Working With A CMO Is Like A Marriage: Sometimes It Ends In Divorce
By Peter H. Calcott Ph.D.
Like marriage, a relationship with a CMO proceeds along a path including a dating phase, an engagement phase, and a marriage phase. But unlike a marriage where there are vows of "till death us do part," relationships with CMOs are destined to finish, which is a divorce phase. How it finishes, though, depends on how you approach the relationship.
The planned divorce
When a relationship is set up with a CMO both parties enter into a business relationship to supply materials for a defined period of time with defined communications for production planning and scheduling. However, it should be recognized by both parties that this will not continue ad infinitum. At some point, the sponsor may build a new plant to meet its needs once funding is available. Or, the capability of the CMO will be surpassed, and there is no desire on both parties to invest in new infrastructure.
In some cases, this relationship may actually continue when the CMO invests in infrastructure to expand capacity to meet the sponsor's desires. I have been in this last situation where the CMO expressed interest in investing in new capacity to not only meet the needs of the client, but, with their added stature as a CMO of choice, for other clients, too. For this to be successful requires a superior relationship between both parties that is exemplified by open, effective, and honest communication. But, that is not a divorce just yet.
Once there is a decision to "divorce." it can be successfully executed when the relationship has been open and honest and the plans are crystal clear to all parties all along the way. The steps are laid out as in a project plan with minor adjustments to timelines and goals as circumstances change.
It also requires you to be constantly putting yourself in their shoes. You must create a win for both parties.
The divorce under strained situations
Let’s walk through a couple of scenarios where divorce happens at nonplanned times or under unusual circumstances.
I was once working with an exemplary CMO that suddenly had a major inspection by a critical regulatory agency which had led to a warning letter. During this time, we were working with the CMO to correct the deficiencies, but at some point, the situation was so serious that it was necessary to resort to plan B — our alternate CMO — to prevent serious regulatory repercussions. Fortunately, we had an open honest, relationship with the first CMO, and they worked with us to perform technology transfer to the new CMO. I am happy to report that the original CMO eventually got back on track and is now back on board as a supplier.
That’s an example of an unplanned divorce from a CMO that had a good relationship with the client. Now, let’s examine the opposite scenario. I was in a relationship with a CMO which I had inherited. The relationship was not very open or trusting. The quality agreements were primitive, and the clauses in the business contract were very punitive if there was a desire to change anything during the course of the contract. However, after a short time, it was clear this CMO was not doing well, especially with the regulatory agency, and it was headed down a bad path. After "amicable" communication with its management, it was clear that more drastic measures were needed as they would not change the relationship easily. Because the relationship had not been built on trust and was not open, the only route was to get the lawyers poised to jump in when we began negotiations to sever the relationship. Fortunately, their lawyers recognized that there were clauses in the contract that we could use to break the relationship because of the regulatory problems they had encountered. The divorce did end on a positive note, but it was a painful experience.
The take-home message
Begin relationships with open and honest disclosure and communication. Be absolutely clear what you expect and for how long. If plans are not concrete, communicate the risks and uncertainties around the figures. Keep the channels open and make sure all parties are aware of the plans and goals. As these plans and goals become more evident or certain, communicate these rapidly and clearly. If you inherit a "bad" situation, try to open up lines of honest communication and try to make it a win for both sides before the inevitable occurs.
About The Author
Peter H. Calcott, Ph.D. is President and CEO, Calcott Consulting which is focused on delivering solutions to pharmaceutical and biotechnology companies in the areas of corporate strategy, supply chain, quality, clinical development, regulatory affairs, corporate compliance and enterprise e-solutions. He is also an Academic Program Developer for the University of California, Berkeley’s Biotechnology and Pharmaceutics Postgraduate Programs.