Eric S. Langer11.14.11
Bad relationships are rarely one-sided. This certainly holds true for the CMO-client relationship, where some might expect the service provider to do the heavy lifting in the alliance. According to data released in our 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production,1 that may not entirely be the case. It turns out that more than 9 in 10 CMOs have their own set of problems and reservations about their partners. Some problems are systemic, and not easily resolved with client services or improved management. For example, nearly all (92%) indicated that their ‘clients want to contain costs by doing limited development runs’. Yet, they still expect projects to be successful at full-scale manufacturing.
If CMOs are to contain costs by doing fewer runs, they’ll need to be more effective at their process development. In the variability of a biomanufacturing environment, this may not always be possible. This creates friction between the partners’ competing needs. And although some CMOs have more competence at process development than others, such a competitive advantage does not guarantee a successful project.
CMOs pointed to another equally systemic client mistake, that ‘clients don’t build in sufficient time for the project’, also cited by 92% of CMOs as either “Very Common” or “Somewhat Common.”1 Significantly, both of these problems also topped the list of the most critical mistakes (measured as “Very Common”). Short-changing the development process was indicated by 74% of CMOs as “Very Common,” and unrealistic timeframes mistake was cited by 60% in this category.
The annual study, which received responses from 352 global manufacturing developers and CMOs, quantifies the most common mistakes made by clients as both sides work to improve their relationship amidst economic pressures. The study shows that, partly as a result of the economic crisis, biopharma companies are actively focusing more on productivity, processes and quality.
They are becoming increasingly risk- and cost-averse. This can lead to stress and problems in even the best of client-contractor relationships. Indeed, both of the problems that topped the list this year suggest that clients and contractors alike are having trouble setting expectations.
Third on our CMOs’ list of most common mistakes made by clients, measured as “Somewhat Common” or “Very Common,” was ‘Clients expect us to resolve the most difficult scientific or technical problems,’ cited by 90% of respondents. This was followed closely by ‘Clients don’t plan their tech transfer process,’ at 88%.
Tied for the fifth spot were ‘Clients don’t communicate with us effectively’ and ‘Clients don’t recognize the variability in process development,’ both at 84%. This process development issue (indicated by 46% as “Very Common”) involves cost containment and time-to-project completion, and suggests that the majority of biomanufacturers, under increasing cost and time pressures, are pushing that stress onto their suppliers.
Rounding out the top 10 most common mistakes made by clients were:
We evaluated how client-CMO relationships have evolved during the past year. We found that these relationships are increasingly creating problems: each of the pain points we evaluated grew from 2010. For example, CMOs’ problems with unrealistic time frames, which topped the list last year with 82% of respondents, took 92% of respondents this year to earn the same dubious distinction.
In comparison to results in 2010, we find many problems are growing over time, suggesting that concerns are not being resolved, and relationships are not getting better.
In contrast to the consistent increase in problems, we found some shift in rankings. The largest rise was seen in how CMOs find they are expected to resolve the most difficult problems, which was relatively moderate in the sixth spot last year (68%), but leapt to 90% of respondents this year. This increase may represent a change in how biopharma clients are allocating their internal staff resources, expecting CMOs to work harder on challenging technical issues.
CMOs’ Typical Pain Points
Reflecting today’s high-stress environment, our report clearly shows that problems concerning time, client support, and project management are widespread and increasing. Beyond the pain points identified in our list, respondents offered comments that confirmed these factors:
Key Concerns on the Client Side
Our study also looked at the other side of the client-CMO relationship, evaluating the factors sponsors considered when outsourcing biopharma manufacturing to a contractor. Among clients, we found that the top critical consideration (rated as “Very Important”) was that CMOs must ‘Comply with my company’s quality standards.’ Cited by almost 60% of biopharmas, it was rated as a critical factor by more than double the amount who indicated ‘demonstrate cost effectiveness of their services’ (28.4%) as a “Very Important” attribute. Not far behind quality standards on the list was ‘Protect intellectual property’, which was rated as a critical factor by almost 57% of developers. This factor relates to biopharmas’ desire that their product-specific manufacturing operations be kept proprietary, and its importance may be the result of the increased focus on outsourcing of operations. As off-shoring of complex operations continues (see facilities resource www.top1000bio.com), these factors will play an increasing role.
In keeping with the themes we found when evaluating relationships from the CMO side, certain factors relating to professionalism, performance and effectiveness figured prominently in clients’ minds. For example, ‘Stick to a schedule’ was cited by almost half of respondents as a “Very Important” factor. ‘Establish a good working relationship’ was close behind, at 45.5%. In fact, of respondents who indicated an attribute was “Important” or “Very Important,” these soft issues took the top spots (when combining these two metrics). The number one issue, ‘Stick to a schedule’ was indicated by 93.2% of sponsors as “Important” or “Very Important”. Close on its heels, ‘Establish a good working relationship’ was cited by 91% of respondents. Communication is a very important issue in any relationship, and the complexities of a CMO-Client strategic relationships can be challenging.
