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U3 Differences in the business models between the client and the supplier are recognised.

“A company’s business model is the means by which it makes a profit – how it addresses its marketplace, the offerings it develops and the business relationships it deploys to do so.”

Pharmaceutical companies (Pharma) and Clinical Research Organisation (CRO) have distinctively different business models. Traditionally Pharma has been in the business of discovering, developing, manufacturing, marketing and selling medicines. In more recent times Pharma has looked to outsource more and more stages of drug development including discovery, development and manufacturing. Most of the big Pharma companies outsource a significant proportion of late phase development (phase I to IV) to CROs. The flow of new drugs is rarely linear, and outsourcing is a more cost-effective way of drug development. The clinical research departments in Pharma companies are much more involved in CRO oversight rather than in the resource-heavy clinical trial operation. CROs on the other hand are selling expertise and hours.

For any outsourced projects the ideal situation would be to align the goals of the Pharma company and the CRO. This is not always easy, seeing that Pharma is interested in the deliverables (e.g., clean data) whereas CRO are interested in activities (e.g., The cost of the hours to produce that clean data).

The next best thing to alignment of goals is an appreciation and accommodation of the differences. Pharma will always be interested in the quality of the data but in a phase III trial the timeline may also be a priority, so it is important that the CRO team has taken this on board. Cash flow might be high priority for the CRO so the prompt payment of invoices would be a positive action as far as the CRO is concerned.

These sorts of accommodations related to the recognition of the differences in business models enhances the relationship by tackling a key relational risk factor i.e., conflict over goals.

Why is it in the Lab?

A clear understanding of the difference between different business models for different organisations in a project enables the alignment or at least the accommodation of goals. The difference in business goals can present as a relational risk with a difference in project goals. Understanding and alignment or accommodation of these difference is an important step in reducing relational risk



“What I love about taking the time to understand your supplier or sponsor is that you can make small changes that can have big effects on relationship e.g., Understanding that cash flow is important to your supplier and paying your invoices in a timely way can be a win-win for everybody. Understanding that the timeline is important to your sponsor and making this a key performance indicator for your team is again a win-win for all concerned.”


“totally agree Roger, too often both sides of the delivery team fail to recognise very simple things about each other which are critical to why people act the way they do.”


“...and I really like the notion of accommodation, it accepts that the Pharma and CRO have fundamentally different business models; yet in a successful project both are accommodated and the holy grail of win-win relationships established.”

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