Making the Best of a Bad CMO-Client Relationship

There are various problems that can arise out of the relationship between CMOs and their clients. The author presents results of a survey of CMOs and biopharmaceutical manufacturers in which respondents describe common mistakes they have encountered.

As outsourcing becomes increasingly integrated into higher-end, more technical bioprocessing activities, new stresses are added to client-contractor relationships. These outsourcing collaborations are already pressure-filled, high-risk, and high-cost. While clients take into account many factors when selecting the appropriate CMO, the relationship only begins once that contract is signed.  According to CMOs responding to BioPlan Associates’ 10th Annual Report and Survey of Biopharmaceutical Manufacturers(1), there are some significant areas in which the clients themselves prove to be less-than-ideal working partners. Recognizing how the relationship can breakdown on the client’s side can be an important step in reducing risks and ensuring smooth-running projects.

BioPlan’s study, which included 238 biomanufacturers and 158 suppliers to the industry, set out to discover the most commonly cited mistakes made by CMOs’ biopharmaceutical clients. The study asked CMO respondents to identify which, out of a list of issues, they would consider a very common problem or a somewhat common problem. The most common mistake, according to CMOs, was that clients were not communicating with the CMOs effectively. This problem was cited by every single CMO in the sample. While this is a “soft,” non-technical issue, its ubiquity indicates that it plagues these relationships. Separately, this was seen as a top problem with the biopharmaceutical clients as well. This problem is not, therefore, a one-sided shortcoming.

The second most commonly cited problem (91.7% of respondents) was that clients don’t build-in sufficient time for the project (i.e., unrealistic timeframes). This is a frequent problem in CMO-client collaborations as it is not uncommon for small, inexperienced companies to have unrealistic presumptions. Moreover, companies new to these relationships sometimes simply do not understand a range of issues such as how to achieve high-performance processes, advance from small-scale to clinical manufacturing, how to release clinical grade material, validation requirements, initiate investigational new drug (IND) submissions, and set up and recruit patients for clinical studies. There are often misconceptions regarding the costs for outsourcing of manufacturing, trials, and other tasks. On top of this, all too often some clients’ pre-clinical in-vivo/in-vitro assays need to be repeated with CMO-produced “representative material” (i.e., representative of what will be further developed and go into trials) and the results may diverge from earlier client results.

Besides unrealistic timeframes, a number of other problems were similarly cited by respondents:

• Clients want to contain cost by limited development runs, but still expects successful full-scale manufacturing
• Clients expect us to resolve the most difficult scientific or technical problems
• Clients expect us to give them our proprietary, internal process development or manufacturing expertise.

These problems appear to be the most common complaints, but a host of other issues also vex CMOs. More than four in five feel that “Clients don’t recognize the variability in process development,” and “Clients don’t understand their role in regulatory submissions.” In fact, of the 11 problems identified, each was cited by at least half of CMO respondents, and all but one was cited by at least two-thirds. With many companies and their outsourcing project managers likely having less experience both with CMOs and various aspects of bioprocessing than in the past (often due to cutbacks in staff and increased outsourcing), it is not surprising that problems with client communications and expectations are widespread and damaging.

Problems may be getting worse
BioPlan evaluated how trends in client-CMO relationships have evolved over the past few years, finding that these relationships continue to involve problems, and that most have remained steady or even increased in recent years. The top area of complaint in 2013, ineffective communications, jumped to 100% of respondents after gradually rising from 80.4% to 86.1% between 2010 and 2012. Clearly, this problem has become more widespread over the years, reaching its peak this year.

Two other problems show a clear upward trend over the past few years:

• Clients expect us to give them our proprietary, internal process development, or manufacturing expertise, cited this year by 91.7%, up from about two-thirds in 2011 and 2012 and 53.6% in 2010
• Clients don’t understand their role in regulatory submissions, indicated to be a problem this year by 83.3% of respondents, up from 69.4% last year, 66% in 2011, and 53.6% in 2010.

• These three problems show the most definite multi-year trend. Others appear to have become more pronounced over the past year, but show more variability from one year to the next:
• Clients want to contain cost by doing limited development runs, but still expect successful full-scale manufacturing, at 91.7% of respondents this year, up from 86.1% last year, but on par with the 92% from 2010

• Clients expect us to resolve the most difficult scientific or technical problems, also at 91.7% this year, a big jump from 72.2% last year, but again on par with 90% in 2010.

There are some snippets of good news among the survey results. After gradually rising for a couple of years, complaints about clients not appreciating the differences between small-scale and full-scale manufacturing and just handing off a project without planning for on-going interactions have leveled off this year. Furthermore, fewer respondents this year indicated that clients aren’t planning their tech transfer process or are wanting CMOs to use cell lines or processes that are not suitable for GMP manufacturing.

Fixing problems requires better communication
The most common, wide-ranging complaint among CMOs, that clients don’t communicate effectively, extends into many of the other complaints. Part of communicating more effectively is setting and managing expectations, and several of the issues at hand appear to be the result of breakdowns in this area.

CMOs, for example, should theoretically be able to ease problems associated with clients expecting to contain costs and still achieve full-scale manufacturing. Experienced CMOs will know what they can achieve and what they can’t--and clients should also have a solid awareness of their own weaknesses and pain points. The data suggest that a frank discussion of potential problems at the outset of a relationship can help stave off future issues and establish a more collaborative working environment.

It is unlikely this problem will go away in the short-term. Most CMOs are technical in nature, and their managers are generally scientists and technical experts, often with limited expertise in building customer relations. In contrast, most non-science service industry segments, including hospitality, restaurants, and entertainment, are staffed with people highly trained in customer relations and communication. CMOs are both highly technical organizations and high-risk service providers. Clients in all service industries expect and demand responsiveness, communications, trust, and confidence in their service providers. The CMO industry is no different. Yet, from the past 10 years of BioPlan’s study, there has not been substantial change in how client-CMO relationships have evolved. Given the importance of communication, trust, and competence in this industry segment, any CMO capable of providing all three would likely have a significant competitive advantage.

Reference
1. BioPlan Associates, 10th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production (Rockville, MD, April 2013).

About the Author
Eric S. Langer is president and managing partner at BioPlan Associates, Inc. in Rockville, MD,elanger@bioplanassociates.com, tel. 301.921.5979, www.bioplanassociates.com.