Managing Contract Manufacturing Organization Relationships

Successful management of the CMO/client relationship should include open communication and trust.
Mar 02, 2013

It is believed among regulatory officials and industry representatives that many CMO/client relationships are immature. If this is indeed true, what can be done to "mature" these relationships?

Photo Credit: Jean-Christophe Riou/Radius Images/Getty images
The CMO/client relationship is complicated for a variety of reasons. There are many types of contract providers including CMOs who may supply cell banks, APIs, drug product, or finished drug product, CROs, contract test laboratories, and distributors. Marketing partners complicate matters, as their company-specific requirments need to be incorporated and may be different than the client's needs.

Each contract provider has a different business focus. A CMO-Only provider does not manufacture its own drugs, but is built around serving a portfolio of clients. The CMO Hybrid 1 serves a portfolio of clients, but also has its own branded products. The CMO Hybrid 2 serves a portfolio of clients, but also has its own generic products.

In a CMO-Only model, the focus is only on the client and keeping their customers happy. When capacity constraints arise, this model does not have to choose between its own products and its clients. The downside is that its business is dependent on customers only; losing a large customer may put its business in jeopardy. The hybrid companies have diversified their business; hence, the impact of losing clients is buffered by its own business.

The variety of product types also plays a role in the CMO/client relationship. Product types have many different technologies and equipment and varying degrees of personnel who know how to take care of the systems. Products include parenterals (e.g., aseptic fill, lyophilization, and terminal sterilization), sterile powders, sterile creams, nonsterile products (e.g., tablets, capsules, caplets, and sachets), and packaging and labeling/shipping to distributor.

Personnel also play a role in the CMO/client relationship. The choice of a liaison that will be the primary contact for the client with the CMO is crucial. Many people, even seasoned leaders, believe that choosing the smartest and/or most-educated person is best. It is more important to hire the right person with the right set of skills and attributes to interact in the most appropriate way with a CMO. Choose wisely and remember that the most intelligent person is not necessarily the best person. Ensure that the person is matched with the skills and needs of the job.

Lastly, clients and their individual needs are varied. Generics-only biopharmaceutical companies only make generic drugs. These companies tend to have limited resources; cost cutting is a huge focus. Large biopharmaceutical companies make many new molecular entities and some generics and tend to place their focus on large money-making products. Mid-sized biopharmaceutical companies typically have between one and eight commercial products. They tend to focus on their limited drug portfolio because each drug is still important. They tend to generate revenue, and many are profitable. They have the resources to focus on building and maintaining systems and have dynamic, motivated employees. Small biopharmaceutical companies typically have a few clinical products only. They tend to have limited resources (e.g., time, money, expertise, personnel). They tend to lack mature systems and knowledgeable people in some key areas such as quality.

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