CMOs are frequently utilized to scale up and manufacture pilot plant-sized batches for clinical trials. However, the majority of development work is usually undertaken and completed prior to engaging the large scale contract manufacturer. When this is the case, scale up will only be successful if a thorough technology transfer program is developed between the pharmaceutical manufacturer and contract manufacturer.
To facilitate this process, we will examine the increasing utilization of CMOs for scale up and manufacture of final dosage forms, outline methods to avoid unforeseen pitfalls and make recommendations for implementing a successful technology transfer program.
Understanding the Reasons To Outsource
The formation of drug development organizations is one result of the wave of mergers that has swept over the pharmaceutical industry during the past decade. Former employees of pharmaceutical companies are pooling their financial and intellectual resources to form drug companies that operate from an office suite location. These companies outsource activities and services ranging from preclinical chemistry and toxicology research to the development and manufacture of clinical supplies for clinical research programs and commercial manufacturing.
Therefore, much traditional drug R&D ends up in a multiple partner relationship: CRO, pharmaceutical company and CMO. One of the reasons pharmaceutical companies select CROs instead of their own in-house research staff is because of the apparent efficiency of these off-site organizations. This perception of efficiency arises from a narrowing of scope of supply; however, the narrower the scope of supply, the more often the pharmaceutical company must manage a technology transfer.
The contract manufacturing firm lies at the other end of the spectrum. The perceived efficiencies of the CRO firm, combined with the post-merger closure of manufacturing plants, has led to an increase in the outsourcing of manufacturing. Traditionally, CMOs have been either pharmaceutical companies selling excess capacity or companies specializing in a distinct processing expertise. A shift has occurred as these process- specific companies have begun to diversify, meeting with the CROs at some point along the development timetable. More often than not, this juncture is either shortly before or just after the manufacture of clinical supplies and ultimately involves the scale up.
At least one chief executive officer of a major pharmaceutical company has publicly stated that the company will close down any manufacturing plants that are producing at less than a certain percentage of its capacity. Is this a wise decision? It depends upon the plant's overhead costs. Will having to find new manufacturing sites for the displaced products hinder efficiency? Of course not. Will outsourcing suspend development of core competencies within the firm? Not usually.
Moving products out of plants that are only operating at 20-30% of capacity will decrease operating expenses over the long run, despite a possible short-term increase in costs. For instance, combining the products of two low capacity plants into one will eliminate the overhead associated with the non-manufacturing related activities of the plants, such as human resources, building maintenance, security, administration, etc.
Alternatively, if the products of both of these plants are outsourced and the manufacturing methods are rooted in older technology, the cost savings can be used to fuel R&D activities and development of core competencies and proprietary technologies, rather than suspending them.
Today there is a trend away from vertical integration, where companies add resources and functions in-house, toward virtual integration. In this network, each firm specializes in a few core competencies. Companies need not have the total complement of competencies within their firm. The influence, power and profits of any firm within a virtual corporate network depend on the uniqueness and relative importance of that firm's core competencies.
Companies providing contract manufacturing must be competent and efficient by nature. Their very existence is based on their ability to combine manufacturing of several products from several sources into an efficient use of their equipment's capacity. Current trends also have dictated that if a product or process does not utilize at least 50% of the capacity of a piece of processing equipment, it is a candidate for outsourcing, unless the manufacturing process is very unique and thus becomes a new core competency. This principle has recently been expanded to include products with gross sales of less than $100 million.
Several pharmaceutical firms have recently utilized Scale-Up and Postapproval Changes (SUPAC) guidelines to move products that were formerly blockbuster drugs to CMOs in order to renovate vacated manufacturing sites for new blockbusters. In each of these cases, sales of the older drugs had fallen to $75 million or below, while the new products were expected to have sales in excess of $300 million. Before this era, pharmaceutical companies would have built or expanded their plants to accommodate both products.