The Top 5 considerations, rated by Clients as “Important” or “Very Important” when selecting a CMO were:
Clients’ Concerns are Leveling Off
When evaluating the critical, “Very Important” attributes considered by clients, we found that the rankings have shifted to some extent over the past five years. For example, ‘Establish a good working relationship’ took the top spot in 2009, dropped to the third spot in 2010, and then fell to sixth this year, with 45.5% of respondents indicating it to be a “Very important” selection attribute. This suggests that, despite “soft” relationship issues continuing to factor highly as concerns for both clients and contractors, clients view their relationships as having slightly improved over the past year. Similarly, ‘Sticking to a schedule,’ another client-relationship issue that is a perennial contender, appears to be getting better from the client perspective. Over the past two years, around 53% of respondents considered it a “Very Important” issue. This year, that number fell to 48.9%.
Summarizing the Trends
In contrast to the CMO contractor side, where all common pain points grew from last year, the only issue that seems to have increased in importance for clients when dealing with CMOs is ‘Have regulatory compliance expertise.’ The decrease in importance ascribed to the other issues by clients may be the result of an overall improvement in CMO management skills. Indeed, given the persistence of complaints regarding “soft” relationship issues from the contractor side, it is quite surprising to see that one of the largest decreases in critical issues for clients was ‘Establish a good working relationship,’ which fell from 58.1% of respondents in 2011 to 45.5% this year.
Other significant decreases were found:
Conclusions
As biotherapeutic developers continue to integrate outsourcing as a mainstream tool, their relationships with contractors will take on increasing importance to our industry’s development. In a pressure-cooked environment where processes of ever-growing complexity are contracted out, a single ill-fated relationship can have disastrous ramifications for both parties. For clients, this means that technical considerations surrounding quality, IP, and regulatory compliance will likely continue to place among the most critical of CMO attributes for the foreseeable future. As our study shows, however, the economic climate of the past 2-3 years has dictated that sponsors also pay greater attention to non-technical factors like timeliness and relationship management. This has translated to the other side of the coin, where cost and scheduling issues have also been front of mind for contractors, and are indeed increasing as concerns. The persistence of these factors means that both parties will need to do a better job of setting and managing expectations if they are to solve their project management problems.
Reference
1 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: A Survey of Biotherapeutic Developers and Contract Manufacturing Organizations, BioPlan Associates, April 2011, 490 pages.
What can clients do to improve their relationships with their CMO?
"Clients need to fully trust their CMO’s with process and technical information. Clients must transfer all product information, no matter how non-related the information may appear to be. [This is required for] successful tech transfer and manufacturing. So, in a word, trust!!!"
"Our client relationships have improved by additional manufacturing site in US and our activities in Asia: India and China."
"[Improving relationships] involves promptness and understanding about the client’s process and quality requirements."
As a client, what has contributed most to improvements in your CMO-Client relationship?
"Most important is to move from being just a supplier of product to a true partner. As the CMO gets information about the overall [project] context, that opens up for improvements both in relationship and actual work done…so much more than just product delivery."
The 2011 8th Annual Report and Survey of Biopharma-ceutical Manufacturing Capacity and Production in the series of annual evaluations by BioPlan Associates, Inc. yields a composite view and trend analysis from 352 responsible individuals at biopharmaceutical manufacturers and contract manufacturing organizations (CMOs) in 31 countries. The methodology also encompassed an additional 186 direct suppliers of materials, services and equipment to this industry. This year's survey covers such issues as: new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time, and assesses differences in the world's major markets in the U.S. and Europe.
Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a Rockville, MD-based biotechnology and life sciences marketing research and publishing firm established in 1989. He can be reached at elanger@bioplanassociates.com or 301-921-5979.
If CMOs are to contain costs by doing fewer runs, they’ll need to be more effective at their process development. In the variability of a biomanufacturing environment, this may not always be possible. This creates friction between the partners’ competing needs. And although some CMOs have more competence at process development than others, such a competitive advantage does not guarantee a successful project.
CMOs pointed to another equally systemic client mistake, that ‘clients don’t build in sufficient time for the project’, also cited by 92% of CMOs as either “Very Common” or “Somewhat Common.”1 Significantly, both of these problems also topped the list of the most critical mistakes (measured as “Very Common”). Short-changing the development process was indicated by 74% of CMOs as “Very Common,” and unrealistic timeframes mistake was cited by 60% in this category.
The annual study, which received responses from 352 global manufacturing developers and CMOs, quantifies the most common mistakes made by clients as both sides work to improve their relationship amidst economic pressures. The study shows that, partly as a result of the economic crisis, biopharma companies are actively focusing more on productivity, processes and quality.
