A quick guide to building strong relationships with your CMO

Ipsen, ACINO and Bayer share insights on building superior partnerships and ensuring agility and flexibility

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Pharmaceuticals & Biotechnology Editor
04/16/2019

Why the pharmaceutical industry is turning to outsourced manufacturing?

In light of public pressure to reduce the costs of medicine, many companies have looked to reduce costs by outsourcing their manufacturing operations. Reduced running costs are far from the only motivator though, with many companies now seeking out strategic manufacturing partners who can increase operational efficiency and bring in new capabilities.

When we asked our Pharma IQ audience about the essential factors for an excellent Contract Manufacturing Organization (CMO), there were the expected responses of; location, quality of services, GMP compliance and product expertise. But technological capabilities, infrastructure and global reach were also highlighted as key factors for excellence.

Ulrich Rumenapp, Head of Launch Preparation and Product Supply at Bayer, agrees that the market has shifted. When asked about some of the key trends in the manufacturing landscape, he said that many companies are experiencing capacity constraints. He also foresees a need to invest in new capabilities to produce new product lines, such as cell and gene therapy. This is coupled with a greater interest in the use of disposables and, with the biologics market growing; he expects many will have a higher need for flexibility in their facilities. This will require new operational models along with new equipment. At the same time, he is seeing many CMOs grow in scale, capacity and capabilities.

“Biopharmaceutical companies look towards CMOs as a strategic option due to the large investments required to build state-of-the-art facilities” Ulrich Rumenapp, Bayer

With an increase in market consolidation for CMOs, many have been able to build up their global reach, acquire new capabilities and produce innovative therapeutic areas. There are now CMOs in the market with substantial capabilities and further mergers and acquisitions are expected as many pharmaceutical companies divest their non-essential manufacturing operations.

We expect that this market will also grow as more pharmaceutical and biopharma companies look more critically at their own in-house manufacturing decisions and big players in the CMO market emerge. With some pharmaceutical companies operating networks with hundreds of CMOs, attention is being given to how the industry can ensure that these relationships are mutually beneficial, efficient and lead to high-quality production.

RELATED: To find out who our Pharma IQ community believes are the Top 10 CMOs in the industry, read our list now. https://www.pharma-iq.com/manufacturing/articles/top-10-medical-contract-manufacturing

What are the fundamentals of a strong CMO relationship?

At the Pharma Contract Manufacturing event, the audience shared some of their biggest challenges when it comes to their CMO relationships. These were wide-ranging, but the most common responses were:

Ensuring consistent communication with partners
Maintaining a high service level across a broad portfolio
Optimizing the CMO selection and management process
Understanding best practices and applying them across the network
Making sure you have the right partner at the right rime
Getting service and priority with small volumes or during volume reduction

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A good relationship with a CMO partner will need to address and rectify these challenges. Many pharmaceutical companies are looking for increased and consistent levels of communication, high-quality service, even for small volume production, and a process that is optimized and reviewed. Flexibility and openness to innovation is also clearly a key factor.

Consisent communication, flexibility and openness to innovation are key for a CMO partnership which excels expectations

At the Pharma Contract Manufacturing event, we also asked the audience to share the qualities in a relationship that would signal a strong partnership between them and their CMO. They decided these were:

Trust, transparency and openness during all discussions
A clear definition of roles and responsibilities for each partner early on
Flexibility to each other’s needs and a willingness to find solutions
Relationship alignment at each level, from senior management to on the ground operations
Mindfulness of cultural differences and effort given to improve communication
A regular communication and review process
Sharing all relevant information and best practices where possible
Mutual respect and willingness to build a long-term partnership

Ulrich Rumenapp of Bayer shared that when it comes to partnerships, they are looking for “reliability, trust and sustainability”. He agrees that it is crucial to have a strategy focus from early development right to market, but he believes that for a strong partnership there must be “awareness, responsiveness and preparedness”.

How to identify the critical success factors for strong supplier relationships?

We can seek out high standards for all our CMO relationships, but it is perhaps more critical to understand what are the most important factors to your success. While you may not be able to optimize a full partnership, these are the areas where you can focus your attention and see early results.

Mark Clinton, Director of External Manufacturing at Ipsen, believes that “for a proactive supplier relationship, the most critical factor is responsiveness and agility”. He expands that “in terms of responsive, it is not just communication. It is letting us know that we have an issue but we’ve got solution A, B and C that we can discuss”.

"For a proactive supplier relationship, the most critical factor is responsiveness and agility"

Mark also believes that there is a critical aspect to strong supplier relationships that is often overlooked and that is consistency. He says that there should be “consistency throughout your own organization and throughout the partnership you’re working with”. He continues that “it should be clear from the chief executive down to the technician on the line that everybody shares the same values and passion for the product that we’re trying to manufacture”.

