GEN: What key factors do you take into account before finally deciding that you will take on a particular biotech or pharma company as a client? Have you ever turned anyone down, and why?
Dr. Lambalot: Our primary factor for client selection is process fit. We work closely with the client during the request for proposal (RFP) stage to understand the specific needs of their process and confirm for ourselves and them that their process is a good match for our facility and core competencies. In some cases we have gone as far as to make capital investments to ensure proper fit, though those investments always need to be commensurate with the scope and risk of the program.
Currently, we are focused exclusively on mammalian batch and fed-batch processing. As a consequence, we have deferred on many RFPs requiring microbial or other nonmammalian host cell lines as well as any perfusion-based mammalian processes. Maintaining this focus has allowed us to greatly extend our core competencies around several common platforms for the expression and purification of numerous recombinant human biotherapeutics.
Mr. Downey: Honesty is the key factor.By this I mean “can the CMO truly meet the time line and capacity requirement of the client?” In an effort to continually generate new business many CMOs will make promises that they cannot keep. However, experience has taught us that one should be as candid and open with clients as possible. Determine realistic expectations and then manage those expectations accordingly. If something cannot be done, do not be afraid to state this, even if it means the client goes elsewhere.
In terms of turning potential clients down for other reasons, there are some occasions when client expectations are patently unrealistic or the commercial value of the business is marginal. Then open discussion and clear communication as to these reasons are required.
Dr. Ruchatz: As a service provider it is of utmost importance for us to satisfy the customer by offering sustainable solutions for their needs. That is the reason why we have to carefully evaluate in a first step how a project fits from a technological point of view into our facilities (e.g. BSL, molecule types etc.). Second we need to look whether the expected scale and scope fits with our capacities and how we best can meet the desired time lines of the customer.
Then we will prepare a tailored solution proposal to the customer’s project requirements. Due to our global development and manufacturing network with our own facilities in major markets we can serve a broad range of customers from small biotech to Big Pharma. This includes projects of various molecule types, technologies, service packages, and life cycle phases.
Mr. Head: One major factor includes unrealistic time frames, which is a common mistake made by companies looking for a CMO. Another factor is when a client wants to contain costs by performing limited development runs while still expecting successful full-scale manufacturing. A final factor to consider is when a client asks the CMO to resolve the most difficult scientific or technical problems with no planning of their tech transfer package and with expectations set too high.
We have turned a potential client down when we discovered in early discussions that the project was not a fit for our capabilities/expertise.
Mr. Weiler: Each customer relationship starts with a discovery phase that includes looking at the work to be done and if we can accommodate it. Once we verify that we are capable of working with the customer in terms of safety, technical expertise, proper equipment, capacity, etc, we will move forward to define the terms of the partnership. As mentioned before, it is always important to distinguish whether it is a tactical or strategic partnership right up front, which will allow us to fully disclose what we can provide. Really, it all starts with seamless and open communication.
It is rare that we would turn a customer away. We will always do what we can to accommodate a customer, but we must also be sure that the relationship is mutually beneficial. The only case where we would turn a customer away is if they are unable to fulfill their end of the contract, or if we do not have the capacity to meet their needs.
Mr. Podesta: There are many questions we ask as we vet opportunities. Ultimately, we try to define “why” we want this particular client. We look at the financial health of the organization. We also need to determine if their needs align with our capabilities. We then review the program to understand the value proposition. On this point there are three key questions that help us make a decision to take on a particular client: Does this opportunity require a custom solution? What unique value does it provide? Is it functional, cosmetic, or product differentiation? And the last question: what delivery requirement does it resolve—is it ease of use, accuracy, unique delivery method, and/or size?
It is important we understand the “why.” We have been involved with opportunities that proved to be costly or resource-intensive based on the customer’s needs. However, if there are unique benefits and we understand the value proposition, we are happy to engage as early as possible.
GEN: What is the most widely held misconception regarding working with a CMO, and how do you address this issue?
