Magazine Article | October 12, 2011

How CMOs Can Withstand The Test Of Time

Source: Life Science Leader

By Sanjeev Redkar, Ph. D.

I am simply amazed at the durability of some of the Big Pharma companies. This handful of elite companies — Merck, Bayer, Pfizer, Lilly, Johnson & Johnson, Bristol Myers Squibb, GSK — have shown that they can stand the test of time by surviving and growing over 100 years. What is it these companies have that make them successful decade after decade? In the book Built To Last, Jerry Porras and Jim Collins describe the qualities that such companies possess. It is hard to think of a CMO in the pharmaceutical industry that has shown such remarkable sustainability. To be fair to the CMOs, this model has not been in existence that long, but in my 20+ years in this field, I have seen several contract organizations being built, grown, and eventually folded. So, what is it that makes some CMOs succeed whereas others are hard to grow. I will share with you the perspective of someone in a midsize biotech firm utilizing a virtual model that employed the services of a wide variety of contract organizations — formulation platform CROs, API manufacturing CMOs, oral and parenteral drug product CMOs, preclinical services providers, commercial distributors, etc. Over the years, I started seeing common themes among CMOs that were poised for growth and ended up with consistently satisfied customers.

Strong Leaders and Open Communication
As a small biotech using the virtual model, I rely heavily on our collaborating CMO for all the internal commitments I make. There is a lot at stake when we choose and start work at a CMO. There are critical timelines and deadlines to be met, without, of course, affecting the quality of the service. All of this boils down to the trust that the two companies develop during the collaboration.

Unexpected events are almost a given in any process development, transfer, or scale-up activity. But, a solution-oriented, open-communication approach seems to be the most likely path toward achieving the project goal. And, in successful CMO partnerships, I have observed there is always a strong leader that influences key decision making at the CMO. Customers do not like to be asked to constantly solve problems or troubleshoot. On the other hand, not being made aware of an issue promptly will most certainly upset even a trusting customer. In such situations, I have seen CMOs with strong leaders handle these relationships very well.

Does CMO Size Matter?
I have heard several large CMOs say that size does not matter. Many large CMOs with multiservice offerings have matrixed organizations with project management as the project leader and may seem convinced that such a structure could handle customer needs very well. After several years of working with CMOs of different sizes, I have come to the conclusion that CMO size may indeed play a role in long-term project success. That does not mean that big is necessarily bad. The elements that are essential to making a project successful need to be empowered to the team. Larger CMOs with multilayered management tend to be less conducive to quick decision making, and sometimes accountability could be lost. This again comes down to that influential leader — or lack thereof — which often impacts the project’s outcome.

Another key point for all CMOs to keep in mind is that companies of varying sizes and varying stages of development have differing needs and tolerances for risk. The CMO that keeps its ears open and gets as much feedback as possible from the customer regarding what is going well and what is not is most likely to tailor the service to the customer’s needs and, eventually, to the customer’s satisfaction. Achieving long-term business growth depends on repeat customers and word-of-mouth advertising and references. Thus, it’s even more important to implement a structure that enables success time after time and project after project. Doing so, though, is more daunting these days with several companies operating with a global footprint.

Running a CMO can be a tough business due to lower margins and high competition. But, with the contraction of R&D and manufacturing in Big Pharma and the constant sprouting of new biotechs utilizing the virtual model, I am certain after a few decades we will see CMO companies that have the qualities (and show sustainability) demonstrated by some of the companies that are built to last.

Dr. Sanjeev Redkar is the VP of pharmaceutical development and manufacturing at Astex Pharmaceutical Inc. (previously SuperGen Inc.). He has more than 20 years’ experience, and his expertise is in formulation, process development, scale-up, manufacturing, and global supply chain management.