They are becoming increasingly risk- and cost-averse. This can lead to stress and problems in even the best of client-contractor relationships. Indeed, both of the problems that topped the list this year suggest that clients and contractors alike are having trouble setting expectations.
Third on our CMOs’ list of most common mistakes made by clients, measured as “Somewhat Common” or “Very Common,” was ‘Clients expect us to resolve the most difficult scientific or technical problems,’ cited by 90% of respondents. This was followed closely by ‘Clients don’t plan their tech transfer process,’ at 88%.
Tied for the fifth spot were ‘Clients don’t communicate with us effectively’ and ‘Clients don’t recognize the variability in process development,’ both at 84%. This process development issue (indicated by 46% as “Very Common”) involves cost containment and time-to-project completion, and suggests that the majority of biomanufacturers, under increasing cost and time pressures, are pushing that stress onto their suppliers.
Rounding out the top 10 most common mistakes made by clients were:
- ‘Clients don’t appreciate the differences between small-scale and full-scale manufacturing’ (72%)
- ‘Clients don’t understand their role in regulatory submissions (66%)
- ‘Clients expect us to give them out proprietary, internal process development or manufacturing expertise’ (66%)
- ‘Clients just hand off a project without planning for on-going interactions’ (60%)
We evaluated how client-CMO relationships have evolved during the past year. We found that these relationships are increasingly creating problems: each of the pain points we evaluated grew from 2010. For example, CMOs’ problems with unrealistic time frames, which topped the list last year with 82% of respondents, took 92% of respondents this year to earn the same dubious distinction.
In comparison to results in 2010, we find many problems are growing over time, suggesting that concerns are not being resolved, and relationships are not getting better.
CMOs’ Typical Pain Points
Reflecting today’s high-stress environment, our report clearly shows that problems concerning time, client support, and project management are widespread and increasing. Beyond the pain points identified in our list, respondents offered comments that confirmed these factors:
- Client expectations are too high (e.g. they want the best service for the least price and completed in an unrealistic time frame).
- As a CMO I find many clients:
- Do not understand why GMP manufacturing costs are so high
- Have unrealistic timelines for approving and reviewing GMP documentation
- Refuse to devote the proper amount of time to process development. We can be pushed into GMP manufacturing and end up doing process development work at scale in the clean rooms — very expensive, which leads to tense relations with the client.
- Have no in-house QA/QC expertise and expect their CMO to make regulatory decisions regarding their product.
- Clients are often their own biggest problem in terms of slow document review.
- Clients expect reciprocal terms in clinical risk . . . the client will see the full benefit of profit margin for a successful product . . . so it is difficult for CMOs to accept clinical risks.
- Clients don’t provide sufficient information on their raw materials, cell lines, etc.
- Clients do not appreciate the importance of a comprehensive contract that specifies the roles & responsibilities of each party, especially when dealing with worst-case scenarios.
Key Concerns on the Client Side
Our study also looked at the other side of the client-CMO relationship, evaluating the factors sponsors considered when outsourcing biopharma manufacturing to a contractor. Among clients, we found that the top critical consideration (rated as “Very Important”) was that CMOs must ‘Comply with my company’s quality standards.’ Cited by almost 60% of biopharmas, it was rated as a critical factor by more than double the amount who indicated ‘demonstrate cost effectiveness of their services’ (28.4%) as a “Very Important” attribute. Not far behind quality standards on the list was ‘Protect intellectual property’, which was rated as a critical factor by almost 57% of developers. This factor relates to biopharmas’ desire that their product-specific manufacturing operations be kept proprietary, and its importance may be the result of the increased focus on outsourcing of operations. As off-shoring of complex operations continues (see facilities resource www.top1000bio.com), these factors will play an increasing role.
In keeping with the themes we found when evaluating relationships from the CMO side, certain factors relating to professionalism, performance and effectiveness figured prominently in clients’ minds. For example, ‘Stick to a schedule’ was cited by almost half of respondents as a “Very Important” factor. ‘Establish a good working relationship’ was close behind, at 45.5%. In fact, of respondents who indicated an attribute was “Important” or “Very Important,” these soft issues took the top spots (when combining these two metrics). The number one issue, ‘Stick to a schedule’ was indicated by 93.2% of sponsors as “Important” or “Very Important”. Close on its heels, ‘Establish a good working relationship’ was cited by 91% of respondents. Communication is a very important issue in any relationship, and the complexities of a CMO-Client strategic relationships can be challenging.
