Vested Outsourcing

Vested^® is a business model, methodology, mind-set and movement for creating highly collaborative business relationships that enable true win-win relationships in which both parties are equally committed to each other’s success.¹

At Tepnel we have recognised that a Vested approach to pharmaceutical outsourcing can create a true win-win relationship which ultimately benefits all parties.

We recognise that outsourcing should be a continuum rather than a destination therefore as Vested Outsourcing practitioners we look to innovate and develop a different way of working with our partners in supporting the delivery of their desired outcomes.

The way in which pharmaceuticals and therapeutic agents are being researched, developed and delivered to patients has changed significantly in the last 10 years. New models of working with partner organisations to achieve the vision and outcomes of precision medicines and value added healthcare have necessitated this change. Whilst the framework within which the relationship works is well established from a regulatory standpoint, the commercial mechanisms for creating and managing the outsourcing paradigm has moved on significantly to the point that the sector requires the next evolution in how these relationships are governed and executed.

At its most basic level outsourcing is conducted using a pure transactional model. Through the adoption of this model services are purchased and paid for relational to the requested task and the associated activity. Transactional business models have been in existence for centuries, the idea of paying someone to do something is not new. However difficulties start to arise when the complexity, variability and the mutual dependency also starts to increase as a part of the transaction.

Transactional outsourcing is by its very nature an at arm’s length arrangement. Contract givers who adopt this model does not normally wish to engage in a dialogue or contribute any resource, time or effort in achieving the required output. There are a number of reasons behind this route as presented in the table below, but in essence it all comes down to a decision as to whether a company wants to spend the time/effort to “make” themselves or buy it in.

In the 1960s Rolls Royce, the premium British motor car manufacturer of the time, adopted an outsourcing model across all of its businesses. It was based on the concept of performance based logistics and was specifically designed to facilitate outcomes over transactions and performance measures. The basic premise of the model is simple, contract givers pay for or buy the results/outcomes from the service they procure or use e.g., the value that is created.

The partners, in the case of traditional pharmaceutical outsourcing, the contract giver and the contract acceptor, agree a defined set of business or desired outcomes. The business transaction is in the achieving of the end result and not the myriad of transactions or performance indicators that are involved in the achievement of that result. Achievement of the result leads to reward, the parties agree their desired outcomes and then work together, in partnership and through innovation to achieve those outcomes.

Vested Outsourcing is the outcome of research undertaken by the University of Tennessee. They did not “invent” Vested but rather studied some of the most progressive outsourcing relationships and codified their findings into a set of rules which when applied and adhered to have the ability to transform how outsourcing both works and is managed (Find out more).

Click here to read the white paper by Dr Vikki Renwick, which provides a review of outsourcing business models in the CRO space.

[1] Source: Used with permission. Vested^® www.vestedway.com. Vested Outsourcing, Inc.