Animal Pharm Reports - A Guide to Outsourcing in the Animal Health Industry

A Guide to Outsourcing in the Animal Health Industry

Strategic Management

Animal health companies are increasingly outsourcing key business functions, including R&D, product registration and marketing, in a bid to improve the benefits they receive from their current level of expenditure. Animal Pharm's report, A Guide to Outsourcing in the Animal Health Industry, will be your practical guide to this important strategic issue, providing you with:

an analysis of the global market for outsourcing in the animal health industry
expert guidance on selecting the right CROs
strategies for negotiating successful contracts
an examination of the legal issues involved
profiles of 18 animal health CROs.

This authoritative report provides you with comprehensive analysis and practical advice on all aspects of outsourcing, and has been written specifically to answer all your questions, including:

What are the key stages in the process of CRO selection?
How should contracts be negotiated and which issues need to be addressed?
How do I select which business functions to contract out?
How do I draw up confidentiality agreements, and what types of information should be excluded from this agreement?

PUBLISHED: AUGUST 2000
REFERENCE: SR193E
PAGES: 105
PRICE: £395/$830/¥95,000

For further information about this report, please contact our Customer Helpdesk on:
Tel: +44 (0)20 8332 8965 / 66
Fax: +44 (0)20 8332 8992
E-mail: [email protected]

CONTENTS
LIST OF TABLES AND FIGURES
EXECUTIVE SUMMARY
SCOPE AND METHODOLOGY
S.1 Scope
S.2 Terminology
S.3 Methodology and sources of information
S.4 Valuing contract research business with the animal health industry

ACKNOWLEDGEMENTS
ABOUT THE AUTHORS
ABBREVIATIONS AND GLOSSARY

CHAPTER 1 INTRODUCTION
1.1 Evolution of outsourcing
1.2 Regulatory framework
1.3 Costs
1.4 Why utilise external expertise?
1.5 Advantages and disadvantages of using contract research organisations
1.6 Current values of veterinary work outsourced
1.7 Prospects for sustaining the future
1.8 The influence of contract research organisations on the animal health industry
1.9 Political influences
1.10 Why use a CRO?
1.11 Which aspects of the regulatory process can be outsourced?
1.12 Regulatory services offered by contract research organisations

CHAPTER 2 THE REGULATORY BACKGROUND TO OUTSOURCING
2.1 Introduction
2.2 Regulatory legislation
2.2.1 Europe
2.2.1.1 Maximum residue limits
2.2.1.2 Delays incurred by the MRL process
2.2.1.3 Maximum residue limits for products in clinical trials
2.2.1.4 Maximum residue limits for old products
2.2.1.5 MRLs and generics
2.2.2 Good Clinical Practice for Veterinary Medicines
2.2.3 Example: UK regulations
2.2.3.1 Animal Test Certificate
2.2.3.2 The right to prescribe by a veterinarian
2.2.3.3 Importation of veterinary medicines
2.2.3.4 The Pharmacy and Merchants' List category
2.2.4 Defining the product
2.2.4.1 Which route to obtain your MA?
2.2.4.2 Full or abridged application?
2.2.4.3 Feed additive legislation � Directive 70/524
2.2.4.4 Biocide Directive 98/8
2.2.4.5 Variations � Commission Regulations 541/95 and 542/95
2.2.4.6 Pharmacovigilance
2.3 Regulation in the US
2.4 Regulation in Japan
2.5 Regulation in the rest of the world
2.5.1 Australia
2.5.2 Canada
2.5.3 South Africa
2.6 VICH
2.7 Conclusions

CHAPTER 3 KEY ISSUES IN CONTRACTING OUT IN THE ANIMAL HEALTH INDUSTRY
3.1 Why outsource?
3.2 What to outsource
3.2.1 Drug discovery research
3.2.2 Preclinical safety assessment
3.2.3 Pharmacokinetic studies in target animals and maximum residue limit analysis
3.2.4 Proof of concept studies
3.2.5 Veterinary clinical trials
3.2.6 Environmental Risk Assessment of Veterinary Medicinal Products
3.2.7 Pre-formulation studies, stability testing and packaging development
3.2.8 Contract pilot and full-scale manufacture
3.2.9 Regulatory advice and services
3.3 Preparations prior to selecting a CRO
3.3.1 Determining budget availability
3.3.2 The responsibility checklist
3.4 CRO selection � the decision-making process
3.4.1 Prequalification questionnaire
3.4.2 Drawing up a shortlist
3.4.3 Presentations
3.4.4 Site visits and audits
3.4.5 Contracts
3.4.5 Payment schedules
3.5 Project management
3.5.1 During a study
3.5.2 Completion or termination of a study

CHAPTER 4 NEGOTIATING STRATEGY AND TRAINING
4.1 Overview
4.2 Response of the animal health industry
4.3 Process for purchasing
4.3.1 Positional bargaining
4.3.2 Principled negotiation
4.4 The ACCORD model
4.4.1 Agree aims and objectives
4.4.2 Conditioning
4.4.3 Creating options
4.4.4 Strive for open behaviour
4.4.5 Rigorous approach
4.4.6 Focus on specific deliverables
4.5 The focus of negotiation effort
4.5.1 Value
4.5.2 Cost
4.5.3 Cash
4.5.4 Risk
4.5.5 Legal and contractual
4.6 Strategic alliances
4.7 Conclusion

