Latest update December 9th, 2017 9:12 AM
What You Need to Know Before Picking a Contract Manufacturer
Hint – Relationship, Relationship, Relationship
By Neelima Phadnis
Given the multiple areas of expertise that are needed for creating a finished biopharmaceutical product, today’s virtual manufacturing environment is a team effort. Therefore, just as “location, location, location” is the key to real estate, contract manufacturer organization (CMO) selection is all about “relationship, relationship, relationship.”
Until recently, the accepted model was to evaluate a contract manufacturing organization on five fronts: legal, competence, quality, capacity and cost. Evaluation could be accomplished through a typical 10-step process:
- Making a list
- Screening the list
- Setting up an information matrix
- Shortening the list to 3-5 vendors
- Receiving proposals
- Scoring the proposals
- Performing on-site visits
- Negotiating the contract (two vendors recommended; second as backup)
- Repeating steps 1-8, if necessary, to accommodate new insights
- Initiating Project Management
When the scope and manufacturing steps are simple, this model works well. However, complex production processes, geography and logistics contribute to a supply chain that has many moving parts. The need for nimbleness and just-in-time operations of suppliers further complicates planning efforts. Additionally, virtual pharma organizations looking for CMOs are vastly different in their composition and global bidders have opened up possibilities that did not exist earlier. In order to leverage these supply chain options, and contribute to the bottom line, a few additional items should be considered for assessment, preferably early in the evaluation phase – for example a CMO’s commitment, support continuity, deliverability, communication, cash resources and a cultural fit with the client organization.
In preparation for future manufacturing activities, another item to keep in mind is the inherent difference in the nature of R&D and manufacturing units. The need 
to innovate, maintain flexibility and be creative in real time define the R&D mindset to be that of a hunter-gatherer, while the steady and repetitive process oriented manufacturing activities show a proclivity for a farmer mindset. During the transition of a product from R&D to manufacturing, the interface between the two needs to accommodate this mindset change. In preparation for this crossover, it is useful to review any special requirements for a production process and determine if they can be eliminated or simplified. Depending on the expertise and experience of both the CMO and the client organization, a lot of questions may get asked, specifications agreed upon and deliverables defined.
A client’s clarity of goals, objectives and roles set the stage for long term interactions with the CMO. The client’s ability to share their vision with the CMO will enable the CMO to support client needs without further interpretation. Vision sharing also ensures that the CMO is aligned for adjustments to the schedule or processes necessary for special product requirements. Immediately after the two organizations agree to work together, it is wise to invest in technical due diligence activities and realistically evaluate the steps and cost necessary for building a robust production process.
In order for the CMO to perform as an extension of the client organization, it is a good idea to set up the relationship as a long-term partnership and have an integrated project approach from the start. The partnership must be strategic and can involve a significant amount of resource investment upfront, but it will pay off in the longer term. Client organizations benefit from bringing CMO representatives into the discussion at an early stage. By setting up the infrastructure whereby the team members feel empowered, the time-cost-quality triumvirate can be managed effectively so that risk is minimized. This is largely due to being able to undertake in-depth pre-planning exercises, establish budgets etc ahead of time – all key stakeholders are then able to work within an agreed to framework.
By integrating the CMO’s input into the earliest planning, companies have the opportunity to assess their combined strengths, seek assistance for other sources to address any weaknesses and analyze their costs closely, so that potential surprises are mitigated. Delivering a manufacturing project on-time and within budget is just one form of partnering synergy. While limited “hand holding” is warranted in isolated instances, a team based approach allows the CMO to operate independently and ask for guidance from the client, only when the situation is outside previously agreed parameters.
Keep in mind that even with the best planning, a good team anticipates the unexpected and needs to be flexible. This flexibility of course, must be in the context of a quality system. In regulated industries, the quality system may dictate having an upfront mutual agreement on level of CMO process changes needing client input and buy-in.
To capture agreements between the two organizations effectively, dividing contract activities into three strategic documents is recommended: (1) the master service agreement, (2) the quality agreement, and (3) the project agreement. Splitting the contractual agreements in this manner enables defining lines of responsibility early on without waiting for a manufacturing project to begin.
Neelima Phadnis, Ph.D., is CMC Director at Xeris Pharmaceuticals and is based in Austin. Xeris is a specialty biopharmaceutical company developing therapeutics for multiple indications including diabetes. www.xerispharma.com
