How are organizations balancing cost with regulatory, supply chain, and reputational risk when selecting partners or sites?

The risk parameters organizations consider today have a much broader impact than they did in the past. Fifteen, 12, or even seven years ago, manufacturing location decisions could often be simplified to cost effectiveness. Companies would identify a region that offered a more cost-effective manufacturing environment and move operations there. This cost basis was a driving factor behind many decisions to build plants in China, India, Ireland, and other regions that offered economic advantages or incentives.

Today, however, organizations take a much more comprehensive approach when evaluating their global supply chains. While cost remains an important consideration, they are also balancing factors such as regulatory requirements and compliance expectations, supply chain risk and availability, government and geopolitical implications, healthcare policy changes, and broader social and ethical considerations. These considerations can have significant impact on supply chain resilience and long-term operational stability.

As a result, there is now a much broader spectrum of variables that organizations evaluate when making decisions about where to locate manufacturing and supply chain operations, reflecting a shift from a primarily cost-driven approach to one that incorporates a wider range of strategic and risk-related factors.

Today, biotech and biopharma companies are looking beyond the lowest-cost option when selecting manufacturing partners. Cost efficiency remains important, but recent supply chain disruptions, evolving regulatory expectations, and increasing demands for transparency and accountability have shifted the focus toward resilience and long-term value. Organizations are asking whether a partner can consistently deliver quality, navigate complex global regulations, and maintain operational continuity in a changing market.

At the same time, sponsors recognize that selecting a contract development and manufacturing organization (CDMO) should not be driven solely by available capacity. The right partner is one with the technical expertise, platform capabilities, and scientific experience to successfully develop and manufacture a specific molecule or modality. A strong technical fit reduces technology transfer risk, improves process robustness, and helps accelerate development and commercialization.

Leading sponsors are increasingly prioritizing CDMO partners with proven regulatory performance, transparent quality systems, and integrated multi-modality capabilities that provide operational flexibility and built-in redundancies across development and manufacturing. Ultimately, resilience is a competitive advantage. The most valuable CDMO partnerships combine technical excellence, regulatory confidence, integrated capabilities, supply chain agility, and cost-effective execution. These qualities — not simply available capacity — are what increasingly differentiate leading CDMOs in today's global biopharmaceutical landscape.

Organizations are increasingly moving beyond a purely cost-driven sourcing model and adopting a more balanced, risk-adjusted approach when selecting manufacturing partners. While lower-cost regions remain attractive, recent supply chain disruptions, geopolitical uncertainty, and growing regulatory expectations have highlighted the importance of resilience alongside cost.

Today, partner selection is influenced by factors such as good manufacturing practice (GMP) compliance, inspection performance, quality culture, data integrity, business continuity planning, and supply chain transparency. Pharmaceutical companies are also seeking greater geographic diversification to reduce exposure to regional risks, trade restrictions, and logistics challenges. As a result, organizations are increasingly favoring partners that can demonstrate operational excellence, dependable capacity, and robust quality systems rather than competing on price alone.

Technical expertise has also become another key differentiator. Companies value partners that can solve complex manufacturing challenges while helping to reduce development and commercialization risks. This is particularly relevant for advanced drug delivery technologies, where process understanding, scalability, and technology transfer capabilities can significantly influence speed to market and long-term supply reliability.

Against this backdrop, spray drying has emerged as an enabling technology for improving bioavailability and optimizing product performance. As a result, companies are increasingly seeking specialist partners, such as Codis, whose expertise in process development, scale-up, technology transfer, and GMP manufacturing can help support complex development programs from early development through commercial manufacturing.

Organizations are becoming far more deliberate in weighing global cost advantages against the growing range of regulatory, supply chain, and reputational risks. While low cost regions once dominated early stage outsourcing, geopolitical uncertainty, regulatory divergence, and public sector scrutiny have increased the downside of overreliance on distant or politically exposed supply chains. Companies are now prioritizing partners who can deliver cost-effective solutions while maintaining consistent execution and regulatory compliance. Essentially, cost savings are no longer meaningful if they introduce delays, compliance challenges, or quality issues.

Supply chain fragility is a major driver of this shift. Companies are increasingly adopting regional manufacturing strategies to reduce exposure to cross border disruptions and to maintain tighter oversight of critical programs. Innovators are actively evaluating re shoring options and exploring flexible models, such as custom suites or plant in plant arrangements, which improve supply security without requiring significant capital investment.

