The causes of these problems are no secret. Many CMO relationships are established while a product is early in clinical or
even preclinical development. At this stage, decisions tend to be made by product or process development personnel, with the
goal of simply finding the required material or capabilities to facilitate further study of the product.
Even later in a company's development, employees who lead commercial sourcing efforts are not sourcing professionals, but
are the same people charged with different roles in the ongoing clinical trial process. Stretched across multiple priorities
and ill-trained for sourcing, they tend to focus the selection process on finding a supplier that meets technical and volume
specifications at the lowest unit price. In other cases, constrained resources may find the selection made for them by default.
With time running short to build commercial supply relationships, one client found their options limited to their current
supplier materials—not only because of sound technical buiness qualifications, but because they were the only source not requiring
a technology transfer and could be viable with the required timeframe.
CMO LIFECYCLE MODEL
Emerging, established, and mature life sciences companies can foster both highly effective, as well as ineffective, CMO relationships
and business practices. In the dynamic environment of most companies, decisions made about establishing and maintaining CMO
partnerships can easily revert into a reactive, crisis-management perspective. To help companies establish and manage critical
relationships, it is useful to consider the CMO relationship as a lifecycle. This perspective helps companies establish and
manage these critical relationships. The model (Figure 1) consists of a business process view of each stage in the CMO lifecycle.
By viewing the relationship as a series of discrete business processes, consideration can be given to the downstream activities
required at each stage. For example, language should be included in the contract that recognizes and allows a process to address
issues in ongoing operations, as well as mechanisms for changing the scope and scale of the relationship in response to changes
in the company's business environment.
In executing the model, it is also recommended that companies plan for and engage the services of a trained sourcing professional
to establish critical CMO and vendor relationships. Sourcing professionals bring a level of structure and rigor typically
not found in emerging companies, in areas such as market analysis, financial analysis, supplier performance, and development.
CMO RELATIONSHIP BEST PRACTICES
Aligned with each stage of the lifecycle model are seven best practices for establishing effective and long-lasting CMO relationships:
1. Develop partnering strategies aligned with your long-term business needs.
An important initial step in establishing a CMO relationship is to develop a clear set of objectives for the relationship
and the material or capability to be outsourced. For example ask these questions:
- Is this material or capability a core competency for our company?
- Do we ultimately intend to bring it in-house or keep it outsourced?
- Do we intend to develop alternate sources?
- Is this relationship intended to be long-term or short-term in duration?
Answers to these questions will require an understanding of the company's long-term business objectives and strategies, and
knowledge of the technical and competitive environment of the material or capability to be outsourced.
A well-developed strategy will guide subsequent stages of the CMO lifecycle. For example, attributes of the partnership strategy
can be included in the evaluation requirements. Negotiation priorities should be linked closely to the partnering strategies,
and thereby aligned with the business needs.
2. Employ a structured evaluation and selection process.
For biopharmaceutical companies, the importance of a sound contracting process is made clear by the regulatory requirements
for qualifying key vendors. And more recently, achieving Sarbanes-Oxley compliance provides additional incentive for rigor
and due diligence in CMO selection and contracting. Base evaluation and selection on a formal, structured process that examines
a comprehensive set of criteria beyond just technical capabilities and cost, including:
- Business requirements fit/gap
- Product and process technical capabilities
- Partnership attributes
- Total cost of partnership
The selection process should include:
- Identification of qualified candidates
- A formal Request for Proposal (RFP) process and detailed examination of proposals
- Supporting capabilities and technology transfer plans