September 15, 2017 PAP-Q3-17-FA-001
A well-thought-out and structured partnership can bring a sponsor organization both strength and agility. Whether with a CDMO, CRO, engineering & design firm or an equipment supplier, an ideal relationship must be defined to be successful. The importance of forging international relationships across the supply chain is evident from discovery to development, on to commercialization and through to packaging. Global presence is not only a factor for companies looking to partner, it can be the defining factor — especially as the industry’s universe narrows. This issue’s feature highlights how these types of organizations are creating bridges around the world and becoming ever more interdependent.
Contract development and manufacturing organizations (CDMOs) have not always benefited from the influence they have on sponsors at present. The relationship type sponsors have sought from CDMOs has shifted over the last several years, though the trend is clear — a preferred provider relationship has emerged ahead of a tactical service relationship. According to the 2017 Nice Insight Contract Development and Manufacturing Survey, 32% of over 700 respondents indicated that they outsourced to a tactical service provider, with 42% selecting a preferred provider or seeking a strategic partnership for their outsourcing needs. In 2015, only 28% of respondents to the survey indicated they were “very interested in a strategic partnership with a CDMO.”1
Since CDMOs are held increasingly accountable and viewed as a trusted supplier entity that can lead both provider and sponsor to better business, it is interesting to note exactly what factors into CDMO selection. Of respondents to the 2017 CDMO survey, 72% confirmed that regulatory compliance was crucial when selecting a partner. Geographic convenience was also seen as a huge deciding factor, with 68% indicating the importance of location proximity. To further drive the point home that an international footprint can be make it or break it for CDMOs, 63% of respondents stressed that they take the organization’s global presence into account when selecting an organization to work with.1 That CDMOs must be global, and that they must uphold strict quality standards regardless of where they are based, has become a theme.
According to Tim Tyson, Chairman and CEO of Avara Pharmaceutical Services, regulatory concerns must be top of mind for both CDMOs and sponsors. As a result of this, CDMOs that have a proven track record dealing favorably with quality in emerging markets will often demonstrate an advantage over a competitor. “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,” noted Tyson.2 The CEO also commented that operating region should not impact quality. “Excellent global supply chain management capabilities are also necessary to ensure the security of supply for customers and patients, regardless of location,” Tyson confirmed.2
So who do sponsors choose to work with? A sponsor’s perception of the country a CDMO is working in can affect how they treat a potential CDMO partner. It is interesting to note that the Nice Insight CDMO Outsourcing Survey shows a positive correlation for CDMOs in emerging regions over the last few years.1 In 2014, 49% of respondents said they had worked with CDMOs in emerging markets. This number rose to 53% in 2015 and then shot up to 69% in 2016; it currently rests at 62%, which is still almost 20 points higher than it was three years ago. The number of trustworthy CDMOs in these markets is also increasing. In 2014, 20% of respondents said they were willing to outsource to emerging markets but were unable to, as they did not know “any reliable CDMOs yet.” This number has dwindled over the last few years, with only 9% indicating the inability to identify a qualifying partner in 2017.1
And where are buyers of CDMO services deciding to seek out providers? International interest varies across the board. The numbers have remained approximately the same since 2014. This year, of buyers who engage in outsourcing to emerging market providers, 23% outsourced projects to the US and Canada, 14% outsourced to Western Europe, 12% India, 11% China, 10% to Argentina and Brazil, 10% to Eastern Europe and Turkey, 8% to Japan and Korea and 7% to the Middle East as well as to Singapore and Southeast Asia, with 0% indicating other regions. These numbers indicate that CDMOs have become more diverse across the supply chain, with an increasing amount of global partnerships.1
Among those who did not wish to expand into foreign, emerging markets with partners, the top fear indicated was over the quality of the product being too risky, at 38%. This was directly followed by regulatory compliance concerns, with 37% accounting for this. While intellectual property licensing and safety may not have been an issue in the past, it is a top-of-mind concern for many, now. Apprehension over intellectual property issues has shot up over the last few years — only 19% indicated this was a fear in 2014. This number grew to 26% in 2015, and now rests at 35% in 2017 — judging by this trend, IP issues will likely be an increasingly growing concern, enough so that sponsors may not enter into an agreement with a provider in a certain market, because for them, the risk is not worth the reward.1
For CDMOs looking to become more international across the supply chain, knowledge of all regulatory standards is paramount. The safest bet for CDMOs is not only to adhere to the regulatory standards of the country they are operating in, but implement an even higher set of standards. According to Joachim del Boca, VP of Regulatory Affairs/Quality Compliance at Vetter Pharma-Fertigung GmbH & Co. KG, it is crucial to always stay abreast of regulatory demands in the country the organization is operating in, but more than one regulatory agency should be observed. “Cooperation with local authorities, as well as participating in meetings with the FDA concerning quality metrics, is critical.” Adding to this, del Boca noted the pressure on CDMOs to remain ahead of the curve. “Continuous development of manufacturing sites and techniques to prepare them for future needs and requirements is necessary for manufacturers to deal with increasing regulatory requirements,” he commented in an interview with Pharmaceutical Manufacturing Magazine. “If systems are not according to regulations, (bio-) pharmaceutical companies may have difficulty entering markets that are regulated by these authorities,” he added.3
It’s true; this is where the adage to “think global but act local” is applicable to CDMOs especially. A compliance officer that can interface between two agencies is crucial. Trends in regional government no doubt dictate production, as is the case of Russia’s Pharma 2020 strategy. This long-term plan calls for pharmaceuticals to only be manufactured in the country in order to guard against volatility and sanctions, and also as a way for Russia to assert self-sufficiency from a global standpoint.4 However, that does not mean the doors are closed. Servier {Servier CDMO} has been a major player in Russia for more than 30 years; the French firm currently operates several locations either within or serving the nation (including ZAO Servier, Serdix and EGIS).5
We are far from having one set of regulatory standards dictate compliance on a worldwide scale; however, there are ethics codes that can be considered a step towards unification. For instance, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) code of practice is a set of ethical requirements and operations that must be upheld by all. In this code, the top priority is patients, followed by adherence. As the world shrinks and the supply chain grows, the need for a central, guiding system has become more apparent. Whether this manifests as a central patient database applied to clinical trial data or as a sole compliance standard that leaves little room for safety risks, unifying the pharmaceutical landscape should always be focused on the patient.
Dr. Challener is an established industry editor and technical writing expert in the areas of chemistry and pharmaceuticals. She writes for various corporations and associations, as well as marketing agencies and research organizations, including That’s Nice and Nice Insight.
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