Dr. Lambalot: Perhaps the greatest misconception is that contract manufacturing simply provides access to the physical assets and resources required for the conversion of raw materials to finished product. In reality, successful partnering with a competent and experienced CMO is more about building a mutually beneficial and trusting relationship.
It should be one that provides the client with access to a wealth of process development, technology transfer, manufacturing and regulatory experience that can ensure creation of a successful regulatory filing dossier and the ability to sustain long-term compliant commercial manufacturing. We address this misconception early on in the vetting process by working to convince prospective clients that our experienced staff provides a level of process judgement and regulatory acumen that while not factored into the cost of access can very well be a determining factor in the overall success of their CMO strategy.
Mr. Downey: In my experience there continues to be a misconception that outsourcing is more expensive and it is always cheaper to do things in-house. Clients continue to find it challenging to determine their internal costs whether it be the perception of incurred overheads (labor and facilities) or complex product assembly. Often there is an assumption that client overhead rate is the same for all products irrespective of such complexities. This makes it difficult to perform true side-by-side cost comparisons. The flip side to this is when cost becomes the key driver and quality, flexibility, and CMO management are forgotten about (e.g., off-shoring to an Indian or Chinese CMO). To address this Almac builds “value” into its service offering by integrating development, clinical, and commercial requirements to save time and cost and to mitigate risk.
Dr. Ruchatz We think that the degree and magnitude of benefits a world class CMO can offer is often underestimated. We see this as a misconception because our experts help reduce costs with our services for a client company, both in up-front capital cost and also net expenses. Customers only pay for the services related to their products and not the entire cost of operating a development and manufacturing infrastructure. The high utilization in our multiproduct facilities results in cost-efficient services for our customers.
In a “total cost-to-market” view, we offer highly competitive services along the entire life cycle of a product, which basically allows our customers to avoid significant capital expenses and low running cost for their products.
Furthermore, we as a CMO help to shorten process development time lines. With our broad experience in different molecule types and our platform technologies we increase speed and flexibility to our customers as we help them select the right technology and high-expression system for their project early on. The increased speed to reach first clinical results is crucial for the overall development cost of a project.
Mr. Head: The main misperception is that the CMO can address or “fix” any technical challenges encountered without an interruption in cGMP manufacturing schedule. The CMO needs to work with its clients to educate them in misconceptions such as manufacturing costs, realistic timelines, documentation, and the time involved for process development work so that a CMO is not pushed into GMP manufacture, which results in performing process development work at scale. This will end up hurting the production runs because problems have not been solved.
Mr. Weiler: The greatest misconceptions we see are:
- Fear of IP infringement.
- Being tied to a CMO/getting taken advantage of.
- CMO pricing should be cheaper than keeping the process in-house.
In the past, there were CMOs that negotiated lower prices in exchange for partial ownership of the IP, but that model is going away. Today, CMOs sign full nondisclosure agreements. The customer almost always wants to own the process.
Regarding costs, CMOs are constantly fielding a large amount of hidden costs in technical capital and reinvestment. Even if a customer can do the work for considerably less money, it would be hard for them to compete with the time lines and expertise that a CMO can offer.
SAFC has been building on its CMO approach for over 15 years, and we ensure that our customers own the process. From having a dedicated project manager to support their projects, to having the ability to get weekly reports, there is never a moment where the customer does not have full access to what is happening.
Mr. Podesta: We believe there are two widely held misconceptions. The first is that a company may feel a sense of loss of control. With so much at stake for each program, finding the right partner is difficult. It comes down to trust in the CMO’s capabilities. It is an uncomfortable position to place trust in a second or third party with one’s creation. Thus, the misconception is that the lack of trust in the contract manufacturer will result in a negative impact to the program.
Another misconception is that CMOs defer to the biotech or pharmaceutical company for direction and support regarding specifications and validation. This can be the case when the customer has a defined approach, depth of talent, and historical reference. They may prefer to dictate the approach and method of validation.
However, we have the capability and bandwidth to develop those processes and protocols in tandem with the customer. This assumes that we fully understand the defined test and functional requirements. This can be sorted out with early and clear communication. It is a function of the partnership, the building of trust, so that we can work through these issues effectively.