Tuesday, May 26, 2009

Pick a Partner

Pick a Partner, Not Just a CMO

For a good relationship, clearly define your criteria

Not so long ago, the choice of a contract manufacturing organization (CMO) was based on fairly straightforward criteria. Did the CMO have relevant experience and an excellent regulatory track record? Were personnel qualified and knowledgeable? Was equipment up to date?

Now, the assessment process is no longer limited to finding a contract organization that has capacity. It's about finding a long-term partner that can add value and support to enhance the life of a molecule.

The rapid growth of the biopharmaceutical industry-biologic drugs currently comprise 50% to 70% of the drug pipeline-is affecting the industry's approach to supply chain management and strategic partnerships. 1 Although biopharmaceuticals offer the potential for lifesaving and life-improving therapies, the discovery and development of these complex molecules is a time-consuming and resource-draining effort. In order to devote limited resources to discovery and development, pharmaceutical companies rely on their supply chains to help them deal successfully with specialized therapeutics, smaller therapeutic indications, pricing pressures, and the likelihood of generic competition.

For many companies, given the complexity of some molecules, the high purity and quality standards required, and the significant capital investment needed to construct and maintain an aseptic formulation, fill, and finish operation, outsourcing biopharmaceutical manufacturing is a logical route.

With this in mind, CMOs have expanded operations and capacity for biopharmaceutical and other parenteral manufacturing, giving pharmaceutical companies a wider range of choices than ever before. 2

Virtual biotech companies have long relied on a network of outside suppliers to move their molecules from development through commercialization phases, help assure global regulatory compliance, and enhance the commercial success of their products. Now, pharmaceutical companies of all sizes are adopting a horizontally integrated business strategy, with a network of external partners providing access to the additional technical and scientific knowledge necessary to succeed in a competitive market.


A CMO with global regulatory experience and expertise can ensure that the initial product, its repackaging, or its reformulation reaches the market quickly. Global flexibility can help eliminate the logistic concerns and transferability that might result from moving to a different supplier, while experience with the current good manufacturing practices (cGMP) of multiple regulators around the globe can increase on-time delivery.

Setting the Standards

Clearly laying out the parameters for the relationship between pharmaceutical companies and contract manufacturing organizations (CMOs) will benefit all involved. The CMO and its client company should discuss specific project management standards in order to:

  • decide how intercompany activities will be managed;

  • define normal roles, responsibilities, and points of contact;

  • stipulate critical intercompany processes to ensure that they are followed and that changes are identified, tracked, and approved; and

  • define performance metrics to measure progress and drive continuous improvement.

With the rise in generic competition, shrinking pipelines, and pricing pressures, differentiation through proprietary technologies and life-cycle management is increasingly important. CMOs with technologies that enhance the value of a pharmaceutical company's molecule can accelerate a product's potential for growth.

Strategic outsourcing allows pharmaceutical companies to allocate internal resources to other projects, while leveraging the CMO's specific talent and expertise in other areas. A quality CMO with superior life-cycle management capabilities should have the expertise and ability to enhance the value of a molecule using reformulation or enhanced packaging.

The CMO's scientific and technical expertise and its intellectual property, including enhanced packaging to improve delivery or ease of administration, can also be a major asset to the pharmaceutical company. For example, a CMO with these capabilities should be able to help move a commercially available molecule from a vial or ampule to a pre-filled syringe or pre-mix bag.


Finding a reputable CMO with industry expertise can sometimes be a challenge. It's important to consider a company's track record, its history of innovation, and its financial stability in evaluating the risks that may be involved in outsourcing with a potential partner. The CMO's ability to attract top talent and its investment in improvement processes are also important elements.

Additional criteria to evaluate include the CMO's employee engagement and its enthusiasm for the work that is being done. How are the CMO's employees inspired? Do you get a sense of the organization's passion? Does it have established values? By visiting the facility and getting to know its associates early in the process, pharmaceutical companies can determine how each employee participates in the overall development and delivery of the drug.

For their part, pharmaceutical companies can enhance employee engagement and knowledge by sharing their product and disease state information with the employees who will be responsible for production once a partnership is formed. By turning passion into action, showing that they truly understand the molecule and feel the sense of urgency involved in crafting a product that is potentially life-saving, CMO employees can nurture a trusting relationship with their partners.


Measuring satisfaction throughout the process is another key criterion in outsourcing. A potential CMO partner must show that it is a service-focused organization that can bridge cultural differences within its own organization and with its customers; at the same time, the CMO must demonstrate how those relationships will be managed in the early stages of the partnership. Long-term strategic relationships are built upon a CMO's ability to listen to its customers through regular, candid reviews of progress and through assessments of operating improvement opportunities.

A CMO's processes for both internal and external communication, its experience with the specific production capabilities, and its responsiveness to client needs should be reviewed. To ensure trust and alignment in the early stages of the partnership, this crucial step should be established well before an agreement is inked. A pharmaceutical company should expect the CMO to offer a highly structured approach to the relationship between customer and CMO (see "Setting the Standards," p. 32).

A quality CMO with superior life-cycle management capabilities should have the expertise and ability to enhance the value of a molecule using reformulation or enhanced packaging.


A written agreement between the CMO and the company should ensure a mutual understanding of how issues will be resolved, how materials will be moved, and how procedures will be handled. To further develop the pharmaceutical company's knowledge, the CMO should review all internal processes, documenting how every step in the process-from project approval to development and commercialization to annual reporting-will be handled. To be effective, proposed operating processes should be robust enough to handle any complication along the way.

A CMO's project plan could be expanded to describe in detail how the two companies will work together on a day-to-day basis. For example, the CMO and pharmaceutical company could agree in advance on how often to hold meetings, who will attend them, and who among the meeting attendees will be the ultimate decision makers.

Building partnerships with CMOs helps to form lean and flexible pharmaceutical companies with products that are introduced to the market quickly, succeed on a global scale, and maintain a competitive advantage throughout the commercial life cycle. But to do this, companies must find a CMO whose employees will handle a partner's molecule as if it were their own. �

Eyre is general manager at Baxter BioPharma Solutions.


1. Annual Survey. Pharmaceutical Research and Manufacturers of America; 2005.

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