Reputational considerations are also becoming increasingly important as governments, investors, and customers place greater scrutiny on sourcing decisions tied to national security, regulatory compliance, or BIOSECURE related restrictions. As a result, organizations are favouring partners with strong regulatory track records, transparent operations, and the ability to build long term, trust based collaborations.

The decision framework has fundamentally changed. Sponsors increasingly value partners that can integrate development, analytical expertise, manufacturing, and regulatory readiness into a single execution strategy.

At KBI Biopharma, we’re seeing sponsors move beyond evaluating manufacturing partners primarily on cost. Cost will always matter. But today’s outsourcing decisions are increasingly driven by the ability to reduce total program risk while accelerating development timelines. That means weighing regulatory confidence, supply chain resilience, technical expertise, operational flexibility, and execution consistency alongside traditional economics.

In biologics and advanced therapies, the lowest-cost option is rarely the lowest-risk option. A manufacturing strategy that introduces delays, technology transfer challenges, regulatory uncertainty, or supply disruptions can quickly outweigh any upfront savings. Sponsors are placing greater value on partners with proven quality systems, scientific depth, and the ability to respond rapidly as programs evolve.

Ultimately, successful global outsourcing is becoming less about finding the least expensive manufacturing location and more about building resilient development and material supply strategies. The strongest CDMO partnerships help sponsors navigate complexity, anticipate risk before it materializes, and maintain momentum from early development through commercial manufacturing.

Sponsors are no longer optimizing for simply the lowest cost — they’re optimizing for the highest probability of program success.

Organizations are increasingly taking a risk-adjusted view of CDMO selection rather than choosing partners on lowest cost alone. While global cost advantages remain important, sponsors are placing greater value on technical expertise, regulatory certainty, supply reliability, proximity to decision-makers, and reputational protection.

This shift creates a strong advantage for U.S.-based CDMOs. A domestic partner can help reduce cross-border complexity, improve communication and oversight, shorten response times, and align more closely with U.S. Food and Drug Administration (FDA_ expectations, customer audits, and U.S. market launch requirements.

Simply put, we help sponsors lower total risk while preserving competitive economics. By combining differentiated technical competency, compliant operations, transparent communication, and responsive program management, a U.S.-based CDMO can deliver the lowest risk-adjusted cost of compliant, on-time supply.

Cost will always be part of the decision, but it cannot be the only factor. The bigger question is whether a partner can deliver consistently, meet regulatory expectations, and respond effectively when something does not go according to plan. That is especially important in cell and gene therapy and biosafety testing, where programs are complex and delays or quality issues can have a significant downstream impact. A lower-cost option can become much more expensive if risks are not properly anticipated or managed, leading to supply disruptions or remediation work later.

From a quality perspective, organizations are looking more closely at the full picture. They want to understand how risk is managed, how transparent the quality systems are, how quickly issues are escalated, and whether the team has the experience to work through problems constructively. The strongest partners are not necessarily the lowest-cost options. They are the ones that can balance cost with reliability, regulatory readiness, scientific expertise, and operational resilience while maintaining the consistency needed as programs move forward.

Organizations have always weighed cost alongside regulatory expectations, supply continuity, and reputational considerations when selecting partners or sites. However, geopolitical tension, shifting trade policies, and heightened scrutiny of certain jurisdictions have ensured that risk management is of increased importance in sourcing strategy.

Rather than rely on historically low cost regions without deeper evaluation, companies are reassessing the stability and transparency of their global networks. Procurement teams are examining whether partners can maintain compliance under evolving regulations, withstand inspection pressure, and provide reliable documentation. This has led many sponsors to diversify their operational footprint, qualifying secondary manufacturing and development partners to ensure continuity if a primary site becomes constrained.

Sponsors are balancing cost advantages against a broader risk adjusted framework: regulatory predictability, logistics resilience, geopolitical exposure, and the reputational imperative to maintain uninterrupted patient access.

Balancing global cost advantages with regulatory, supply chain and reputational risk requires moving beyond a lowest-cost-location mindset. The more effective approach is determining which work can be delivered globally, which requires local expertise, and what level of oversight and resilience each activity demands.

Global delivery hubs can provide significant advantages in scale, access to talent and cost efficiency. A functional service provider (FSP) model can help sponsors access those advantages while retaining the flexibility to place work according to capability and risk. That needs to be combined with local regulatory knowledge, particularly in countries where a sponsor does not have its own infrastructure or on-the-ground presence. An established FSP partner can provide expertise in country-specific regulatory pathways, language and documentation requirements, Health Authority interactions, and ongoing compliance.