Most manufacturing agreements in an outsourcing arrangement specify an initial manufacturing term followed by annual or biannual renewals. This gives both parties ample time for strategic planning. If the product is to be moved to the pharmaceutical manufacturer after the initial contract term, time is needed to meet any FDA requirements that may be prerequisite to the site change. Most importantly, CMOs can manufacture products more efficiently. In most cases, production is not an efficient use of a pharmaceutical company's capital. It isn't worth it to invest in space, processing equipment or personnel for a product that underutilizes available capacity, if the core competency is not unique and is available elsewhere.
Advantages of Outsourcing
Outsourcing is only an advantage when a CMO can perform the outsourced task faster, cheaper or better than the pharmaceutical manufacturer. Most decisions to outsource projects are based on one of three reasons:
a) tight deadlines/timelines;
b) special one-time production/project or
c) manufacturing scales are not available in-house.
For these reasons, there are some points to consider when selecting a contract manufacturer:
- Depth of experience – High utilization and specialized focus should translate into a more experienced staff than your own.
- Mission statement – What is the stated "mission" of the company? Is outsourcing a primary or secondary consideration?
- Proprietary technology – Accessibility to a patented process or drug delivery system is a major consideration. Sustainable competitive advantage requires innovation and the ability to deliver that innovation to the market as quickly as possible.
- Ready capacity – Does the contract manufacturer have an opening in its schedule? If it takes too long, cost and time advantages may no longer be applicable.
- High utilization – Provided this does not cause scheduling difficulties, a facility that is highly utilized allows wider spreading of overhead costs which should result in cost advantages.
- Organization structure – Who will be the primary contact for your company? It should be a project manager who has a solid science background, good people skills, the ability to solve problems and sufficient time to do the job thoroughly.
Since the goal when selecting a CMO is to reduce cost and/or time to market, it is essential to determine the value each potential CMO brings to the project. Outsourcing product development is beneficial when it balances with internal resources or it brings in leading edge technology that is otherwise unavailable in-house.
However, before selecting the outsourcing option, a company must evaluate how it will handle the relationship. This is especially true when a technology transfer is involved. Subtle differences in processing equipment between the research and manufacturing groups is the most overlooked cause of unexpected delays and failures during technology transfer. Most processes will define the major pieces of equipment with the formulation considerations, but what may be neglected is defining the pumping systems, spraying systems, mixer or homogenizer types; for a fluid bed application, filter type and porosity must be defined. Minor changes in any of these can result in completion of a technology transfer manufacturing series that does not achieve the expected results.
A pharmaceutical company prepared for outsourcing will thoroughly investigate its own internal experiences. It will determine what level of staffing is required. It will determine its de-sired inter-company interface. The pharmaceutical company should decide how much autonomy it wishes to give to a contractor long before it enlists one. It should also determine its work system requirements and be willing to review them in detail with the CMO. Finally, it must determine the accuracy of its timelines. If the pharmaceutical company utilizes a CMO to improve speed to market, it must not enter the relationship with unrealistic expectations.
Ultimately, the advantages of outsourcing scale up and technology transfer come down to selecting a contract manufacturer that scores well in the four Cs: Credibility, Capability, Capacity and Cost.
A point system of: 0=Poor, 1=Fair, 3=Good, 5=Excellent, a score can be given for each of the three criterion for the 4 Cs. CMO candidates that score below 40 based on a review of their abilities (as they fit the pharmaceutical company's needs) should be avoided because they will most likely not measure up to expectations.
Additional factors to consider are:
- Service excellence
- Technical expertise
- Product quality
- Competitive pricing
- Proactive partnership
- Regulatory approvals
- Financial stability
Analytical and Stability Work
Analytical methods development and analytical methods transfer present a unique series of potential problems during technology transfer. The problems most frequently encountered involve differences in the equipment and techniques used by the research group and those used by the manufacturers. Because data obtained by the manufacturer after technology transfer cannot be ignored or reacquired without sufficient reason if it does not match the data from the research group, it is imperative that representatives from both groups spend time discussing their methods prior to attempting the transfer. This discussion should include equipment setup, calibration schedules, weighing and injection techniques and sample preparation methods. Analysts from the research group must spend time at the manufacturer's site during the methods transfer, especially if the analytical method was originally developed by the research group. In fact, it is common for analytical methods to be transferred several times as the project moves from the preclinical to post-approval phases. At each transfer, the question arises as to the equivalence of data generated by the lab receiving the method transfer. During the final transfer to the manufacturing site, assurance of this equivalence becomes critical to the product from economic, compliance and regulatory points of view.
