Outsourcing in a Changing Environment

Outsourcing in a Changing

Environment

Objectives

Discuss the evolution of outsourcing

Discuss the evolution of outsourcing

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Do cost efficiencies, flexibility and productivity exist?

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How to maintain morale while outsourcing

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Where outsourcing has succeeded and failed

Benefits of Variable Resourcing

“Companies can achieve added value by using sales force outsourcing

Companies can achieve added value by using sales force outsourcing

strategically… Since variable costs can be adjusted more easily than fixed

costs, companies can respond more quickly and efficiently to changes in

circumstances without being constrained by investments that have been

g

y

made in-house.”

Datamonitor

Datamonitor

Three Macro-level Imperatives

Imperatives

Challenges and Risks

Driving the industry transformation

Imperatives

Challenges and Risks

P&

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Optimize

Portfolio

Value & Risk

P&L pressure, development bandwidth

constraints and Market Access limit ability

to push assets to market to fill exclusivity

expiry from revenue cliff

Value & Risk

Approval timing, access and capacity

issues are becoming inconsistent with

g

the less profitable business model

Improve Productivity

Reduce Fixed

Cost Risk

Comprehensive provision of all drug

development / commercialization

functions too cumbersome to react to

rapidly changing market

4

Outsourcing is Evolving Around Key

Business Imperatives

Imperatives

How Quintiles can help

• Robust quantitative decision analytics to de-risk portfolio

Imperatives

How Quintiles can help

Optimize

Portfolio

Value & Hedge

Robust, quantitative decision analytics to de risk portfolio,

release latent value locked in assets and provide more ‘shots on

goal’. Potential Product / Brand solutions

• Provide geographic reach to maximize portfolio or product value

• Enable corporate therapeutic decision making

Value & Hedge

Risk

• Enable corporate therapeutic decision making

• Allow for regional or national decision making

Improve Productivity

• Allows for greater reach for single product

companies

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Reduce Fixed Cost Risk

• Provide position offerings headcount

transfers to allow for

product/marketing based decision

making to maximize product potential

Greater Flexibility to Respond to

Fluctuating Resource Demands

Outsource (Variable Cost)

Traditional Model

Strategic Outsourcing

Limited scope

of flexibility

Network Pharma Model:

Greater scope of flexibility

Outsource (Variable Cost)

In-house (Fixed Cost)

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ource

%

)

Traditional

Model

Network

Pharma Model

Variable

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Force Re

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Demand (

%

Variable

Costs

Variable

Costs

Fixed

Sal

e

In-house

In-house

Fixed

Costs

Fixed

Costs

“Forward thinking companies are making their value chains more elastic and their

Time

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g

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organizations more flexible.”

– Harvard Business Review

Benefits of Variable Resourcing

Converting fixed costs to variable costs allows for…

Strategic Flexibility (over time)

• Managing the peaks and valleys associated with new product launches, competitive campaigns and impact

of product patent expiration

of product patent expiration

• Quicker recovery time from unexpected market events

• Consideration of more aggressive and/or innovative strategies

(

)

Tactical Flexibility (over execution)

• Apply the precise level of resources based on the product lifecycle and any changing market conditions

• Rapid decision making and implementation

• Pilots, pilots, pilots

Risk Management

Risk Management

• Benefit from outsourced experience and best practice solutions

• Potential for shared financial risk

Co employment risk mitigation

Tactical Outsourcing

Pre-1995

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Recruitment

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Strategic Value

Tactical Outsourcing

1995-2005 Era

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ncies

Recruitment

Virtual Sales Force Builds

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fici

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Co

s

Strategic Outsourcing

The current & future landscape

Shared Teams

Merchandisers & _{Shared Teams}

Sales Force Change Agents Sample Reps Hybrid Teams Vi t l S l F

e

ncies

Recruitment

Virtual Sales Force Builds

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Co

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Vacancy Mgt General Pilots

Strategic Outsourcing

Shared Teams Merchandisers &

The current & future landscape

Shared Teams Sales Force Change Agents Sample Reps Hybrid Teams Vi t l S l F

e

ncies

Recruitment

Multi-Channel Teams Virtual Sales Force

Builds

s

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fici

e

Co

s

Strategic Outsourcing

The current & future landscape

Shared Teams

Merchandisers & Brand

Solutions

Lifecycle

Revenue Sharing Rep Profile Optimization/

Sales Force Change Agents Resource Transition Virtual Company Builds

Sample Reps Solutions

e

ncies

Management g Acquisition Expansions Virtual Sales Reimbursement Specialist Vacancy Management

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Geographic Pilots _{Clinical Trial}

Geographic Expansion Multi-Channel Teams Force Builds Strike Force

Co

s

Educators Patient Adherence’

Communities MSL’s Leave of Absence Fee-Based Sales Teams Proof of Concept/ New Commercial Model Closed-Loop Marketing teams General Pilots g Teams 12

Strategic Value

Maintaining Morale While Outsourcing

Fully integrate or create a stand-alone entity

Integrated

Integrated

• Full Communication strategy is needed with the internal team

> Including WIFM

• Integrate resources (Sales Force Automation, VM, email, etc)

• Create Common Goals & align Incentives

• Create an Escalation plan: driven by “across, before up”

• Create shared and common teams

> Partnership Champions, Product Champions, Data champions

• Shared Meetings

• Shared Meetings

• Lead by Example (Corporate level governance)

• Share Success together

• Allow for Cross Pollination

• Eliminate the poison

Stand Alone

• Full Communication Strategy is needed

• Full Communication Strategy is needed

> Including WIFM

> Including Strategic reason for outsourcing

> Periodic Updates

Making Outsourcing Successful

Putting in place the right strategy to ensure long-term success

Long-term Success

• Can drive both Strategy and

Tactical Success

Disruptive

• Partner treatment (Disposable

Assets)

Failure

• Treating the partner as a

vendor (an “A” and a “B” team)

Tactical Success

• Partner can hire headcount

after “proving-time”

• Allows for strategic rightsizing

of partners infrastructure (field

d h

ffi

)

Assets)

• One Product Field Forces &

unrealistic forecasts

• Co-employment and often

transferred internal support

vendor (an A and a B team)

• Creating demands in excess of

internal team

• Primarily Tail Products and low

decile physicians

and home office)

• Can increase Market

Capitalization

• Can increase societal goodwill

• Allows for flexibility

• Non-Compliance (generally

smaller organizations)

• Bulge Deals and procurement

power plays

• Lack of a POA for an

outsourced initiative

• Allows for flexibility

• Allows for non-strategic

investments and assets

• Allows for creativity

(POC/Pilots)

• Permits maximization of

non-strategic assets

Contact us:

To learn more about our customized

To learn more about our customized

partnering solutions, contact us today,

email:

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