A well-designed FSP model also creates resilience through a distributed delivery network, with standardized processes, strong governance, cross-trained resources, and backup coverage. Follow-the-sun delivery can accelerate activities such as regulatory publishing or pharmacovigilance processing, while geographic diversification helps maintain continuity when an individual market or region experiences disruption.

Ultimately, the organizations managing this balance most successfully are evaluating total value and risk, rather than labor cost alone. The goal is the right work, in the right location, with the right expertise and oversight

There are two dynamics at play. COVID exposed the risk of assuming innovation stays in North America and Europe with manufacturing sits elsewhere. When global supply chains broke down, companies that had outsourced critical manufacturing found themselves unable to secure supply, which has pushed many toward onshoring or building manufacturing capacity they control directly.

Also, since the late 2010s, China has significantly accelerated its own development timelines, moving from discovery to clinical proof of concept faster than much of the West, particularly in areas like antibody therapeutics. That creates a real incentive to partner there for access to innovation, set against legitimate concerns about IP protection and policy risk, including the scrutiny reflected in the BIOSECURE Act.

These are ultimately political and policy questions rather than scientific ones, and they shift as regulatory and geopolitical conditions shift. Because that uncertainty is largely outside any single company's control, organizations tend to evaluate these partnerships with a shorter-term risk–benefit lens rather than committing to long-term arrangements built on the assumption that today's conditions will hold.

Cost has always mattered in site and partner selection, but organizations are learning that the cheapest option and the most reliable one are not the same calculation. A supplier that offers the lowest unit cost this quarter is a liability if it can’t pass a quality audit, survive a customs delay, or continue shipping when a border closes. That is prompting more life sciences companies to treat supplier qualification as risk management, not just an aspect of the procurement process.

At Seer, that has meant building around control as opposed to whichever geography is cheapest. We manufacture our core nanoparticle chemistry in-house, which keeps our most proprietary and highest-value process under direct quality oversight rather than dependent on a third party’s capacity or compliance posture. Where we do rely on outside manufacturing partners, we favor components from multiple qualified sources, so that no single supplier’s disruption can halt production or compromise the data our customers depend on.

The organizations navigating this environment well made resilience an operating discipline early, before geopolitics forced the issue. That groundwork is what lets them absorb today’s tariff volatility and shifting trade policy without disruption to supply.

Organizations are moving beyond cost-based sourcing models toward risk-adjusted approaches. As global supply chains face pressure from regulatory tightening, sustainability/climate disclosure mandates, and stakeholder scrutiny, organizations can no longer evaluate partners solely on unit cost. A lower-cost supplier may create higher long-term costs if it introduces compliance issues, supply disruptions, carbon exposure, or reputational risks.

Any supply chain gap can translate directly into disruption exposure and downstream customer impact. Therefore, resilience requires upfront assessment of a supplier’s ESG maturity, labor and human-rights practices, environmental incident history, and raw-material traceability. This connects to regulatory readiness: future compliance costs and audit capabilities must be priced into today’s production expense. The stakes extend through reputation and customer expectations, where a partner’s ethical lapse can erode brand trust — making structured environmental, social, and governance (ESG) due diligence essential. On environmental competitiveness, factors such as renewable-energy accessibility, carbon intensity, and water and waste management now shape value chain (Scope 3) and Product Carbon Footprint (PCF)/Life Cycle Assessment (LCA) positioning. Finally, governance and transparency validate real management systems, audit cycles, corrective-action track records, and data disclosure quality.

ESG due diligence and ongoing supplier governance are becoming an important part of balancing global cost advantages with long-term continuity and customer trust.

Over the last six years, several major supply chain disruptions have caused pharmaceutical companies to rethink their global supply chain strategies. The pendulum has shifted toward security of supply, and many companies are addressing this through greater regionalization of their manufacturing and supply networks. Although cost remains an important consideration, it does not carry the same weight it did five or more years ago.

Companies have always been concerned with regulatory and reputational risk, and many believed these risks could be managed through global oversight. Today, however, they are also looking closely at supply chain reliability and continuity when selecting manufacturing partners and sites.

In the U.S. market, the push for greater supply security, combined with increased interest in domestic manufacturing, has accelerated this trend. The impact of tariffs and other trade uncertainties has also made U.S.-based manufacturing a more competitive option.

When companies balance cost with supply security and risk management, a more regional approach often makes sense. At Evonik, we see this firsthand as customers look for partners who can provide reliable manufacturing capabilities and help strengthen security of supply. As a result, global supply chains are becoming less attractive in some cases, with a greater focus on resilient regional networks that can consistently support patient needs.

