There have been continual challenges associated with implementing a new and innovative approach, particularly with this preferred
provider arrangement. Endo is a young, high-growth company. At least 40% of its employees have been at the company for fewer
than three years. Many of them come fresh from a traditional environment where the CRO is treated as a supplier, not embraced
as a partner. A change of perspective is ongoing in which Endo managers are retrained to hand off responsibility to the CRO
so it can use its experience and best practices, rather than dictate to the CRO exactly how the clinical trial is to be conducted.
This also requires a change in perspective on the CRO's side, so that it stands firm on its charge of steering the direction
of the project, and insists, like a partner but unlike a supplier, that it knows what needs to be done and will implement
its own industry-leading processes. Finally, a built-in small–versus–large organization culture clash exists that must be
overcome. Endo is a small company, focused on a limited number of projects, while most CROs are large organizations with a
pool of talented project managers that to some degree will be constantly circulating in and out of the projects to implement
the clinical activities. These and other challenges may be quite difficult in the short run, but Endo sees it as an opportunity
to build trust, and learn a lot about new models of partnership in the long run.
An Enduring Model?
Re-engineering the virtual outsourcing model has radically transformed Endo's product pipeline in less than 10 years, and
produced a fifteen-fold increase in market value for the company since 1997. Numbers like these are the result of senior management
sticking to its fundamental realization that no single firm has the resources to do everything. Endo's extreme version of
semi-virtual partnering is catching its share of attention too. At the beginning of 2007, the company was recognized with
an Honorable Mention award by the Association of Strategic Alliance Professionals (ASAP) Corporate Alliance Excellence Awards.
Endo was cited for its role in changing the traditional model of the biopharm industry to one that is heavily reliant on effective
alliance management practices at all points along the value chain. Perhaps this model shows just how an extreme outsourcing
structure can continue to produce results over the long term. More importantly, it demonstrates that by not taking on layers
of internal infrastructure, a company can maintain flexibility and ability to rapidly scale up and down to adapt to a changing
scientific and commercial environment.
Harry Atkins is senior director of alliance management at Endo Pharmaceuticals, Inc., Chadds Ford, PA, 610.558.9800, Atkins.Harry@endo.com