Choosing the right Contract Development and Manufacturing Organization (CDMO) is crucial to the successful development of a new API. The marketplace is competitive and complex, but the author offers an intriguing comparison between CDMOs and the automotive industry. Just as automakers rely on third-party suppliers to craft essential parts while retaining control over the
final product and brand, pharmaceutical companies
trust CDMOs to oversee the manufacturing of life-saving drugs. Where auto help us move with
the cars they build, CDMOs are driving innovation in healthcare with the drugs they provide. With deep insight into pharma supply chains and industry expectations, the author provides a fresh perspective shaped by experience, positioning themselves as a valuable resource—much like a key automotive supplier—helping ensure smooth production and top-tier quality.

When growing up, you learn about cars from your parents. For example, my father loved Fords and hated Chevy’s. Why? My father said that Fords were dependable and Chevrolets always broke down. Was this true? I had no idea. As I grew older, I became more curious about cars and the companies that

made them. As one gained experience as a driver, I naturally started to form my opinion about auto makers.
For example, I began to notice the various tiers of auto makers. For luxury cars, many people gravitated to brands like Mercedes and Rolls-Royce. For sports cars, many felt that Ferrari, Maserati and Porches were the best. The decision to buy a car often included where the car was made. Was it made in the USA or was it made elsewhere such as in Europe or Japan? This was always a great discussion in a household where one’s father was a card-carrying union member.
Remember when Kias first came out? Built in South Korea, they were constantly maligned for their mechanical problems. Today, one can argue they have done a fine job to solve these issues and become a very solid brand. Alternatively, the Yugo came and went. People were just not able to accept a cheap car that was not dependable. The Yugo has been called the worst car ever made.

Reputation or experience or both?

When deciding to buy your first car, you have multiple choices. Do you go with what you know or do you consider other choices after speaking with friends and colleagues? It can be a difficult decision to process. The same can be said about CDMOs.

When you first learned to drive, the choice was likely made for you by your parents. When you are developing a drug and your job involves the sourcing

of the molecule, you may have to work with a CDMO that was put into place by your current boss or management.

While that CDMO may be sufficient, just like your first car, you will likely have your own ideas. You may have noticed that the CDMO you must use is more ‘product centric’ yet you would prefer a more ‘service oriented’ CDMO. Your experiences with your current CDMO may be underwhelming. That is to say, the legacy CDMO is acceptable, but it is not exactly what you desire – similar to that car you first drove thanks to your parents.

After attending several conferences, you begin to get a feel for an organisation after speaking to them. You can begin to assess what other CDMOs have to offer and perhaps realise that your current CDMO,

albeit doing the job, is not a great fit for your ultimate needs. After meeting with yet another new business development (BD) representative from your current CDMO, you have heard or met with several CDMOs that have excellent reputations. Some even have experience along with a long time, stable management team that could possibly make your life easier.

Time to shop? 

The decision to push your management to consider bringing on a new CDMO can be a challenge. You can see the potential benefit of a fresh take on your programs yet your boss may feel somewhat obligated to stick with your current CDMO. Who knows, the stories of kickbacks, underhanded dealings, commissions being exchanged for priority status and other nefarious deeds are out

there. You are told things like “we have always used them” or “it is too difficult to bring on a new CDMO with all that paperwork and site visits”. Nonetheless, you see that having more options could potentially bring great value to your company.

My father asked me, “Why do you want to look at another auto maker?” My response was a simple one, “I have spoken to friends and done my homework. I know that I can get more bang for my buck with another car maker”. The same can be said for looking at bringing on a new CDMO. Some (large?) companies have a list of preferred vendors and they will never consider a new addition no matter the circumstances.

There are many biotech and pharma companies that continue to grow their stable of CDMOs to provide not only value, but the necessary options to speed their drug through the clinic. What do you want to be – a leader or a follower?

Be aware of unnecessary contractual agreements

There is no need for signing that extended warranty agreement when you know the car is built well.

Yet the salesman will try to convince you that it is worth it. Many buyers make this mistake. Too often, small and virtual pharma companies make the same mistake by signing agreements with companies or agents that often have questionable intentions. Why?

Typically, a very small company that just doesn’t have the bandwidth feels that it is better for them to ‘outsource’ their outsourcing. What they fail to realise is that they often handcuff themselves to the third party, who will now either control the sourcing for the life of their molecule moving forward and/or will take a percentage of the spend in perpetuity (see Mr Wonderful on Shark Tank).

Having choices greatly enhances your success. Also, dealing directly with a CDMO not only saves you money, but cuts out the middle man. Buying a car from the dealer direct is much better than using an agency that guarantees a low price. Only the dealer can get you that low price because no agency works for free.

Repeatedly, these contracts hamstring a company. With today’s marketplace, there is little value in paying for a service that only complicates

communication and invoicing – longer time and higher prices will not help you get to market.

Service it regularly and it will run forever

Whether you carry out your own maintenance or have a good mechanic, you know that you must service your vehicle regularly. My father told me that your car will run forever if you do three things regularly – change the oil, spark plugs and anti-freeze. I can’t say he was wrong. It was good advice. He also said be sure to talk with the mechanic to be proactive in car care.

Communication with your CDMO is probably the most important thing you can ever have. Being open and having transparent conversations regardless of the state of the project will serve you well. Establishing a relationship with the CDMO allows you to position your company to understand production schedules, timing, demands on resources at the CDMO and a host of other important items. It also allows the CDMO to understand, possibly anticipating, projected capacity requirements for the API requirements that seem to change weekly depending on the patient population, dose and indications.

The innovator/CDMO relationship works both ways. It is critical for both parties to succeed. Risk must be shared. Working together as part of a team will allow

candid dialogue that will ultimately lead to success. The drug candidate may fail its clinicals or the company may be purchased by another party, yet the relationship you established with your CDMO will allow you to work together in the future. This is just like bringing your new car to your old mechanic.

Is new technology worth it?

Gasoline, diesel, hybrid or electric – what is the best? It depends on what you want. There are arguments both ways though I have been told that Tesla drivers have now replaced BMW drivers as the most obnoxious on the road today! Regardless, technology is constantly changing and offers us multiple choices.

Most CDMOs are looking to ‘expand their tool box’. Why is this? In order to stay relevant, you need to offer customers more options. Many car dealers have a plethora of options to look at. CDMOs are no different. By making investments back into themselves, they can continue to grow and improve.

I see some car dealers move to a newly-built location, yet the car selection is the same and/or the dealer name changes. I have seen private equity (PE) backed CDMOs build new labs that cannot be used since they want to flip their investment to a new PE group and exit with a profit, which is the goal of any PE group. Good for them, but what does this do for the customer?

What car to select?

At the end of the day, the choice is yours. There are many reputable CDMOs to select from. You have likely been contacted numerous times by a BD representative to set up a meeting. Do your due diligence. Get to know the team you will likely work with. Establish a solid working relationship based on trust and values. If you do this, your CDMO will work for and with you for a long time just as your car will.