Cost will always be part of the equation, but in biopharma manufacturing, it is usually not the main driver. Regionalization and geopolitical uncertainty are forcing sponsors to rethink their supply chain strategies, and a lot of that comes down to finding CDMO partners who can offer reliable local-for-local manufacturing capacity. We're seeing far more strategic, integrated partnerships now, because a purely transactional approach puts too much risk on the program and, ultimately, on patients.

What sponsors want is a CDMO that acts like an extension of their own team and internal manufacturing capacity. By establishing long-term agreements, robust collaboration and governance frameworks, CDMO–sponsor partnerships enable open communication and effective problem-solving. CDMO relationships based on these frameworks foster transparency and drive reliable, high-quality execution that supports the program’s development, manufacturing, and regulatory timelines. Ultimately, this is the best way to protect the program from global, regulatory, and supply chain risks.

None of this works without candid upfront conversations about collaboration and risk allocation, so there are no surprises or misaligned expectations. This type of transparency is how we build trust with sponsors and regulators. Reliability, transparency, and a partner’s ability to consistently deliver the highest quality are ultimately what creates lasting value for sponsors and patients.

Quality is not negotiable — this, together with the ability to deliver reliably through our connected, global network-offering, is one of the most important drivers for our partners to choose FUJIFILM Biotechnologies as their trusted CDMO.

When organizations evaluate clinical trial sites today, the conversation extends well beyond cost. Sponsors are increasingly recognizing that site burden, data quality, and operational complexity can be significant sources of risk that ultimately affect timelines, budgets, and study outcomes. Historically, site selection focused on factors such as patient access, investigator experience, and cost efficiency. While these remain important, there is growing recognition that how a site operates day-to-day is equally critical. Sites are being asked to manage increasing amounts of technology, duplicate data entry, and complex study processes, all of which can contribute to delays, errors, and staff burnout.

As a result, sponsors are taking a broader view of risk when selecting sites and partners. They are looking for organizations that can help simplify workflows, reduce administrative burden, and create more connected ways of working across the trial ecosystem. This not only helps sites participate more effectively in research but also improves data quality, operational predictability, and study performance. The most successful organizations are those that recognize that supporting sites is not just a site engagement strategy; it is a risk mitigation strategy. By making studies easier for sites to deliver, sponsors can improve resilience, strengthen execution, and achieve better outcomes for patients and stakeholders alike.

Biopharma holds a position of responsibility to improve the quality of life for patients, which means a responsibility for protecting the planet. There has been an increase in sustainability regulations, many stemming from the European Circular Economy Action Plan (2015). Many other regions have introduced their own sustainability regulations, providing additional governance on protecting the planet.

Biopharma’s supply chains are becoming more complex, with the global landscape facilitating faster access to therapies. This also raises demands to meet environmental and pharmaceutical quality regulations. While some regulations are harmonized, many are not. There are challenges in understanding this global landscape and adhering to the quality standards within specific regions to supply or manufacture therapies.

A shared purpose and mutual trust facilitate the relationship and drive continuous improvement, a basic principle of the pharmaceutical quality system. Working with partners who rely on building relationships is a way to strengthen trust and open relationships required between sponsor and partner to deliver safe and efficacious medicines.

Partners who understand this level of complexity are essential to protect license holders from reputational risk that can be realized when regulations are not met, whether a sustainability legislation or a quality expectation of regulators.

One of the primary trends reshaping how drug developers approach CDMO partnerships is the growing importance of assessing regulatory, supply chain, geopolitical, and reputational risks. Pharma and biotech companies are increasingly seeking regional sourcing solutions for greater flexibility, reduced concentration risk, and long-term reliability, quality, and continuity of supply.

The result is a shift toward more geographically balanced manufacturing networks, with U.S.-based capacity playing an increasingly important role alongside established capabilities in Europe and Asia. At Lonza, we continue to invest in U.S. capacity as part of our broader regionalization strategy. For example, our acquisition of Roche's Vacaville, California site, one of the world's largest biologics manufacturing facilities, expands our ability to support large-scale manufacturing in a critical market while providing greater flexibility and resilience across our global network.

Partner selection is also increasingly shaped by quality and operational readiness. With specialized containment expertise required for manufacturing highly potent active pharmaceutical ingredients (HPAPIs) and antibody–drug conjugates (ADCs) as an example, drug sponsors are prioritizing partners with integrated solutions for customers to manage risk, strong cGMP expertise, proven execution, and the ability to maintain reliable supply across regions. They recognize that delays, disruptions, compliance issues, or ineffective tech transfers can quickly outweigh any short-term cost advantage, especially when multiple manufacturing partners are involved.