The Top 5 considerations, rated by Clients as “Important” or “Very Important” when selecting a CMO were:
- Stick to a schedule (93.2%)
- Establish a good working relationship (90.0%)
- Comply with my company’s quality standards (87.5%)
- Effectively handle cross-contamination issues (85.3%)
- Have capacity enough to meet my sales demand (85.2%)
When evaluating the critical, “Very Important” attributes considered by clients, we found that the rankings have shifted to some extent over the past five years. For example, ‘Establish a good working relationship’ took the top spot in 2009, dropped to the third spot in 2010, and then fell to sixth this year, with 45.5% of respondents indicating it to be a “Very important” selection attribute. This suggests that, despite “soft” relationship issues continuing to factor highly as concerns for both clients and contractors, clients view their relationships as having slightly improved over the past year. Similarly, ‘Sticking to a schedule,’ another client-relationship issue that is a perennial contender, appears to be getting better from the client perspective. Over the past two years, around 53% of respondents considered it a “Very Important” issue. This year, that number fell to 48.9%.
Summarizing the Trends
In contrast to the CMO contractor side, where all common pain points grew from last year, the only issue that seems to have increased in importance for clients when dealing with CMOs is ‘Have regulatory compliance expertise.’ The decrease in importance ascribed to the other issues by clients may be the result of an overall improvement in CMO management skills. Indeed, given the persistence of complaints regarding “soft” relationship issues from the contractor side, it is quite surprising to see that one of the largest decreases in critical issues for clients was ‘Establish a good working relationship,’ which fell from 58.1% of respondents in 2011 to 45.5% this year.
Other significant decreases were found:
- ‘Have capacity enough to meet my sales demand’ (60% in 2010, just 34% this year)
- ‘Offer a secure supply (Control of capacity)’ (46% in 2010 vs. 34% this year)
- ‘Provide superior technology transfer services’ (31% in 2010 vs. 20% this year)
- ‘Provide lead times sufficient to cover development processes (29% in 2010 vs. 18% this year)
Conclusions
As biotherapeutic developers continue to integrate outsourcing as a mainstream tool, their relationships with contractors will take on increasing importance to our industry’s development. In a pressure-cooked environment where processes of ever-growing complexity are contracted out, a single ill-fated relationship can have disastrous ramifications for both parties. For clients, this means that technical considerations surrounding quality, IP, and regulatory compliance will likely continue to place among the most critical of CMO attributes for the foreseeable future. As our study shows, however, the economic climate of the past 2-3 years has dictated that sponsors also pay greater attention to non-technical factors like timeliness and relationship management. This has translated to the other side of the coin, where cost and scheduling issues have also been front of mind for contractors, and are indeed increasing as concerns. The persistence of these factors means that both parties will need to do a better job of setting and managing expectations if they are to solve their project management problems.
Reference
1 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: A Survey of Biotherapeutic Developers and Contract Manufacturing Organizations, BioPlan Associates, April 2011, 490 pages.
What can clients do to improve their relationships with their CMO?
"Clients need to fully trust their CMO’s with process and technical information. Clients must transfer all product information, no matter how non-related the information may appear to be. [This is required for] successful tech transfer and manufacturing. So, in a word, trust!!!"
— Michelle Peake, CEO, Alpha Biologics, Malaysia
"Our client relationships have improved by additional manufacturing site in US and our activities in Asia: India and China."
— Dr. Rolf Werner, SVP Biopharma Contract Mfg Business Boehringer Ingelheim GmbH Germany
"[Improving relationships] involves promptness and understanding about the client’s process and quality requirements."
— Sanjay Singh, Head, Biotechnology, Sun Pharmaceutical Industries Limited, India
As a client, what has contributed most to improvements in your CMO-Client relationship?
"Most important is to move from being just a supplier of product to a true partner. As the CMO gets information about the overall [project] context, that opens up for improvements both in relationship and actual work done…so much more than just product delivery."
— Kim Sandell, Director, Operations Management, Pfizer Health AB, Sweden
"Our relationship with CMOs has been fairly stable. This is due to the many years we have been working together, knowing what each party needs and can provide."—Albert E. Schmelzer, PhD, Principal Scientist, Development Process Cell Culture, MedImmune, Gaithersburg, MD
"To build your relationship with CMOs…you have to invest in this relationship…for every 3 FTEs invested by the CMO you need 1 FTE from your own company. This is important to build up a relationship."— Alfred Luitjens, Senior Scientist New Technology, Crucell Holland B.V. , Leiden, Holland
The 2011 8th Annual Report and Survey of Biopharma-ceutical Manufacturing Capacity and Production in the series of annual evaluations by BioPlan Associates, Inc. yields a composite view and trend analysis from 352 responsible individuals at biopharmaceutical manufacturers and contract manufacturing organizations (CMOs) in 31 countries. The methodology also encompassed an additional 186 direct suppliers of materials, services and equipment to this industry. This year's survey covers such issues as: new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time, and assesses differences in the world's major markets in the U.S. and Europe.
Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a Rockville, MD-based biotechnology and life sciences marketing research and publishing firm established in 1989. He can be reached at elanger@bioplanassociates.com or 301-921-5979.
