“It takes two to tango…”
Contract manufacturing organizations are our industry partners. There are few strategic and tactical plans within the global life sciences that do not include an outsourcing element. The maturation of the Indian and Chinese markets has created opportunities to spread drug development, manufacturing, and clinical trial management around the globe for the developing markets outside of the U.S. in such rapid expansion.
For development organizations, the adoption of contract service providers (CSPs) is one of the key decisions affecting overall program development and commercial risk. But this requires engagement – a compact of sorts – committing both parties to responsibilities and performance expectations that move the programs forward. To lend structure and consistency to the evaluation process, development organizations rely on checklists developed by industry professionals. Despite the sophistication of selection criteria, engagement and collaboration with a CSP can be a difficult relationship. Organizations can minimize their overall program risk by selecting a CSP with the attributes that best fit the needs of a specific program.
Pharma and biotech outsourcing services exist for many elements of the drug development and commercial supply chain, from analytical and testing services, to manufacturing API, high potency materials, parenterals; for scale-up, quality, regulatory filings, logistics and validation.
CMO & CDMO
Criteria for selecting a CSP to support early development pre-clinical work fall under the contract research/manufacturing services (CRAMS) sector of the CSP spectrum. These CSPs are valued more for their characterization expertise and their academic and technical horsepower as it pertains to the molecule selection process than for their GMP manufacturing capability.
Contract Development Manufacturing Organizations (CDMO) are measured by their ability to bridge early development and nearcommercial manufacturing capability, although some tout their endto- end capabilities. Contract Manufacturing Organizations (CMO) are evaluated for their ability to support late-stage product development and their regulatory and compliance capabilities.
When evaluating a prospective CSP, have a clear idea of what role they are to play in the overall program development process and how far into the clinical program they may be required. The temptation is to find a CSP that can support the entire development program: depending on the economics of the final drug product, this may not be the best solution for the customer or the CSP.
Recognizing Competing Objectives
Complicating the CSP engagement issue is the reality that the success metrics between a CSP and a customer are not always aligned. As a program moves from development support to commercial support the risk profile for both parties may change, and, consequently, the terms of a functioning relationship must change as well. Shifting to a new CSP may not be viable late in a development program, thereby limiting the ability to ensure a smooth transition to commercial manufacturing. Recognizing any downstream program differences early in the selection process can shift the weight of the evaluation criteria and reduce the likelihood of engaging a CSP that may not be fully in sync with your overall program objectives.
Understanding the Differences
Many criteria can be used to evaluate a CSP. Table 1 captures several universal evaluation criteria, the success metrics from the perspective of customers and CSPs, and the typical alignment between the two parties.
Table 1. Summary of Client and CSP Success Metrics by Evaluation Criteria
Existing Relationships
Expanding support requirements within a CSP with an existing Master Services Agreement (MSA) may seem like a natural decision. First-hand knowledge of the communication and project management style may make it easy to evaluate the CSP’s ability to provide additional support. The CSP benefits from a baseline understanding of the customers’ operating practices as well and can factor in the historical financial risk of expanding its role with the specific customer.
Regulatory Inspection History
This is a checklist item within a typical Supplier Qualification program. Even so, how a CSP addresses it can provide insight into the firm’s perspective on quality as a key component of their service offering. The ability to efficiently summarize and present their regulatory history shows that they view their compliance regulatory understanding as a core competence. It can provide the foundation for any customer-specific compliance elements that must be addressed. For many virtual companies moving to the later stages of product development, this understanding will be critical to ensure that both the CSP and the customer can establish common compliance and technical performance expectations. This will be critical to reducing overall program risk downstream during the pre-approval inspection.
Technical Capability
Technical competence can incorporate many considerations, from familiarity with the technology, to capability, to the ability to monitor and manage the process. While many early stage companies focus on product development, it is not unusual for the process characterization activities to have lagged behind. As a result, a CSP’s ability to adopt, characterize and maintain a unique process can acquire significant risk. Often the development contract will reflect this uncertainty with the CSP and base its pricing and support on a low probability of program success until it can gather a better sense of the responsibility and support obligations.
Financial Stability
Smaller, privately or venture-backed com-panies may seek a CSP that is strategic to the program’s development. In this case the customer may look to the CSP to invest resources or capital to further the program’s development in exchange for a share of the commercial revenue. CSPs may look to ensure the financial viability of their customers and the pricing will reflect the risk undertaken in the program’s development. As in technical evaluation, early phase development success metrics might be strictly execution-based and have no success-based component, to reflect the uncertainty of the program risk.
