Originally Published IVD Technology January/February 2005
Diagnostic Outsourcing
Immunoassay development partnerships
Mutual market benefits can make these business relationships between equals
seem like marriages made in heaven.
Katherine M. Horsfall
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The medical diagnostics industry today faces numerous economic and technical challenges. From regulatory requirements to price pressures, these challenges are changing the way IVD companies bring new products, such as laboratory tests, to market. Now, more than ever, IVD companies must find faster, high-quality, cost-effective ways to provide a broad menu of diagnostic tests.
One common way to add menu quickly is through codevelopment agreements with other companies. Companies with niche products can gain a wider market presence by partnering with a large company that already has a worldwide commercial distribution network. And larger companies can gain efficiency and access intellectual property position by leveraging the entrepreneurial agility of smaller companies.
Codevelopment partnerships come in many shapes and sizes. This article describes the approach taken by the Immunodiagnostics Business Center of Beckman Coulter’s clinical diagnostics division (Fullerton, CA). As part of its menu expansion strategy for the Access family of immunoassay systems, Beckman Coulter has chosen to partner with key external companies to provide a broader disease-focused diagnostic menu.
Where some OEM arrangements fail, Beckman Coulter’s partnerships have been successful. One reason: the company enters into its partnerships with an understanding of coinvestment and joint reward—and a great deal of planning.
Partners Rather Than Suppliers
Many companies, including Beckman Coulter, employ numerous types of partnership and supplier agreements. Traditional OEM and contract development and manufacturing agreements are, typically, highly contractualized. Every contingency is described at length, and the tone is often more formal than collaborative. However, in its development partnership approach, Beckman Coulter takes a different path by considering the partnership a collaborative relationship rather than a traditional supplier contract. The end goal is for both partners to share in the responsibility of development, and share in the results and rewards. But like any successful business partnership, these partnerships require high levels of diligence, compromise, and collaboration.
Mutual respect is of the utmost importance. Going into the partnership, it is important to understand that there is no one-size-fits-all formula for success. Each relationship requires customization to leverage the strengths of both partners, while identifying and minimizing the weaknesses of each. The ultimate goal is to design a partnership that is mutually satisfying and profitable.
To help identify and develop partnerships, the Immunodiagnostics Business Center established a market development team that identifies and evaluates promising new disease-focused analytes and recommends potential development partners. In addition, the business center created a new business development function to develop and manage selected partnerships. The creation of these two groups allows Beckman Coulter to sharpen the collaboration skills of its staff members and bring more focus to this critical activity.
What does this type of working business partnership look like? The remainder of this article examines the elements of a typical relationship life cycle and describes the specific partnership development between Beckman Coulter and two other companies.
Finding a Good Fit
Within the Immunodiagnostics Business Center, the market development group reviews scientific literature, identifies promising specific analytes, and attends scientific meetings, with a goal to find companies with a targeted disease-focused suite of assays or a company with key intellectual property. For example, Beckman Coulter entered into a partnership agreement with R&D Systems (Minneapolis) to benefit from that company’s expertise in esoteric and cytokine assays. Another agreement, with Hycor Biomedical Inc., a Stratagene company (Garden Grove, CA), provides added expertise in autoimmune diseases. Both of these partnerships are viewed as long-term relationships, encompassing multiple development and manufacturing projects, rather than single-project events.
Collaboration Begins
During the early phase of a partnership, standard due diligence activities take place. The proposed partnership must fit the needs of both companies’ business strategies. Because each company has a different quality system, development philosophy, and style, the fundamental question that must be answered is whether they can really work together.
From this point, the parties craft a framework for the potential relationship. Key factors are defined and questions formulated and answered. Roles and responsibilities are further defined, as is the interface between the companies. For example: Is the partnership to be development only? Will it include manufacturing? If so, to what level?
By partnering with Beckman Coulter, R&D Systems seeks to expand its research-use-only (RUO) products into IVD markets. Beckman Coulter provides the instrument platforms and commercialization, while R&D Systems brings the analyte know-how and critical biologicals. By leveraging its expertise in cytokines with Beckman Coulter’s technology platform, R&D Systems gains access to worldwide IVD markets it otherwise may not be able to serve.