When looking for a place to start, on the product side you can look to quality status and consider market compliance, deviations and complaints. You can review the technical metrics, including process and packaging yield. You can also look into the supply chain and consider you lead times, on-times and in-full inventory.

In regards to people, your critical success factors will likely relate to transparency, ensuring that there is clear understanding and collaboration. As Mark has mentioned, responsiveness or agility. And of course, cultural alignment.

To Mark, one of the stand-out points is transparency. Understanding the success factors needed in your partnerships requires you to have awareness of what the partnership and product means to each party. As he puts it, Ipsen are “one of the mid-size rather than one of the big players”. For them, it is critical “to know where we stand, in terms of priority from a production point of view and how willing our partners are to be flexible to our needs”.

How to increase agility and flexibility with your CMO?

It is understandable that manufacturing needs may change, so it is important to build flexibility into your partnerships. As Felix Faupel, Associate Director of Contract Manufacturing at ACINO, notes “flexibility should not be a one-way street”. Instead, it should be an exercise between both parties to find areas where they can be flexible to one another’s needs and adaptable to market changes.

As Felix highlights, there are areas where you cannot be flexible, such as quality or reliability. So it’s also about finding the areas which are best suited for flexibility and pursuing initiatives there.

"Flexibility should not be a one-way street"

Donna Stevens, VP of External Manufacturing at Ipsen, points out that “the ability to be agile and flexible is also dependent on KPIs, personnel, incentives and whether you are working with a key CMO or a preferred supplier”.

Her advice is to always approach your relationships with open communication and be as transparent as possible about the context of your situation. By showing your own flexibility and outlining the situation and constraints, you will be more likely to find a satisfactory solution for both parties.

How to select the right communication model for your CMO?

In a large network of CMOs covering a variety of portfolios, there are bound to be a multitude of relationships. It is important to establish who are going to be your core or strategic suppliers and who will be a more casual partner. Once you understand the scope of your relationships, you can then invest time accordingly and also select the right working and communication model.

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Robert Cassidy, Managing Director at Tamesis Pharma, believes that “to operate effectively and deliver business value, customer and supplier relationship management has to operate within a dynamic communication model”.

He offers three communication models for pharmaceutical companies to explore when it comes to their CMO relationship management.

Model 1: Single point of contact – In this model, both parties select a single point of contact. This will lead to few opportunities for joint work or future integration, but can be particularly useful if there is a long-standing relationship or if both parties are already well integrated. In this context, both of the single points of contact must be empowered with decision making and conflict resolution ability.
Model 2: Occasional joint working – In this model, the customer and CMO will engage in selective integrative working. This will require more collaboration and communication across teams but maintains distinctions between the parties.
Model 3: Fully integrated working – In this model, both parties will pursue intensive integration to explore a joint value driven agenda. This requires full cross-company and cross-functional team work and will demand a significant amount of attention. While this model has the power to generate innovation and improve efficiency across workflows, if there is a communication breakdown it will be far more significant.

How to re-build a relationship with your CMO after a communication breakdown?

Unfortunately, relationships may experience communication breakdowns or other issues. During a crisis management exercise at the Pharma Contract Manufacturing event, Pharma IQ challenged the attendees to create an action plan for when they next face this issue.

The audience decided on some core actions they would pursue. These are:

Align your internal team with an action plan for how you will proceed.
Investigate the true root cause of your communication breakdown or issue – some areas to consider are, whether there has been; a change in management or key account holder, a shift in priorities in the company, if they have undergone a merger or acquisition, if there has been a disagreement in approach or new business entering the CMO.
Leverage your current relationships and communication channels to gather as much information as possible.
Organize a crisis meeting to discuss with your partner and internally agree on the escalation level.
Create a back-up plan, such as a second source supply in the short term, to run in parallel with your attempts to re-establish the relationship.
Build a strategy based on the outcome of your meetings and investigations and decide whether to re-build your current relationship or explore a new partnership.

What is the secret to successful CMO relationships?

One of the key factors for success in relationships is investment. Investment in time to proactively build a long-term relationship, built on transparency and trust. And relevant investments in capability, innovation and quality.

As Jan Gustafsson, Operations and External Partnerships Manager at Phico Theraeutics, aptly sums it up; "if you pay peanuts, you get monkeys". A strong relationship requires dedication and effort. He recommends leading with strategy from the start, setting out your intentions and requirements early through contracts and ensuring you work on the relationship. He suggests that all pharmaceutical companies remember, "there is no CMO as bad as the one you are leaving… and there is no CMO as good as the one you have just signed”.

Tags: relationships with CMO outsourcing the manufacturing process agile and flexible partnerships Pharma IQ Pharmaceutical industry CMO GMP Compliance Bayer Ipsen ACINO