Project Management
This is one of the largest frustrations cus-tomers voice when engaging a CSP. Having identified a potential CSP partner, the desire is to move quickly to establish a scope of work and to begin as soon as possible. The CSP on the other hand must juggle competing top priority demands on its management, organizational, and facility resources. One common tactic employed by CSPs is to require that all components of a scope of work be in place before proceeding. As a result, the ability to define, price, schedule and begin a scope of work may be pushed out many months. Understanding the percentage of time the assigned project manager will have as a baseline assumption is a good indication of the level of support and attention the CSP will be able to provide a program.
Confidentiality
This may seem like a foregone conclusion for engaging any CSP but nondisclosure is an important topic to discuss. For instance some customers may use project code names rather than product names as the normal mode of communication. If equipment is a custom design and is perceived to be a significant market advantage, access may have to be restricted and even viewing the equipment may have to be controlled. Data may have to be kept secure and communication channels formally defined. All of these special business practices restrict a CSP’s ability to juggle its competing demands and requires discussion before moving forward.
Availability
Availability is one of the hidden issues that can disrupt the relationship with a CSP. Sched-uling and time management are always an issue during the development process, as many activities can take longer than desired for customers. The ability to take advantage of unforeseen market fluctuations is a key consideration for most customers as the product moves to commercial introduction. Customers can avoid this problem by discussing an availability clause in the support contract. This is a key component that is often overlooked in the final supply agreement for commercial support. First mover advantage: The ability to move quickly can translate to significant revenue for new products in the marketplace. In exchange for this monthly available capacity and response capability, the CSP will charge the customer a monthly opportunity-lost fee to cover costs of square footage, resources and infrastructure allocated. Customers that look to place equipment at a CSP can expect availability to be a primary point of discussion in any contract negotiation.
Due Diligence
Checking the references of any CSP is impor-tant. A CSP’s experience with similar products, processes and willingness to collaborate with a customer to establish the prerequisites for executing any contractual relationship are key considerations. CSPs are concerned with their reputation. But just as the overall CSP experience can vary considerably from customer to customer, the customer’s perceived take-away can vary just as greatly. Given this reality most CSPs will focus on demonstrating those characteristics with the largest potential for financial benefit. A CSP can weather a marginal reputation by compensating in other areas such as scheduling, time management, or price.
Geography/Location
In a global economy geography is not as significant a consideration as it once was, but factoring in the development team’s ability to interact with a CSP can impact both a program’s schedule and overall cost. Have systems in place for team meetings, and plans for information or data exchange to make sure both parties are clear about how to move forward together to manage and execute a scope of services.
Conclusion
The secret to selecting the right CMO is to take into consideration not only capabilities, but also the development organization’s ability to work effectively with the CMO. To be successful it is important to recognize that the challenges and success metrics for a CSP differ from those of a customer. Identifying these specific points of divergence and addressing them in the selection and engagement contract will ensure that both parties can manage their organizational and business risk. The result will be a much healthier relationship based upon a common platform of expectation management and mutual benefit.
References:
- T. Wright, 2015 Annual Outsourcing Survey, http://www.contractpharma.com/contents/view_outsourcing-survey/2015-05-13/2015-annual-outsourcing-survey/
Bikash Chatterjee has been involved in the biopharmaceutical, pharmaceutical, medical device and diagnostics industry for over 30 years. Mr. Chatterjee has guided the successful approval of over a dozen new products within the U.S. and Europe and is a frequent speaker at industry and regulatory events. He has published and is a regular editorial contributor to several internationally recognized industry journals. Mr. Chatterjee has spoken and published extensively on the application of PAT, Lean Six Sigma, Quality by Design and Process Validation approaches within the regulated life sciences industry. He is an ISO 9000 certified Lead Assessor and Six Sigma and Lean Manufacturing Master Black Belt. Mr. Chatterjee has developed and transferred products and processes to satellite operations and Contract Manufacturing Organizations for much of his career. He has extensive experience with design and implementation of systems to satisfy the requirements for ICH Q8, Q9, and Q10 as well as e-pedigree and the application of risk based approaches in the area of validation. His experience in complex product and process development and technology transfer has resulted in the development of a six sigma based methodology to support the PAT initiative and has successfully tailored the principles of Lean and Six Sigma for application in the pharmaceutical R&D environment resulting in reduced program risk and reduced time to market. Mr. Chatterjee is a member of the USP National Advisory Board and is the Past-Chairman of the Golden Gate Chapter of the American Society of Quality. Mr. Chatterjee is a member of the Healthcare Information and Management System Society Technical Advisory Board and sits on several private Scientific Advisory Boards. He is a founding member of the CPhl Expert industry Advisory Board and writes a recurring column for several magazines on industry trends and challenges. He is a frequent industry speaker and has published over 70 articles. He is also the author of "Applying Lean Six Sigma in the Pharmaceutical Industry (ISBN: 978-0-566-09204-6), July 2014 published by Gower Publishing, Mr. Chatterjee holds a B.A. in Biochemistry and a B.S. in Chemical Engineering from the University of California at San Diego.