Confidentiality agreements were executed with each shortlisted CMO. A detailed product specification sheet written in the
format of a technical transfer questionnaire was prepared and submitted to each candidate. The CMOs were asked to review the
information and respond with details explaining how the project could be managed at their facility and, in particular, explaining
any issues that would have to be resolved to make the sterile emulsion properly. For example, buying and validating a new
rotating autoclave at the sponsor's expense was not considered a viable option. The result of the in-depth paper evaluation
of suppliers was condensed into the matrix shown in Table 1.
Table 1. The results of the in-depth paper evaluation of suppliers
A study of the information in Table 1 revealed that none of the five suppliers included on the candidate short list met all
of the criteria for this project. Supplier 1 and Supplier 5 were removed from consideration because capital expenditures would
have been necessary for the CMO to manufacture the product. Both suppliers requested co-marketing arrangements for the product,
which was an unacceptable consideration on the part of the sponsor. The sponsor recognized that a minimum production volume
requirement might have to be negotiated as part of the final supply agreement, but was unwilling to consider co-marketing
as an option. Supplier 4 was eliminated because the CMO's development capabilities were determined to be inferior to the other
suppliers and not robust enough to support an offshore technical transfer of a sterile emulsion. The final decision was to
enter the formal evaluation stage with Suppliers 2 and 3. It is notable that virtually none of the suppliers had the capability
to handle sterile emulsions and fill ampoules, and therefore, a management decision was made to drop the ampoule from the
The final evaluation stage involved detailed financial and regulatory compliance due-diligence. A formal technology transfer
questionnaire, comprehensive product specification information, and technical development documentation were provided under
protection of the previously executed confidentiality agreement and with additional protection of a two-way letter of intent.
At the same time, regulatory compliance audits were scheduled at the sites proposed for manufacturing the sterile emulsion.
Supplier 2 met all the criteria for the project but was confronted by a significant logistical problem because their only
rotating autoclave was not located at the site that filled sterile emulsions. Shipping the unsterilized emulsion from site-to-site
was not an option. Supplier 3 was primarily a large-volume manufacturer of emulsions so their proposal had to identify a cost-effective
and timely resolution for filling small-volume parenteral products. Supplier 3 indicated it would consider making large capital
improvements as part of the terms of a preferred supplier agreement.
THE FINAL DECISION
The financial and regulatory compliance due-diligence audits revealed several important points that affected the final outcome
of the outsourcing decision. The financial assessment identified conflicts between the development and manufacturing units
of Supplier 2 that had potential to impact negotiation of the supply agreement. Supplier 3, while solvent, was determined
to be in jeopardy of being sold by its parent company. It was essential to confirm that a strategy was in place to maintain
the ongoing business.
The compliance audits provided the final information to make the CMO selection decision. Supplier 2 failed the compliance
audit. The development group was determined to be underqualified to handle the sterile emulsion product. The proposal offered
to handle terminal sterilization was viewed as inadequate. Manufacturing operations were observed to be loosely controlled.
Supplier 3 was observed to have the best sterilization technology for an emulsion and had a strong development group. Supplier
3's plan proposed to convert a large-volume parenteral area to small-volume manufacturing was considered as marginal, but
staff members at the sponsor company agreed this issue could be jointly resolved. Therefore, Supplier 3 was selected.
David Moyer is vice president of regulatory compliance at Fulcrum Pharma Developments, 919.228.4432, firstname.lastname@example.org