Delivering on Unfulfilled Promises – Building a CDMO

It has been made clear in the past couple of years that contract development and manufacturing organizations (CDMOs), in addition to providing superior quality and on-time delivery of products and services, must demonstrate expertise, continuous innovation, flexible deal structuring and collaborative processes to meet sponsor and payer demands for safe and effective medications that are readily available with a secure supply chain. To do so requires facilitation of clinical trials and scalable manufacturing for all patient populations; regional supply; and sustainable partnerships. 

The landscape for contract manufacturing organizations (CMOs) serving the pharmaceutical industry is changing rapidly. Most notably in 2015, the concept of contract development and manufacturing organizations (CDMOs) was fully realized. Many conventional CMOs have actively pursued acquisitions and internal investments, some funded through initial public offerings, in order to become CDMOs with the capability to support the needs of pharmaceutical customers across the entire development and commercialization cycle in an increasingly integrated manner.           

Clients themselves are busy revising their business strategies in order to address demands from various stakeholders for lower-cost medicines with proven added value, while also facing increasing competition from generics and biosimilars. At the same time, pipelines are fuller than ever and drug approvals have once again reached peak levels. Strong cash flows are enabling internal investment in capacities and capabilities, as well as acquisitions of both other pharma-biotech manufacturers and outsourcing providers.

Despite these investments, pharmaceutical companies of all sizes have increasingly relied on outsourcing partners for activities from discovery to lifecycle management, and that trend is expected to continue throughout 2016. The use of service providers, however, is becoming more selective. Rather than interact with many suppliers with one particular area of expertise, most sponsor companies are identifying a limited number of preferred partners with broader, integrated capabilities that have a history of meeting or exceeding performance expectations and / or establishing long-term strategic partnerships with top CDMOs that involve highly collaborative interactions.

CDMOs that wish to be included in those groups of preferred and strategic suppliers need to provide clients with much more than superior quality and reliable, on-time delivery of products and services. A demonstrated understanding of the industry and deep technical expertise, particularly for addressing the specialized formulation and handling needs of current and next-generation drug substances, combined with a commitment to continuous innovation are essential. CDMOs must also have the ability to tailor contractual agreements to meet individual customer needs, flexibility to rapidly respond and adapt to changing project conditions and a culture and processes that encourage and enable collaboration. Excellent global supply chain management capabilities are also necessary to ensure the security of supply for customers and patients, regardless of location. Processes designed for scalability and experience in technology transfer are also imperative.

Superior Quality And On-Time Delivery

Because outsourcing of pharmaceutical development and manufacturing services carries significant risk for sponsors, the selection of preferred and strategic outsourcing partners is a long and involved process, and only the most likely candidates are subjected to the full vetting process. To even be considered as a potential candidate, CDMOs must at a minimum have a strong track record of performance with respect to quality and on-time delivery.

In addition, to retain the label of “preferred supplier,” ongoing performance in these two areas is crucial. According to the 2016 CDMO Outsourcing Survey of pharmaceutical and biotech executives, management, operations and technical staff conducted by Nice Insight, quality compliance and on-time delivery are the top two performance attributes that sponsor companies evaluate post-engagement and when making decisions on whether to continue doing business with a CDMO. The greatest source of dissatisfaction for these respondents was also poor product and service quality, and desire for better quality was the number one driver prompting sponsors to switch CDMOs.

Demonstrated Expertise And Continuous Innovation

Continued investment in innovation and the development of proprietary solutions that address the needs of current and next-generation therapies is fundamental to success. Specialized technologies, particularly those that support the processing, formulation and packaging of highly potent compounds, controlled substances and poorly soluble drug substances, will be central to CDMO profitability in 2016 and beyond.

CDMOs with a breadth of advanced technologies will be at a further advantage due to their ability to explore more potential solutions and identify truly optimal formulations tailored for each specific project. Those that can leverage technology to enhance formulation development, clinical trial supply, process scale-up and technology transfer will attract the attention of sponsors seeking integrated partners. Finally, CDMOs that also invest in technologies designed to improve the efficiency, productivity, safety and quality of their operations will draw the greatest attention.

Flexible Deal Structuring And Collaborative Processes

Flexibility with respect to both contractual agreements and ongoing interactions with clients is also an essential characteristic of CDMOs that are looking to become preferred suppliers. In fact, respondents of the 2016 Nice Insight CDMO survey look closely at the contractual approach adopted by potential CDMOs, second only to their regulatory compliance track record. Inflexibility is also noted by many survey participants as a key source of dissatisfaction with CDMOs they have previously engaged.

