Overview
Supporting a leading biotech organisation during a negotiation with an established preferred provider for long term success.
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The Problem
- The client, a rapidly expanding biotech company with a significant portfolio of ongoing and planned clinical trials were working with several preferred major CRO partners, but no standard commercial packages were agreed.
- The spend with one CRO was already high but, with projected new studies due to start, the spend was predicted to grow significantly up to $20-30M per year.
- Variation in rates and commercial terms across ongoing studies made planning, budgeting and contract management difficult and inefficient for both parties, which led to increased effort required to review, agree, execute and change work orders, resulting in delays or unfavourable contractual agreements.
The Solution
- The solution our team provided was focused on achieving maximum long- term savings for the client, based on the projected scope of work.
- The 4C team performed a thorough analysis of the proposals by the CRO, comparing them against historic agreements and market benchmarks.
- Our analysis showed us that less than 80% of the overall costs were attributable to 12 pivotal roles, which led to a negotiation strategy being developed to maximise the rate reductions for these roles.
- Additional bottom-line and volume-based discounts and risk-share percentages were assessed to confirm maximum benefits at projected spend levels.
- A negotiation plan was prepared for the client with identified targets and fall-back positions.
- 4C led the negotiation team and conducted live discussions with the CRO to come to the final agreement.
The Impact
- A commercial package valid for three years was agreed between the parties, including a 20% bottom-line discount for main CRO activities.
- Hourly rate savings across all 12 key categories were identified, providing indicative savings of ~4% ($1M) against one of their ongoing studies.
- Additional volume-based discounts were introduced from 1-5%.
- Risk sharing elements were fixed at 10%. and inflation rises to resource rates were frozen for three years, providing more stability for the business and enabling focus on patient wellbeing.