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Jun 1, 2010 (Vol. 30, No. 11)

Due Diligence Essential in Selecting CMO

Firms Must Look Beyond Credentials to Find the Right Partner for Their Manufacturing Needs

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    Cherokee Pharmaceuticals provides custom and fermentation manufacturing services as well as a process development lab for gram-to kilo-scale process development.

    At their foundation, business relationships with contract manufacturing organizations (CMOs) are about relationships with people. In a niche in which nearly all of the providers have state-of-the-art equipment, modern facilities, experienced employees, and leaders familiar with the industry, savvy biotechs must look beyond credentials to find not only a capable CMO, but one that fits their own organization.

    Speaking at IQPC’s “Contract Manufacturing for Pharmaceuticals & Biotech” conference last month, Justin Noll, plant manager for Cherokee Pharmaceuticals, said that the word “partnership” may have lost its luster, but certainly not its importance. “Emerging companies are placing their company’s life in the hands of strangers. That has to be a partnership.”  

    “A CMO is an extension of your supply chain,” noted Alex Badal, senior manager of global strategic sourcing and supply at Valeant Pharmaceuticals. Selecting a CMO may require a few months or a few years, depending upon the product’s complexity and importance, and anticipated sales and revenue. Initial questions will involve technology, the anticipated production time, expected costs, one-time costs, ongoing commercial pricing, and references.

    “As in any relationship, there is more than one aspect,” noted Adam Sabouni, Ph.D., president and CEO of PharmaArtz. He advised identifying the top three priorities before selecting CMO candidates. “When those criteria are satisfied, then go beyond them. We make so many assumptions. In choosing a CMO, you need to delve deeply into the details,” to ascertain whether the primary assumptions are held jointly. Otherwise, misunderstandings are almost inevitable.

    The question, as Noll stressed, is “can the CMO lay out a comprehensive plan from day one that shows all the activities that must be done to help the customer bring a drug to market. Competence and experience are key.”

    CMO clients’ top priorities were quality, technical capabilities, and service, according to a recent survey of CMO clients conducted for PharmaArtz. A similar survey of directors of biomanufacturing operations at pharmaceutical and biotech companies, conducted by HighTech Business Decisions, showed the same priorities, according to William Downey, president. “Quality means both meeting the specifications and having quality systems,” Downey added.

    There are, however, additional characteristics that must be considered. “Available capacity is key to many pharmaceutical and biotechnology companies, because they don’t want manufacturing to be the limiting factor,” Downey explained. “Technical fit is another critical factor. This is especially critical in the commercial phase where capacity must be a good fit with respect to technology, process, and scale.”

    “Vet what they tell you,” Badal recommended. Quantitative and qualitative information can be extracted from each of those categories of questions, that will help prospective clients develop a fuller understanding of the CMO’s capabilities and operating environment.

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