Are your business partners happy with your performance?

In our globalized economy, pharmaceutical companies commonly outsource the production of drugs to countries with lower manufacturing and labor costs.  Some “virtual” pharmaceutical companies rely entirely on overseas manufacturers to supply them with raw materials and finished products while focusing their efforts solely on marketing and distribution.  This supplier-distributor relationship requires executives and managers who speak different languages, live in different time zones, and come from different cultures to interact regularly to provide life-saving medications and products to patients.  These complex business interactions are vitally important to the profitability of both the supplier and the distributor.  In fact, the term “partnership” is a much more appropriate descriptor because of the depth and significance of such a business relationship.

One major impact of working with an external partner (i.e., outsourcing) is the lack of formal feedback between business partners.  This feedback is commonplace internally at traditional pharmaceutical companies that both manufacture and distribute their own products.  Needless to say, accurate feedback can identify areas where partners may have major issues and ultimately improve the quality of the relationship.  But more often than not, external partners are afraid to voice their concerns because they believe doing so might jeopardize the overall business relationship.

To overcome these concerns, MedSpan Research recently assisted a virtual U.S. pharmaceutical company with an evaluation of its partnerships with its overseas manufacturers.  We employed a proprietary methodology called “Partner Performance Analytics.”  Using a blinded Internet survey bolstered by in-depth telephone interviews, MedSpan asked our client’s overseas partners to evaluate their performance in several key areas, such as business development, product development, and quality assurance.  In addition, we asked our client’s employees to evaluate their own performance, as well as the performance of their overseas partners in the same key areas.

Based on our experience, it is common for virtual drug companies to underestimate the quality of service they provide.  So not surprisingly, we found that our client’s employees tended to rate their own performance lower (i.e., more harshly) than their overseas partners rated our client’s performance.  In other words, our client under-valued the strength of many of its own business processes and relationship management skills.  But there were some areas where our client actually rated its own performance higher than its overseas partners did, effectively over-valuing its own skills and performance.  In addition to these mismatches, we identified specific processes and skills where our client was performing below the competition, and even below their business partners’ minimum acceptable levels of performance.  Prior to this study, such benchmarks had never been discussed, let alone formally stated as a reference point for comparison.

To enhance your relationships with your partners, our recommendations for virtual pharmaceutical companies, or any healthcare manufacturers with extensive external partnerships, include:

• Develop methods to communicate open, unbiased, and constructive feedback.
• Use this feedback to identify strengths and opportunities for improvement.
• Evaluate whether current improvement initiatives are addressing real (and not just perceived) weaknesses.
• Prioritize whether to address performance issues or build upon strengths.
• Adjust internal standards of excellence to exceed business partners’ expectations and outperform competitors.
• Reallocate human and technological resources to improve performance.

Through the study, MedSpan Research was able to help our client elicit open and unbiased feedback from its partners.  This client can now use the customized results to improve each of its partnerships.  For both our client and its overseas partners, the end result will be a better, stronger, and healthier business relationship.

Author: Ken Chiang, M.D.

Editors: Robert Kaminsky, Joseph Robinson, Jamie Notaro

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