The stability program should be designed with input from the research and manufacturing groups. Stability should be maintained at the research site for pre-clinical samples, but at the manufacturing site for clinical samples and thereafter. Unless the stability program is poorly defined, it does not typically cause any problems that undermine success in technology transfer.
Factors for Success
Communication. Good communication from the onset is crucial to implementing a successful transfer strategy. It is one of the most important elements of success, but is often difficult to achieve. Efficient and successful scale up and technology transfer can only occur through close cooperation between the development and manufacturing groups. In order to ensure a successful product launch, it is imperative that a complete transfer of the necessary technology be accomplished. The research and manufacturing groups must work closely together to complete a technology transfer program that trains and demonstrates proficiency in the skills necessary to manufacture and test product efficiently, meeting all the appropriate specifications on a consistent basis. The experience and documentation that comes from this provide in-valuable tools for the continued support of the product throughout its life cycle. For this to occur, the input of both the research and manufacturing groups is required early on in product development.
Prior to the initiation of the transfer, as many aspects as possible must be identified and addressed by all sides. This is especially true when there are more than two parties involved. Communication problems are the most common sources of conflict during a technology transfer. Nothing should be left to interpretation or assumption; to do so increases the risk that the technology transfer will not proceed seamlessly.
Communication must be timely. The best mechanism for routine communication should be identified. Whether this is regularly scheduled calls, faxes, e-mails or meetings, a backup plan should also be put in place. All oral communications should be expeditiously documented. The absence of clear and complete documentation of oral discussions can lead to misunderstanding and finger-pointing. Expectations should be clarified with respect to timeliness, compliance, protocols and reports.
In addition to the project manager, technical contacts should be identified across all critical departments (R&D, manufacturing, quality, analytical). A designated technical contact identified by both parties can mean the difference in solving a technical problem within the project deadline or not.
Quality. Work must be conducted in compliance with FDA regulations. Quality should be continuously evaluated during ongoing site visits. Quality goes beyond technical expertise; it extends into the corporate culture.
Timeliness. Timeliness is critical for the success of any project. To succeed in a technology transfer, expectations should be communicated, not assumed. Critical milestones must be clearly defined. Bear in mind, one of the reasons to outsource is to improve the speed to market. Therefore, the sooner the CMO knows the timetable, the easier it should be to meet it.
Relationship. Successful outsourcing occurs through a partnership. This requires time and effort by both parties. Visits and meetings provide a forum for all parties to get to know one another. The better the relationship, the greater the chance that expectations will be met.
Mergers continue to consolidate the pharmaceutical industry. Consolidation is largely a result of the cost-conscious atmosphere in which the pharmaceutical industry must operate today. Most pharmaceutical manufacturers now use CMOs in the production and release of their products. This relationship between the contract manufacturer and the pharmaceutical company is best when it approaches a true partnership. Since an original drug product can cost as much as $350 million to research and develop and take as long as 10 to 12 years to bring to market, companies must find ways to streamline the process and bring products to market more quickly and efficiently. As a result, pharmaceutical companies must build a closer partnership between research and manufacturing operations. In order to be successful, effective and efficient technology transfer between functions is essential to support overall business objectives.
In the past, technology transfers were considered to be successful if ruggedness criteria were met; that is, if close agreement in results obtained between the two locations. Today technology transfer must be robust – slight changes in operating parameters must still yield comparable results – in addition to rugged. As mentioned earlier, subtle differences in processing equipment between the research and the manufacturing groups is the most overlooked cause of unexpected failures during technology transfer.Therefore, when using contract manufacturers for scale up and technology transfer, it is important to select partners that are proficient in and focused on the service they are expected to perform. And for the maximum efficiency in technology transfer, all parties should have a vested, long-term interest in the success of the scale-up process.