to select the vendor, and the decision of who has input and who makes the final determination will ensure selection of the right high-quality vendor. This does not mean there won’t be a critical need to have close management and oversight of that vendor, but alignment at the beginning can help. All parties at a sponsor company can more effectively work together to identify the best process to select a vendor and act on it if expectations are aligned at the outset. The relationship must be a partnership from the earliest stages, so approach it with that level of care and attention!

Katie McCarthy is managing director at Halloran Consulting Group. She leads the company’s emerging biotechnology and pharmaceutical practice area. She has 18+ years of drug development experience.

Connacht Peterson is senior consultant at Halloran Consulting Group. She has 11+ years of clinical development experience with a focus on clinical operations and development and global project management.