API Manufacturing: Strategic Partnering Preferences with CMOs Vary Among Small Molecule, High Potency and Biologic API

Life Science Leader, October 2013 and Chemical Information Services, December 2013

Research from Nice Insight’s pharmaceutical and biotechnology outsourcing survey has shown that buyers of outsourced services have differing viewpoints when it comes to strategic partnerships. 

In previous columns, we’ve explored how company type (Big Pharma vs Biotech) and phase of development (CRO activities vs CMO activities) factor into a buyer’s desire to form a strategic partnership. In addition to these factors, we’ve observed from the data that the type of manufacturing project also impacts strategic partnering preferences.

Nice Insight compiled the data collected from strategic partnering surveys over the past year that relate to outsourcing commercial scale drug substance projects in three categories — small molecule API manufacturing, High Potency API and biologics (large molecule API) to see if there are any noteworthy differences in how these buyers think about strategic partnerships with contract manufacturers.


Across all three API manufacturing categories, buyers of CMO services iterated that roughly one-quarter (26%) of outsourced projects are allocated to strategic partners. Despite expressed interest in forming strategic partnerships, the bulk of projects are still allocated to tactical service providers (37% to 40%), followed by preferred vendors (34% to 37%). Interestingly, respondents showed higher levels of interest in forming strategic partnerships with high potency API and biologics manufacturers than they did with small molecule manufacturers (36% and 35% very interested as compared to 25%, respectively).

Despite expressed interest in forming strategic partnerships, the bulk of projects are still allocated to tactical service providers (37% to 40%), followed by preferred vendors (34% to 37%).

There was some correlation between a buyer’s interest level in a strategic partnership with an API manufacturer and the likelihood that a tactical provider would advance from tactical, to preferred provider and then strategic partner. Just as a higher percentage of respondents were interested in forming strategic partnerships with high potency and biologics API manufacturers, these types of CMOs were more likely to move up the ranks in outsourcing relationships. Sponsors indicated that high potency API manufacturers had the greatest probability of moving from a tactical provider to a strategic partner, with 81% stating it is likely a tactical HPAPI CMO will advance to a preferred provider, and 84% stating it is likely a preferred provider of HPAPI will become a strategic partner.

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As interest levels in forming strategic partnerships varied by the type of API manufacturing outsourced, it makes sense that the fundamental attributes that influence CMO selection varied somewhat as well. The attributes that are quantifiable or measurable in nature, such as geographic location or manufacturing capacity, fall under the umbrella of “hard traits.”  These attributes are not easily changed, nor can they be quickly changed in order to win a project. The top three hard traits sponsors desire in a small molecule API manufacturer are improved quality/regulatory positioning, experience and timeliness. For high potency API manufacturers, experience takes the top position, followed by timeliness and the CMO’s financial stability. Sponsors looking to engage a CMO for biologics manufacturing prioritize experience, followed by improved quality/regulatory positioning and in third position, timeliness.

In the research, respondents are also asked about soft traits that influence CMO choice.  “Soft” traits describe the less quantifiable characteristics that one can’t necessarily provide a set of measures to assess; rather they are the attributes that relay the dynamic of the working relationship. Similar to the hard traits, there is overlap across the group, but slightly different prioritization of qualities. Good communication and an understanding of the customer’s requirements were prioritized in the top three across all three API categories. High potency and biologics outsourcers placed good communication first, and understanding of the customer’s requirements third, whereas small molecule outsourcers placed understanding of the customer’s requirements first and good communication second. A “willingness to go the extra mile” prioritized in the top three soft traits for both small molecule and biologics outsourcers (third and second positions, respectively), while high potency buyers valued a company’s reputation (ranked second) over willingness to go the extra mile.

As more API manufacturing is moving offshore — India and China currently supply more than 40% of the API used in the United States — knowing which qualities to look for in a supplier will help in finding the right CMO for your API manufacturing project, whether the company is in an established or emerging market.  

 

Nice Insight

Nice Insight, established in 2010, is the research division of That’s Nice, A Science Agency, providing data and analysis from proprietary annual surveys, custom primary qualitative and quantitative research as well as extensive secondary research. Current annual surveys include The Nice Insight Contract Development & Manufacturing (CDMO/CMO), Survey The Nice Insight Contract Research - Preclinical and Clinical (CRO) Survey, The Nice Insight Pharmaceutical Equipment Survey, and The Nice Insight Pharmaceutical Excipients Survey.