Outsourcing CRO Services to China

The staffing challenge

D Thomas Oakley,  President and CEO, Bridge Laboratories, USA

The ability to utilise Asia-based CRO capabilities can make it easier and more cost-effective for pharmaceutical and biotech companies to develop and market new products for the burgeoning pharmaceutical market in Asia.

The business benefits of outsourcing Contract Research Organisation (CRO) services to China are compelling in today’s pharmaceutical marketplace and global economy. Labour rates in China are much lower than in the West, and additionally, China offers a large pool of highly educated research talent that can be readily tapped to staff projects carried out in China. Also, the ability to utilise Asia-based CRO capabilities can make it easier and more cost-effective for pharmaceutical and biotech companies to develop and market new products for the burgeoning pharmaceutical market in Asia.

Experience has shown, however, that a number of staffing challenges must first be overcome in order to cost-effectively deliver Asia-based toxicology studies that meet Western standards. These challenges can be grouped into five areas: recruiting, education and experience, language and culture, training, and retention. An overview and examination of each of these challenges is discussed here. The business benefits of outsourcing Contract Research Organisation (CRO) services to China are compelling in today’s pharmaceutical marketplace and global economy. Labour rates in China are much lower than in the West, a major incentive to outsourcing. Organisations whose research projects rely on non-human primates can procure the animals more economically in China, and because of the ready access to the animals, studies can be initiated in a timely manner. China offers a huge pool of highly educated research talent that can be readily tapped to staff projects carried out in China. In addition, the ability to utilise Asia-based CRO capabilities can make it easier and more cost-effective for pharmaceutical and biotech companies to develop and market new products for the burgeoning pharmaceutical market in Asia.

There is a great pharmaceutical research opportunity in Asia. Experience has shown, however, that a number of staffing challenges must first be overcome in order to cost-effectively deliver Asia-based toxicology studies that meet Western standards. These challenges can be grouped into five areas: recruiting, education and experience, language and culture, training, and retention.

Recruiting

The key to find and recruit the right talent in China—as is the case in the United States or anywhere else—is to know where to look, whom to talk to, and how to make the right compromises.

Specific disciplines also pose recruiting challenges of their own. For example, there is no board certification of Veterinary Pathologists in China at present, and board-certified pathologists continue to be in short supply in the West. Study Directors and experienced scientists with the required skills and desire to manage are tough to find anywhere and more so in China. The best option would be to identify Chinese scientists with Western work experience who wish to return to China. Alternatively, expatriates can be recruited, but that could prove to be a major cost factor. In either case, these new employees often lack specific knowledge of the local resources that they must utilise to be effective on the job, thereby requiring more time to become acclimatised to the new environment.

It is essential to strike the most cost-effective and productive balance possible between expatriates and employees recruited from the local job market. Even though there is no shortage of highly-trained scientists in China, the lack of hands-on drug development experience drives a requirement to have excellent on-the-job training. A key responsibility of the expatriates and / or returnees is to mentor these scientists to build their expertise in study direction and customer interaction. Care must be taken in recruiting expatriates to achieve the greatest cost and quality benefits. In addition, every effort must be made to create healthy relationships and handle rivalries between expatriate and local employees; the pay and responsibility differentials can become problematic if not managed effectively. With appropriate management, however, the mix of expatriates and local employees can be optimised to effectively meet the needs of the organisation.

Education and experience

China produces 3.5 million college graduates and 32,000 doctoral graduates in science and engineering each year, with the total number of science and engineering doctorates in China expected to rise to 1 million by 2015 (versus a total of 600,000 in the US).

The availability of such large numbers of highly-educated talent in China is a major advantage for CRO vendors and clients looking to outsource their studies to China. However, this workforce is largely inexperienced, leaving most organisations no choice but to “grow their own” by making significant investments in training.

It is important to note that training investments in the Chinese workforce are well advised and can reap major benefits. This labour pool has proven to be highly trainable—bright, motivated, willing to learn, quick to understand and perform, and always ready to give their best effort.

In addition to training recruits from the local workforce, there is also an abundant supply of foreign-trained ethnic Chinese professionals motivated to “come home”, that can be tapped to meet specific staffing requirements.