For its part, Hycor Biomedical is using the partnership to leverage both its development expertise and manufacturing facilities in Edinburgh, Scotland, and to expand its presence in the automated autoimmune testing market. With both partnerships, Beckman Coulter benefits by rapidly expanding its menu of product offerings.
Taking the Next Step
Once both companies agree upon the framework of the partnership, corporate legal groups become involved, and the framework is translated into contractual language. In this partnership style of arrangement, Beckman Coulter continues to keep the contract high level, rather than overly formal and detailed. Transition to this collaborative partnership style was designed and supported by the business center management, and includes formalization of the dedicated market and business development functions to ensure a clear focus on codevelopment partnerships. Constant and focused emphasis on the importance of these partnerships, and enlistment of the support of the manufacturing, quality, and regulatory functional groups have resulted in increased awareness and support throughout the organization.
As the partnership is further defined, the two companies discuss the number and types of products, manufacturing responsibilities, and the contract duration. The responsibility and authority for managing day-to-day details of the relationship is assigned to prospective program managers, one at each company. The program managers get to know each other’s company and culture. While this phase of relationship building can vary in length, several months may be required to prepare for successful implementation.
Down to Work
Once the contracts are in place, the program managers can get to work. Selecting the right person to be program manager at each company is key to a successful partnership, as they will set the tone for the entire collaboration. Their essential competencies are collaboration proficiency, business and financial expertise, analytical skills, negotiating talent, and excellent communication skills.
The program managers must be able to manage the details of the development projects and the multifunctional cross-company project teams. They also must be able to step back to analyze and manage the ongoing, higher-level interactions of the partnership. They must take into account the impact certain decisions will have on both partners, and both parties must feel that they are being treated fairly. This diligent focus on the overall relationship, with the goal of running the project as if the partners were indeed one business entity, fosters a win-win environment and a feeling of shared responsibility and success.
Capturing the Enthusiasm
The beginning of a new partnership is typically an exciting time, and it is critical to leverage this initial enthusiasm while energy is high. Beckman Coulter begins the training process as quickly as possible after signing any partnership agreement.
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| Figure 1. Outsourcing partners are given training and tools to develop on the entire family of Access immunoassay systems, including the recently released Unicel DxI 800. |
Using staff from several technical areas, the business center developed a thorough training course to share tools and techniques required for developing assays on its Access immunoassay family of systems, including the Access immunoassay system, Access 2 immunoassay system, and UniCel DxI 800 Access immunoassay system, as well as the Synchron LXi 725 clinical system (see Figure 1).
Because both R&D Systems and Hycor Biomedical were experienced in immunoassay development, the training focused on the parameters unique to the chemiluminescent technology used by the Access systems, the operation of the instruments, and the tools necessary to program the system variables, such as incubation times and sample/reagent volumes. Ideally, while this training was taking place at the Beckman Coulter facility in Chaska, MN, instruments were being installed at the partner site so that the technical staff could immediately apply what they learned once they returned. Also during the training period, the partner’s scientists shared with Beckman Coulter their molecular and clinical expertise regarding the specific analytes.
Making It Work Long Term
As the initial excitement and training winds down, the program managers ensure that everyday details of the partnership run smoothly. Each party’s development process and quality system are mapped and aligned. Terminology is agreed upon, and a statement of work (SOW) is created and approved by both program managers. This document describes each development phase, defines the key deliverables for entering and exiting each phase, and identifies and fills gaps. The SOW is customized for each partner and for each project.
Again, the program managers assume a high level of responsibility and accountability for the success of the entire relationship. Both must know how and when to compromise in order to create the win-win environment that is so critical to success. Defining and adhering to a decision-making process is essential. To ensure good communication, the program managers lead weekly joint meetings of the project teams, usually via teleconference. Scheduled face-to-face meetings will take place at least twice per year, and usually more frequently in the early phases of the partnership.
Again, the way two partners work together will be unique to that partnership. There is no cookie-cutter approach. The partnership with R&D Systems involved merging an RUO culture with an IVD culture, and these cultures have very different requirements and expectations. The partnership needs to maintain the agility and speed of the RUO culture, while also preserving the compliance aspects of the IVD environment. Beckman Coulter and Hycor Biomedical share an IVD culture, but the program managers must be mindful of logistical challenges presented by the physical distance between the two companies.