Sponsor companies also tend to prefer CDMOs that offer a variety of deal structures — from fee-for service to profit-sharing —  and that are willing to enter into non-traditional contractual agreements, such as those that include cost and risk-sharing parameters and/or novel licensing arrangements. The upfront work to establish clear responsibilities for each member in the partnership is greater than that observed with the adoption of more traditional contracts, but the rewards can be significantly higher. The highest likelihood of success will be achieved if the terms of engagement are carefully considered and both the CDMO and sponsor company have systems in place to ensure full transparency and open lines of communication. Indeed, CDMOs that can minimize the risks associated with outsourcing across all aspects of sponsor/supplier interactions have a distinct advantage.           

Preferred/strategic suppliers also have the ability to anticipate future customer needs combined with a willingness to make necessary investments in order to provide highly differentiated and adaptable, tailored support. They operate as extensions of their sponsors’ businesses, rather than as external suppliers of specific products or services.

Supply Chain Security

Collaborative relationships, whether with preferred or strategic suppliers, also play a role in addressing the concerns around supply chain security when outsourcing pharmaceutical development and manufacturing activities. Sponsor companies are dependent upon contract manufacturers to deliver a high-quality product on time, every time, in order to meet production schedules and deliver critical medicines to patients in need. CDMOs that form collaborative partnerships with their customers can provide clients with confidence that supply chain management systems are in place to address any potential threat to product delivery.

Yet again, transparency and open communication between the CDMO and pharmaceutical company are at the heart of successful supply chain management. Collaborative development of sourcing plans and production schedules and two-way communication about process information can ensure that the CDMO and client have the same expectations, while a culture of data sharing can lead to the identification of any potential problems before they have a significant impact on the development and commercialization timeline.


Furthermore, with increasing globalization of the pharmaceutical industry and heightened restrictions on the import of pharmaceutical raw materials, intermediates, active ingredients and formulated products, sponsors can only be confident that their supply chain is secure when working with CDMOs that have a history of successful supply chain management on the international level under both normal and adverse conditions. They are also looking to CDMOs that have been proactive in implementing serialization solutions and can provide evidence of the effectiveness of their systems.

Facilitation Of Clinical Trials And Scalable Manufacturing Capabilities

On-time and reliable supply of clinical trial materials is another important attribute of successful CDMOs. Clinical trials are the biggest bottlenecks — and cost drivers — in drug development. They are also increasingly complex, involving multiple sites on multiple continents, and can last for extended periods. Not surprisingly, CDMOs that can facilitate the smooth implementation of these clinical trials can provide significant added value to sponsor companies.

Importantly, the requirements for clinical trial materials often differ significantly from those for commercial products. CDMOs must be familiar with the clinical trial schedule, required dosage strengths, number of patients, dosage regimens and many other factors related to the production, packaging and labeling of products intended for clinical trial use. Collaboration is crucial, not only between the CDMO and the sponsor company, but also with the contract research organization (CRO) conducting the trial and the investigator heading up the study, to ensure compliant shipment of the appropriate materials to the right trial sites at the right times. 

New CDMO Designed To Meet Current And Future Demand

We understand that providing excellent quality and on-time delivery is no longer sufficient to earn repeat business. At Avara, we recognize the importance of real collaboration and are committed to working closely with our customers to provide API manufacturing (including highly energetic chemistry), bulk drug formulation, finished dose and primary /secondary packaging solutions (including for products that require high containment) tailored to their specific needs for solid dosage drugs. We are totally focused on providing an unsurpassed level of customer service dedicated to the need of our customers. We believe and are committed to an on-time, in-full delivery of the products we manufacture. It is the hallmark of our customer service

Although our company is relatively new, our people have extensive experience in the pharmaceutical industry — on both the CDMO and sponsor sides. Avara has extensive experience supplying the US and international markets, a first-class safety, health and environmental record, fast-to-transfer and rapid changeover capabilities, and has implemented an Operational Excellence and Compliance Oriented Program developed using Lean Six Sigma methodologies. As a result, Avara brings to bear on customer projects a wealth of process and industry knowledge and expertise in supply chain management, process and formulation development, commercialization, product launch and technical transfer, facilitating the rapid, cost-effective development of advanced medicines. 

It has been made clear in the past couple of years that contract development and manufacturing organizations (CDMOs), in addition to providing superior quality and on-time delivery of products and services, must demonstrate expertise, continuous innovation, flexible deal structuring and collaborative processes to meet sponsor and payer demands for safe and effective medications that are readily available with a secure supply chain. To do so requires facilitation of clinical trials and scalable manufacturing for all patient populations; regional supply; and sustainable partnerships.

Tim Tyson

Tim Tyson, Chairman and CEO of Avara Pharmaceutical Services and previously the CEO of Aptuit has been instrumental in bringing more than 50 life-saving and life-improving medicines to market. Prior to that he was President and CEO of Valeant Pharmaceuticals and served as President of GlaxoSmithKline Global Manufacturing & Supply, where he had responsibility for over 100 manufacturing sites and outsourced manufacturing worldwide. Mr. Tyson holds a bachelors degree in engineering from the United States Military Academy at West Point and MBA and MPA degrees from Jacksonville State University (USA).