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Tips for Selecting the Right Contract Manufacturing Organization

Tips for Selecting the Right Contract Manufacturing Organization

By Martin Przeworski | The Strategic Sourceror | March 12, 2014

A straight forward consideration for a biotechnology company when selecting a contract manufacturing organization (CMO) for the production of biologics or medical devices is bottom line cost savings. If this was the only factor, the process would call for evaluating three CMO’s technical capabilities followed by extensive negotiations to reach the desired price point. However, other key factors to take into account pertain to verifying the company?s actual capability of producing the product to the same standards of quality as the original over the initial term of the contract and long term stability. This avoids falling for the all too irresistible but undependable cost savings opportunity and taking attention away from the CMO’s internal instabilities or limitations.

We have experienced the most success by casting a wide net during an initial Request for Information (RFI) process to determine the core specialties and in-house capabilities of the CMOs. This gives us the opportunity to profile a large number of companies while sharing a limited amount of information. We then select the best matching candidates for a more thorough Request for Proposal (RFP) process that includes a technical brief on the product in order to receive accurate pricing proposals. This leads us into the negotiation process with the necessary leverage to attain the greatest cost savings from the most capable and stable company.

In this way, the technology transfer process can be seen to begin with the RFP process and leads into the effective design transfer process. This ensures an avenue of communication is open between both companies for an efficient translation of the validated design to the validated manufacturing process.

We consider six main areas during the RFI. Business considerations consist of determining the CMO’s general capabilities, financial viability/annual revenue, and production capacity. Product and market considerations are broken up into technical capabilities, regulatory qualifications, and quality systems.

The general business capabilities profile the CMO’s current involvement with specific industries and products, and identify which facilities are responsible for engineering services, and which facilities undertake the manufacturing of the product’s components. This highlights any sub-contracting of services or patent and intellectual property issues and gives a broad estimate of the company’s typical timelines associated with the technology transfer process and subsequent orders.

The overall financial viability of the CMO can be determined by tracking annual revenue over several years, identifying the sources of capital funding to determine how heavily leveraged the company is, and tracking recent mergers or planned acquisitions. On the other side, we consider current capacity for new business, the production volumes that the company can accommodate, and the requirement of minimum order quantities or lot sizes. This type of information is valuable in understanding how scalable the company is for long term viability within the customer’s supply chain.

When it comes to product specific areas it’s the constraints of the company that make the difference. Can the CMO distribute to the desired markets (US, EU, Asia, etc.)? Do they have the in-house capabilities to manufacture and validate the product, or do they depend on sub-contractors for portions of the development/manufacturing process such as injection molding?

Regulatory qualifications are also region specific. A CMO should be certified to produce the product, and registered with the regulatory agencies where the product will be distributed. The verification process includes gathering and reviewing FDA and other regulatory body inspections (483s, EIRs). Red flags will consist of warning letters, critical observations, product recalls, and FCPA violations. CMOs will usually avoid these problems by ensuring full traceability of sub-components and auditing of sub-contractors.

This brings us to the quality systems the CMO has in place to ensure stable manufacturing. Main components are GMP compliance, the use of SOPs for all functional areas, and purchasing controls. An independent Quality Management System (QMS) consisting of quality assurance and quality control departments and an established change control process are crucial factors.

Value-add services should also not be underestimated as they present the partnership with hidden cost savings and opportunities.

Once this clear profile of each company is established a match can be made between the CMO and the specifics of the desired service. The selected companies can then be engaged during an RFP process in order to provide more specific capabilities, proposed timelines, and detailed pricing. At this point the focus can shifted to the details of the costs and pricing trends of each company. Educated negotiations can now be carried out leveraging the thorough market research of the RFI and RFP.

Cost savings remain a key consideration when comparing contract manufacturing services. However, by conducting a detailed RFI/RFP process to determine the current state of the market and specific capabilities of the CMOs the greatest cost savings can be achieved with the most capable company over the life of the product. While cost is a big component in the overall production of a product, the most important aspect to consider is how well they fit with the needs of the customer and the scope of the project.

Image courtesy of CordenPharma

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