In nearly every case, it is critical for the different company cultures to gel. Both partners need to be willing to compromise, and, if necessary, develop new processes for working together. A “my way or no way” attitude on either side is a prescription for failure.
Going to Market
The ultimate goal of developing a partnership, of course, is to get a product to market. However, it is important to note that managing ongoing manufacturing, commercialization, and support requires as much effort as getting the product developed in the first place, and sometimes more. The program managers again play a key role, as they determine the mechanics of the ongoing project maintenance.
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| Table I. Examples of interface documents created for commercialized products. |
Because some specific operational details are not spelled out in the original contract, Beckman Coulter uses partnership interface documents that are developed by the program managers prior to the first product release to define key expectations, interactions, and approval levels (see Table I). These documents incorporate input from multiple functional areas within both companies, including finance, support, manufacturing, purchasing, and planning, and include logistical details customized to suit the partner and the products.
During this time, each company’s manufacturing group must learn to work with the other. In the optimal scenario, the program managers adopt the best practices from each partner, or create entirely new solutions, as necessary. They use the process of appraising and choosing as an opportunity to improve the systems within each organization.
Critical product and partnership metrics can measure the success of the codevelopment partnership. As each product approaches commercialization, the program managers develop formal quality metrics. These quantified goals are routinely monitored and reviewed by the project teams during the initial 12 to 18 months of commercialization. Numerous postrelease quality metrics might be chosen for tracking progress and possible problems (see Table II).
Having objective metrics against which the quality of the product and the development process can be measured allows problems to be identified and addressed at an early stage, and makes it easier to conduct an honest assessment of the strengths and weaknesses of the partnership. It also prevents escalation of problems down the road and reduces the number of recurring mistakes.
Keeping the Partnership Strong
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| Table II. Examples of postrelease quality metrics. |
In large measure, the strength of a long-term partnership will depend on good communication. In fact, ongoing communication between the two organizations becomes one of the most critical factors for avoiding complacency. Regular face-to-face meetings are still required, even long after the initial kickoff.
Sometimes the maturing relationship needs to be reframed. Changes in the market or commercial environment may require updates to the interface documents or to the initial contract. Again, the program managers are responsible for monitoring and managing the evolving relationship.
Closing the Partnership
Beckman Coulter approaches its strategic business partnerships as long-term relationships, with aligned strategies and goals. However, even the best partnerships come to a close once the strategic objectives are achieved.
For the benefit of both companies, it is imperative to define up front, and in very clear terms within the contract, the provisions for closing a relationship. Each Beckman Coulter codevelopment contract includes detailed terms and conditions for termination, requirements for placing key documents in escrow, ongoing rights, and other such matters.
When expectations are clear at the beginning, the entire life of the partnership is stronger, and this paves the way for an ending that is both amicable and smooth.
Costs and Benefits
Beckman Coulter has three major goals in cultivating codevelopment partnerships: expanding menu offerings, reducing development costs, and bringing products to market quickly. To reach these goals, the company complements the research and development investment of its partners by funding activities necessary to support the agreement. These activities can include clinical studies, regulatory agency fees, customer support, and sales and marketing. Meanwhile, the partner may assume increased research and development costs in exchange for a share of the rewards once the product has been commercialized, without the associated costs of platform development, registrations, distribution, and sales.
Because the partnerships are managed through program managers and multifunctional project teams at both sites, deeper relationships are fostered than in a traditional OEM arrangement. Strong communication channels between the interfacing functions make it easier to directly share critical information, and to identify and correct issues before they become barriers.
How big a role will partnerships play in the future? The Immunodiagnostics Business Center anticipates that many of its future new assay introductions may involve an external partner to some degree.
Conclusion
Beckman Coulter has chosen to make codevelopment partnerships a key part of its menu-expansion strategy for marketing the Access family of immunoassay systems. As a result, the company is forging win-win agreements that it believes will sharpen its competitive edge in an ever-more-challenging environment.
Katherine M. Horsfall is manager of business development for the immunodiagnostic & nucleic acid testing division at Beckman Coulter Inc. (Chaska, MN). She can be reached at khorsfall@beckman.com.
Copyright ©2005 IVD Technology