CHAPTER 5 LEGAL ASPECTS OF CONTRACTING
5.1 Confidential information
5.1.1 Disclosure and willingness to receive information
5.1.2 Non-disclosure and use of information
5.1.3 Marking of information supplied
5.1.4 Binding agreement
5.1.5 Exclusions from confidentiality
5.1.6 Return of confidential information
5.1.7 Obligations
5.2 Contract documentation
5.2.1 Parties and definitions
5.2.2 Performance of services
5.2.3 Delegation of obligations
5.2.4 Price and payment
5.2.5 Confidentiality
5.2.6 Publication and intellectual property rights
5.2.7 Term and termination
5.2.8 Compensation and indemnity

CHAPTER 6 COMPANY PROFILES
6.1 ABC Laboratories
6.2 ADAS Research
6.3 Agro Pharma
6.4 Alberta Research Council Biotechnology
6.5 Applied Analytical Industries Inc
6.6 Avogadro
6.7 Bio Logic
6.8 Biological Laboratories Europe Ltd
6.9 Biotechnical Services Inc
6.10 Cebiphar
6.11 CEM Analytical Services Ltd
6.12 Colorado Animal Research Enterprises
6.13 Covance Animal Health
6.14 Cyton Biosciences Ltd
6.15 Farma Research BV
6.16 Huntingdon Life Sciences Ltd
6.17 Institute for Animal Health (UK)
6.18 Institute of Aquaculture
6.19 Inversesk Research International Ltd
6.20 Kendle International Inc
6.21 Klifovet GmbH
6.22 Lancaster Laboratories
6.23 National Agriculture and Veterinary Biotechnology Centre
6.24 National Institute of Animal Health (Japan)
6.25 Veterinary Laboratories Agency
6.26 Don Whitley Scientific Ltd
6.27 YRCR Ltd

CHAPTER 7 HOW TO FIND INFORMATION ON CROS
7.1 Industry associations
7.1.1 Association of Clinical Research for the Pharmaceutical Industry
7.1.3 Pharmaceutical Outsourcing Management Association
7.2 Publications
7.2.1 European Pharmaceutical Contractor
7.2.2 LARKA Directory of Contract Research Organisations
7.2.3 Pharma Business
7.2.4 Technomark Registers
7.3 Databases
7.3.1 Pharmaceutical Contract Support Organization's Register
7.3.2 DataEdge LLC

REFERENCES
FURTHER READING

EXECUTIVE SUMMARY
The business environment facing companies involved in producing drugs for animal health purposes has become increasingly more difficult over the past decade. In the 1960s and 1970s several large human pharmaceutical companies moved into the veterinary drug sector bringing investment into the production of new treatments. However, some of these, notably SmithKline Beecham and Solvay have now pulled out from further involvement. Also, there has been considerable recent merger and acquisition activity within the industry, for example the takeover by Schering-Plough of Mallinckrodt Veterinary in 1998 (previously Pitman-Moore Animal Health) and the merger by Rh�ne Merieux and Merck AgVet of their animal health activities into Merial.

Reduced demands for some of the industry's traditional products have slackened in major markets and this, together with an increased legislative burden, and the increasing costs of drug R&D, has left the industry at something of a crossroads. Expenditure by the industry, although still large, is far below that of its sister human pharmaceutical industry, a situation which demands that what funds are invested must show a return.

In Europe in particular, the extra work and regulatory burden imposed by the review of existing products in the late 1980s and 1990s together with the need to conduct maximum residue limit determinations, has had a major impact on costs and the disappearance of products from the market, and has forced companies to divert funds into defensive R&D. Indeed, even before applying for registration, manufacturers must first define what they are applying to register in order to decide how to register it (see Table 2.4). Further costs associated with ecotoxicity testing have also been borne by the industry and have diverted funds away from basic R&D.

One area which has benefited the industry over the past few years has been the growth in treatments for companion animals, the drivers being the owners' willingness to pay for treatment and the less demanding regulatory requirements compared with the livestock sector. The UK National Office of Animal Health has noted that in 1997, 70% of all new development was in the area of companion animal treatments. However, the long-term success of the industry depends on new drugs being brought to market, derived either from those being developed for human use, or from basic research into animal diseases.

There have been moves to encourage international regulatory harmonisation through the International Conference on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH), a move which mirrors similar progress in the human pharmaceutical industry through the ICH Harmonised Tripartite Guidelines for Good Clinical Practice. The adoption of these guidelines will have far reaching implications for companies conducting veterinary clinical trials in both farm and companion animals.

There has always been a certain amount of outsourcing by the animal health industry, to access new technologies and products, conduct preclinical safety studies and specialist studies, and to obtain consultancy advice for regulatory purposes. The need to restrain the large fixed costs of maintaining facilities and staff for laboratory and field studies in farm animals has led to a reduction of in-house facilities and a growth in contracted out studies. The introduction of Good Clinical Practice for Veterinary Medicines will probably lead to more companies contracting out studies to contract research organisations (CROs) who can demonstrate their ability to conduct studies to these guidelines.

This report is intended to provide an overview of the current status of the animal health industry and to guide companies who are intending to contract out studies. It provides an overview of the regulatory aspects of outsourcing and takes the reader through the theoretical and practical stages required when preparing to contract out a study. CRO selection is also covered. The legal aspects of a contract are discussed and advice is provided on negotiation strategies essential to produce the 'win-win' situation so often spoken of between clients and CROs, but so seldom attained. A list of CROs offering services to the animal health industry and a list of publications, and sources of industry information are also included.