Vendor Selection and Management From a Small Pharma Perspective

June 28, 2018
Selecting the right vendor is critical for young companies. Here are six essential steps for making sure your company makes the right choice.

Running successful clinical trials is challenging for any company. With ever-increasing pressure among life science companies to develop treatments and medicines faster, more are outsourcing many of their core business processes.  

With the level of outsourced pharmaceutical production exceeding 40 percent by several estimates, Contract Manufacturing Organizations (CMOs) and Contract Research Organizations (CROs) are a strategic part of the global supply process. This is especially true for small companies because they usually don’t have the in-house resources to support all the activities from manufacturing to running the clinical trials.

Gowri Sukumar

Outsourcing has several advantages, such as the ability to accelerate the drug discovery process, control development costs, exploit profitable niche markets and minimize time to market.

Along with the benefits of outsourcing come some challenges and risks to the sponsor organizations including ensuring efficient data exchange, managing multiple contracts, successful technology transfer, and reliable and consistent product delivery.

Thus, selecting the right vendor is critical for young companies. Choosing the wrong vendor could be detrimental to the program and can lead to delays and cost overruns. In order to select the right vendor, it’s critical that a formal selection process is in place. This article discusses the systematic approach to selecting an appropriate vendor and ultimately vendor management. There are a number of ways to approach this process, but a robust vendor qualification process is comprised of the six major steps outlined below.

Outline an Outsourcing Game Plan

It is critical for the sponsor to outline all the requirements and considerations to the vendor and include some of the key considerations such as:

  • Assessing core capabilities
  • Evaluating project scope including details such as scale of manufacturing, testing requirements, specification for the product, packaging and labelling
  • Analyzing market trends
  • Budget and timelines for the deliverables

In addition, it is essential to determine upfront what the level of technical capabilities and competence is for the vendor, and if they are flexible for urgent requirements or schedule changes. 

Cull The Vendor List

As a next step, the sponsor will assess whether potential vendors are able to meet the requirements defined in step 1. Screening potential vendors on valuable attributes may include total cost, timeline, location, royalty and licensing fees, intellectual property stipulations and the potential to be a one-stop-shop. Other factors to consider may be the payment schedule and reputation.

Vendor Selection

Usually, screening is accomplished with a Request For Proposals (RFP), where the scope of work along with the timelines are well defined by the sponsor so that they can receive bids from different vendors and make head-to-head comparisons. The goal of the RFP process is to zero in on the top few vendors’ capabilities, capacities and competences. Typically, a confidentiality agreement is in place prior to this that allows a free exchange of information between the two parties. 

It is recommended that the sponsor uses a specific template for the RFPs across the vendors for the ease of comparison. However, it can take longer for the vendor to provide the same in a given template rather than the vendor’s standard template. It is also equally important for the sponsor’s quality team to also evaluate the vendor’s compliance status in terms of warning letters, recalls and so on. Employing a questionnaire is a pivotal tool for collecting important information about the vendor including licensing and certifications, outsourced operations by the vendor to the third party, Corrective And Preventive Action (CAPA) and other Quality Management Systems (QMS) and company policies.

Selecting, planning and budgeting for the use of a vendor is also critical for the success of the program. A bid defense meeting, where vendors get a chance to defend their proposal and provide the necessary clarifications to the sponsor, is an important part of the process. This meeting also gives the sponsor the opportunity to see if the expectations match and to sense if there are possibilities to establish a relationship. 

A broad team of members across cross-functional teams including project management, Research and Development (R&D), Quality Control (QC) should be a part of the selection team to weigh several criteria, including the projected ease of doing business and the ability to leverage multiple services from the same vendor for the given program. This evaluation will serve as the basis of the screening criteria to identify which vendors are the best match.

Perform an On-Site Audit

In order to ensure that the vendor’s capabilities meet the sponsor’s deliverables prior to the finalization of the contract, it is important for the sponsor to visit the facility to assess the capabilities and evaluate the compliance of their operations. 

Develop a Quality Agreement

The next step is to develop a Quality Agreement with the vendor. It is also important to continue to monitor the status of the qualification from time to time to ensure the vendor’s ability to achieve, maintain and demonstrate compliant operations. Also, stay up-to-date on any changes to the management team or acquisitions that might likely have an impact on the sponsor’s products.

Monitor the Qualification Status

Vendor management is also a key to the successful execution of the program within the given timelines. The fact that the sponsor always has the overall responsibility of the trial puts more focus on sponsor’s oversight. Sponsors generally perform oversight on a daily basis via meetings with vendors and internal team members as well as tracking activities to make sure it is well documented. The higher the involvement from the sponsor on a given project, the better the chances are of discovering problems with the plan or timeline.

Even with advanced technical know-how, a vendor still needs input and guidance at each step of the process. Thus, it is important that the sponsor focuses on finding the best solution as well as resolving any issues as quickly as possible to keep the program moving in the right direction. Having a sponsor oversight plan will efficiently track these oversight activities. The template for the oversight plan can include information on considerations regarding the level of oversight, which documents need to be prepared, and the reviewing and approval status.

For small pharma, communication is paramount. It is essential that each team member interacts well within the cross-functional teams. This will enable a more robust strategy that involves a better-informed decision-making process to devote sufficient resources in the right direction for the effective management of outsourced activities. Additionally, it’s equally important to occasionally re-evaluate study objectives, and look at where core operational skills should lie to ensure processes are in line, matches the budget, and meet the quality standards within the given timeline.

Gowri Sukumar is an Associate Director, CMC and Regulatory Affairs for ESSA Pharmaceuticals. 




About the Author

Gowri Sukumar | Associate Director