Devising an International Clinical Trial Distribution Strategy: Genentech's Approach - A decision-criteria matrix and cost models helped pinpoint the best distribution approach for the short- and long

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Devising an International Clinical Trial Distribution Strategy: Genentech's Approach
A decision-criteria matrix and cost models helped pinpoint the best distribution approach for the short- and long-term.


BioPharm International Supplements


Developing the Strategy: Selection Criteria and Key Considerations

The distribution business models were evaluated based on five criteria: strategy, implementation, operation, regulatory and quality, and finance. For each criterion, key design considerations were examined. The evaluation questions for the criteria were as follows:

  • Strategy: How does each business model fit the organization's overall strategy, capabilities building, and scalability? Can the model support the creation of networks and relationships with investigators and key opinion leaders? Can potential synergies be leveraged with the organization's commercial distribution network?
  • Implementation: What efforts and risks are associated with creating, managing, and decommissioning elements of the network for each model? What is the organization's expertise and resource availability in executing each model?
  • Operation: What is each model's predicted performance for network utilization, speed-of-supply and re-supply to regions, and network flexibility?
  • Regulatory and quality: What are each model's implications for quality, release times, potential challenges with registration, approvals, import or export, and legal requirements?
  • Finance: What are each model's implementation costs, headcount costs, required up-front investments, and infrastructure costs?


Figure 1. The decision criteria matrix used to select a clinical trials distribution strategy
A decision-criteria matrix (Figure 1) enabled Genentech to compare the business models. During the qualitative analysis, the company eliminated the co-develop and acquire models based on the first four criteria. Hence, it reduced the number of business models on which it needed to perform a financial assessment.

Costing Model Assumptions

Genentech created a costing model based on forecast shipments of kits for each of three global sectors—Europe, Latin America, and Asia. The company did not attempt to create costing models that were combinations of the business models against the regions. The cost modeling effort was used to find the cost boundaries for each "pure" strategy. The determination of cost boundaries provided approximate cost flexibility in pursuing a single business model, or a hybrid of business models, across the following regions: Latin America, Europe (including Russia), Asia (including the Pacific Rim), and Africa.

The build model considered the following for the four regions: start-up costs (recruiting, travel), operating costs (rent, equipment, information technology), variable costs (packaging materials, shipping), and product disposal. In addition, Genentech assumed that certain elements of its existing commercial operations in the Asia-Pacific region could be leveraged, resulting in no recruiting costs, no incremental rent or IT costs, and shared labor costs among clinical and commercial interests.

The outsourcing model was based on having Genentech's internal cost-for-resources organization provide outsourcing oversight, and on variable shipment rates (including shipping, import, and packaging) to the countries of the five regions.

The direct-ship model was based on the variable cost of shipment rates including shipping, import, and packaging to the countries of the five regions. In addition, it included labor costs and expenses of the central distribution center where material would originate for direct ship.


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