Manufacturing Chemist, May 2016

Industry research, referrals and consultants remain the top drivers of CRO and CDMO selection, but trade shows are a good way to learn about outsourcing firms and whether their capabilities fit your needs, writes Wei Gao, Director of Accounts, That’s Nice LLC/Nice Insight.

With the growing demand from pharmaceutical and biotechnology companies for outsourced development and manufacturing services, along with pressures to reduce time and costs, sponsors are more discerning than ever in their methods of choosing an outsourcing partner. In this highly competitive environment with an urgency to develop more products in less time, the careful selection of a contract research organization (CRO) or contract development and manufacturing organization (CDMO) is critical.

According to the 2016 Nice Insight CDMO Outsourcing Survey1 of pharma and biotechnology companies, there was a big jump in expenditure for outsourcing services this year, maintaining the continuously escalating spend over the last five years. The majority of companies (43%) now spend US$51m–$100m on outsourcing, and another 28% spend more than $100m. That’s a big jump from 2015, when the vast majority (62%) spent $10m–$50m and only 23% spent more than $50m.2

Critical Step

The selection process is the most critical step in outsourcing, since many companies seek a long-term relationship. This can have a significant impact on both products and productivity. The process begins with developing a list of basic criteria and forming a service provider selection team. The criteria should include the specific capacity, expertise, resources and technologies needed. The 2016 Nice Insight CRO Outsourcing Survey and 2016 Nice Insight CDMO Outsourcing Survey show that the highest-ranking method employed to select a contract research and/or manufacturing company is industry research, which is used by 59% of companies who outsource to CROs and 56% of those who outsource to CDMOs. This method is used to a lesser degree than last year, when 67% relied on industry research.

Referrals from colleagues (53% for companies that outsource to CROs, 45% for CMOs) and hiring consultants to find the most suitable match for their needs (50% for CROs, 47% for CMOs) are the next two most common methods used in the selection process. This indicates that companies are more likely to conduct their own inquiries prior to choosing an outsource partner.

Web searches have moved up considerably as an important method to select a CDMO outsourcing partner, from 18% last year to 43% this year. This suggests that service providers can reap real benefits by maintaining an impressive website and publishing articles and white papers demonstrating the advantages of their services.

Attendance at industry trade shows and events followed by online directories and publications are also used. These methods are regarded as slightly less reliable but are important tools in the selection process. Trade shows provide an opportunity to meet with representatives of CROs and CMOs, identified as having the basic requirements needed for outsourcing services. To ensure quality, sponsors are using an average of 3.2 methods to identify new partners.

In the 2016 Nice Insight CRO Outsourcing Survey and the 2016 Nice Insight CDMO Outsourcing Survey, of the companies that attend trade shows, Biotechnology Industry Organization (BIO) International will be the most popular, with more than 43% who outsource to CROs and 41% for CDMOs, planning to attend. This is a change from last year, when AAPS was the most broadly attended show.

Second in ranking for companies who outsource to a CDMO, was the Drug, Chemical & Associated Technologies (DCAT) conference; BIO Europe ranked second for those seeking a CRO. About one third of companies will attend the following trade shows: the American Association of Pharmaceutical Scientists (AAPS) Annual Meeting and Exposition, BIO Europe, Contract Pharma, and BioProcess International (BPI). Less than one quarter of companies plan to attend Interphex and CPhl Worldwide (held in Europe).

Rankings by buyer group did not vary significantly from the overall industry rankings, with industry research being the primary selection tool, and BIO International the primary trade show for most groups. However, emerging pharma and emerging biotech companies who outsource to CDMOs rely most heavily on referrals from colleagues as their main selection source. Emerging companies seeking a CDMO rank DCAT and BPI (39% each) as their leading trade show. Emerging companies who outsource to CROs primarily rely on referrals (68%) followed by industry research (58%).

Comparing regions for trade show attendance, 47% of companies that outsource CDMO services and attend Bio International are from North America, 37% are from Europe and 33% from Asia. For those that outsource CRO services, attendance at BIO International is 47% from North America, 33% from Europe and 40% from Asia.

Of the companies who outsource to CDMOs and plan to attend the four highest-ranking trade shows (BIO International, DCAT, AAPS, Bio Europe), the majority are engaged in preclinical or phase IV studies. In most cases, the attendees are primarily from operations/engineering, except for DCAT (42% from operations/engineering, 43% from regulatory affairs) and CRS (57% from regulatory affairs).

As for the type of partnership they engage in, most companies who plan to attend trade shows prefer strategic partnership arrangements, typically followed closely by tactical service provider and lower-ranking preferred provider relationship.

For companies who outsource to CROs and plan to attend trade shows, the majority primarily outsource phases III and IV. Far more representatives in this group are from corporate management (compared with those who outsource to CDMOs), and most seek strategic partnership arrangements.

Service Provider Selection Process

After forming a list of prospective outsourcing firms and reviewing their websites and articles, you may want to speak with their business development representatives before proceeding to the next steps of a Confidential Disclosure Agreement (CDA) and Request for Proposal (RFP). Then consider their audit history, including citations and observations from regulatory bodies. See how well they communicate with you and find out if there are gaps in the specific expertise you need. The prospect's quality record, pricing structure, attention to detail, project management and technical expertise should also be part of the decision.3

References

  1. The 2016 Nice Insight Contract Development & Manufacturing Survey, The 2016 Nice Insight Contract Research - Preclinical and Clinical Survey
  2. Nice Insight’s Annual Pharmaceutical and Biotechnology Outsourcing Survey 2015
  3. Watt D., ‘CMO Selection: Going From “Could Fit” to “Good Fit”.’ June 29, 2015. Outsourced Pharma.