Language and culture

The pool of English-proficient Chinese scientists and technicians is not large, and the shortage is likely to continue for the foreseeable future. This is a challenge that must be overcome, since excellent command of English is required for global submissions.

In the meantime, the language gap can be bridged by minimising the amount of information lost in translation. Direct instructions work best, and the use of indefinite statements (e.g. may, should, could) and Western slang should be avoided. In other words, English-speaking employees should explain clearly and not leave a lot of room for interpretation. Western managers who like to use Western slang are often met with blank stares at all-hands meetings—minimising the impact of the concepts they were so eloquently trying to explain! It’s equally important to minimise the need for translators in meetings, so the staff does not develop a dependency.
Cultural differences are much more pervasive. It has been observed that Chinese employees generally are more hesitant to challenge authority, show a lack of knowledge, ask questions or admit errors than their Western counterparts. They also demonstrate a preference for acting based on consensus, rather than on individual initiative, and they generally eschew direct confrontation. There are exceptions, of course, but these behavioural patterns have been well documented.

Western business expectations are also very different from those encountered in China. Western management is based on meritocracy, not autocracy or democracy. They value individual performance over that of the group, and reward performance with differential pay that inevitably raises fairness issues (equitable vs. equal compensation) in the minds of Chinese employees.

All of these differences in language and culture can directly impact the quality of CRO services delivered in China. In the Good Laboratory Practice (GLP) world, little things do matter a lot. Plus, GLP are concepts and principles, not just written regulations. Management must, therefore, be on constant watch for subtle differences in interpretation that may arise due to language considerations. It must also work hard to ensure that all errors are recorded by every employee—fostering the corporate philosophy that mistakes are natural and there is nothing to hide (obviously, while endeavouring to keep errors to a minimum), and pursuing a policy of correction and prevention (vs. punishment).

The best defense against the effects of these language and cultural differences is Standard Operating Procedures (SOPs) of the highest possible quality. SOPs must be written in a way that is absolutely clear and unambiguous. What’s more, all employees must be told to strictly adhere to the company’s SOPs in all respects and should receive regular training on them.

Training

The need for a significant investment in training Chinese employees has already been mentioned. But in many ways the list of training requirements is the same as that for any GLP toxicology business anywhere in the world. It includes training in the following areas:

• English conversation and writing
• GLP regulations and procedures
• SOPs
• Technical operations
• Certified animal treatment by local government
• Validation policies and procedures
• Equipment operation and maintenance
• Safety – biosafety, radiation, chemical, non-human primate (NHP) behaviour and work safety
• Study Director practices and procedures
• Continuing education programmes
• Finance and legal issues
• Business policies and practices

In the case of Chinese employees, however, English language training programmes should receive the highest priority and be conducted on an ongoing basis.

Retention

Once employees have been thoroughly trained, they become a valuable and much sought-after resource both inside and outside the organisation. The competition for good employees is significant and growing, with both clients and competitors increasingly recruiting from within the organisation’s ranks to meet their own staffing demands.

In this competitive environment, managing the employee’s expectations is a key to retention. Management must paint a clear picture of duties and expectations at hiring, emphasise the importance of career over job, and be careful to create realistic career expectations for each employee. Compensation is important, but recognition is the key to career growth and employee satisfaction.
Management should resist the tendency to hire overqualified people; advanced degrees are probably not required for some jobs. At the same time, companies should also avoid over-reliance on a few key people, as job burnout is real and always presents danger.

Key to Success

Workers in China have a strong work ethic and are eager to learn. The potential is great—especially when training programmes in key areas like English language, GLP and animal care are conducted continuously throughout the organisation. Business success is dependent upon mutual appreciation of cultural differences and patience, on the part of both western managers and local employees, in negotiating those differences.

Finally, CRO management must monitor all aspects of compliance closely on a day-to-day basis. It should hire appropriately and work hard to manage employee expectations. And above all, it must make constant and consistent communication with employees its top priority. By focussing on clear, open and honest communication, management can greatly enhance the chances of business success and build great relationships with their employees.

Author Bio

D Thomas Oakley

Thomas Oakley is President and CEO of Bridge Laboratories and has over 25 years of leadership experience in major contract research organisations, industrial products and consumer products businesses. Oakley received his MBA from the J L Kellogg Graduate School of Management, Northwestern University.

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