Wyeth Tears a Page from the Book of DuPont

OUTSOURCING

Pablo Picasso, that great innovator of 20th-century art, summed up his modus operandi thus: "If there is something to steal, I steal it."

Robert Ruffolo, president of R&D at Wyeth, has stolen this idea.

Wyeth recently outsourced clinical data management to the consulting firm Accenture--basically handing over the entire operation with most of its staff--in a move that many in the pharmaceutical industry would characterize as highly risky, inadvisable, and generally unheard-of.

Outside the drug industry, however, Ruffolo knows that the project he calls Alliance for Clinical Excellence (ACE) is no big deal. "We basically stole this idea from finance, airlines, and banking."

And chemicals. Six years ago, for example, DuPont signed a $4 billion outsourcing deal in which it handed over its computers and most of its information technology staff to Accenture and Computer Sciences Corp. The ex-DuPont workers remained in their cubicles and continued working on DuPont's computers as on-site employees of, for the most part, Accenture. A ground-breaking arrangement at the time, such contracts are now common practice in almost every major industry other than pharmaceuticals.

Ruffolo says he met with DuPont executives before signing with Accenture to see how well the outsourcing firm has performed and to determine whether a similar arrangement would work in the management of clinical data. He obviously liked what he saw.

By handing the transactional data management function to a firm that specializes in this kind of work, he says, a drug company like Wyeth can decrease cycle times and drive costs down by hundreds of millions of dollars per year. "Functions taking us over 100 days will get down to about 20 days," he says. "And Accenture is contractually obligated to deliver this performance, or they pay us."

Ruffolo acknowledges that entering such a deal is a leap of faith for a drug company. "We in the industry believe clinical data are special, that they're different," he says. "For us it was a matter of getting over the hurdle and seeing that they are not different. A person who enters and cleans data and tabulates it and puts it back doesn't care if the data are dollars, cents, gallons, blood pressure, or whatever. Data are data. And it's hard for the pharmaceutical industry to deal with that."

Ruffolo would not disclose the value of the deal, cost-savings targets, or performance since the program started last April. But he describes the potential for cost savings.

"It's an expensive process," Ruffolo says. For Wyeth, a big project costs multiple tens of dollars per page on up to 2 million pages. "We are driving costs down because of Accenture's ability to deal with transactional functions, which is not something the pharmaceutical industry is really good at."

Of Wyeth's one-time staff of 300 in clinical data management, about half now work for Accenture at Wyeth's Collegeville, Pa., campus. The other positions were eliminated.

David Boath, head of Accenture's pharma practice, sees Wyeth as further along on a path most big drug companies are entering. He says the pharmaceutical companies went through much of the 1990s with seemingly unlimited funding for their pipelines while companies in other industries were forced to pioneer cost-saving strategies. Practices such as outsourcing data management are now being adopted by drugmakers as funding gets tighter.

With some process redesign, these strategies fit well, Boath says. "If you establish a pure operational center, separate from the science, you can bring in purely operational disciplines," he says. For example, the "zero defects" manufacturing discipline developed for manufacturing by Japanese companies decades ago has successfully been applied to transactional data management in banking worldwide, he says, and it will work in clinical data management as well.

There is, however, still a lot of resistance at drug companies, according to Boath. "Some pharma companies still think you need to have a lot of therapeutic expertise when looking at these data," he says.

Indeed, although some drug companies are cognizant of the lead that other business sectors have on operations management, most are taking smaller steps than Wyeth. Jonathan Knowles, president of global research at Roche, for example, says Roche has its eye out but is skeptical of deals like Wyeth's. "We're looking hard at how other industries manage. But the number of parameters for evaluating data is much larger in our industry than in others," he says. "It is complicated by the uncertainty of science."

He adds that outsourcing is often an irrevocable step. The drug company in any deal needs to retain control of the design and integration of data, he says. And relationships with service providers are also uniquely complex for a drug company. "It's harder to work with outside partners," he says. "You need to explain discovery to them, and discovery changes."