The Small Pharma–CDMO Marriage: How We Can Make It Even Better

By Sue Wollowitz, Ph.D., president, Wollowitz Associates LLC

Unlike Big Pharma, which may outsource internally developed processes and formulations, small and midsize pharma/biotech firms are dependent on contract development and manufacturing organizations (CDMOs) for much of their product development and GMP manufacturing activity. In fact, the ever-changing community of small to midsize pharma companies would not exist today if the CDMO industry was not growing along with it.

Why is this relationship important? One reason is that for a significant percent of drugs that make it to market, small pharma sponsors get them into at least Phase 1, and often beyond. In 2014, 35 percent of new drugs approved in the U.S. were from small pharma sponsors — and that number does not include those drugs acquired by larger sponsors before the New Drug Application (NDA) was filed.¹ The corollary is that small and midsize pharma represent the majority of early development work at CDMOs, including route scouting, formulation, analytical method development, and Phase 1 manufacture. They and/or their late-stage development partners also constitute a significant portion of late development activities. Not surprisingly, the CDMO-sponsor relationship can have a large impact on the overall quality and timing of CMC development, and ultimately the launch of many products. 

The parallel growth of small pharma and the CDMO industry has allowed each side to manage a separate set of risks and business challenges. Interestingly, the two industry groups have evolved differently over the last 20 years, albeit feasting or fasting in unison in response to the vagaries of the greater financial world and global economies. 

Opposites Attract

It’s particularly interesting to see how the CDMO industry has grown, matured, and consolidated while the small pharma business model and organization has remained surprisingly unchanged. For small pharma, the ability to rapidly grow (and at times rapidly contract), to attract individual entrepreneurial scientists, and to manage a small set of very dynamic projects while investing little in capital and non-project-focused areas is key to bringing investments into innovative, high-risk projects. The CDMOs, on the other hand, take on the high capital investment of brick-and-mortar facilities and hire in deep technical expertise. Their ability to continuously provide state-of-the-art process and analytical technology is critical to both attracting customers and manufacturing in a highly regulated environment. 

Given that this marriage of opposites is so important to the development of life-changing and life-saving pharmaceuticals, let’s think about the key needs of the two parties and how can we make the relationship even more effective.

The CMC environment at small pharma is the seed of this partnership. The product development experience of the CMC staff is highly variable, particularly for early stage projects, ranging from substantial experience in development, scale-up, and launch to “learn on the job.” Research laboratory space may be available, though equipment and procedures are unstandardized. The CMC people likely wear many hats. In small organizations with only one or two products under development, much of the development activity may be supported or even directed by technical consultants — for economic efficiency and to manage business risk.

Regardless of headcount, the CMC team must move things forward in parallel with nonclinical and clinical development, and is directly impacted by the overall business and financial situation of the company.  Events in these areas may require sudden changes in project goals and sponsor priorities.  For example, the product definition changes during formulation development, the drug compartment of a drug-device combination is modified, clinical supply requirements rapidly expand five- to 10–fold, or problems with API manufacture require more investment and time in process chemistry.  Worse, rapid cancellations of agreements sometimes follow unfavorable nonclinical and clinical results. All sponsors face these issues, but for less experienced and/or small teams and early stage projects, this is a major challenge.

Let’s focus on what this means to the relationship.

Expertise Needed

The “D” in CDMO refers to the development services provided, particularly to small and midsize pharma that do not have their own laboratories or the specialized capabilities needed for the project. However, more than just lab space and equipment is needed; small pharma depends on its CDMOs for more than a “a pair of hands.” These sponsors want scientifically and technically qualified personnel who can bring their own experience to problems and provide solutions to development challenges. 

In fact, the increase in technical capabilities in the CDMO industry has been driven by the widening demands of companies that lack internal capabilities in specific areas.  For example, the availability of CDMOs that can handle high-potency materials, new drug delivery systems for improved bioavailability, antibody-drug conjugates, and drug-device combinations capabilities is due to industry-wide interest in the technologies. The ability to obtain these capabilities on an outsourced basis has allowed small sponsors to envision and achieve new ideas, but this also brings with it the need for ever more experienced personnel at CDMOs.

Are We Collaborative Enough?

In this outsourced model that separates the lab and plant from the rest of the sponsor’s drug project development team, the seamless flow of information is a key challenge. 

Just going through a weekly agenda is not always sufficient for developing a truly effective relationship. Transparency is not a default component of such meetings, nor is the level of knowledge sharing that is necessary to make a team truly high-performing. These two characteristics of collaboration are crucial to making the best and timely decisions benefitting both the sponsor and the CDMO.

Knowledge sharing is about technical and tactical information. Outsourcing all development and manufacturing activities, likely to multiple CDMOs, inherently results in silos of information, separating technical experts from the larger knowledge database. The sponsor is the repository of this database, gathered from all internal and external sources, but to fully leverage the expertise of the CDMOs, sufficient data needs to be available to them. For example, details concerning the robustness of a process, product, or method — or lack thereof — allow a CDMO to better understand the risks and needed scope of effort. Collectively, this information is important in identifying potential critical process parameters (CPPs) and quality attributes, and in ensuring a smooth tech transfer during scale-up. (For more on knowledge management, see my recent Life Science Leader article “An Outsourcing Challenge: Creating A Knowledge Base With Legacy Value.”)

Knowledge sharing is a two-way street, however. Observations at each CDMO feed into the overall knowledge base. Technical personnel guess at the level of detail that should be communicated to the sponsor, but if a CDMO wants more information to come in, the same level of detail must flow out to allow real dissemination of knowledge. 

Written documents used to communicate between the parties may not include such detail, yet they can have a major impact on understanding what must be done and when. Sponsor-CDMO weekly and on-site meetings should encourage direct interaction between the people who are able to assess and transmit technical data; otherwise, the meetings become simple audio versions of written updates. 

Finally, let’s discuss transparency.  Both sponsors and CDMOs have various internal demands they are juggling in parallel with the agreed-upon workplan, which is the nut of their collaboration. Transparency about information that might change the internal business planning and risk understanding of the other party  — or that anticipates a scope change — is important. On the CDMO side, this information can include the changing availability of personnel or facility resources, delays in internal or externally generated supplies, and those notifications typically spelled out in a quality agreement. On the sponsor side, it may include timing changes in sponsor-required delivery dates or sponsor-provided materials, or a heads-up on potential scope changes. Sharing this information helps the other party determine how to reduce any negative impact or, ideally, capitalize on changes in plan.

Like a marriage, the shared goals of the partners and the individual goals of each are achieved through understanding, collaboration, and communication.  For the small pharma–CDMO marriage, this will help keep both parties healthy as they face exciting new scientific and technical challenges in an ever-changing business landscape.

References:

1. H. Sant, “HORIZON LINES: A Yearly Review of NDAs – 2014,” Pharmaceutical Outsourcing, July/August 2015, Vol. 16, Issue 4, pp. 52-55.

Acknowledgements:

The author would like to thank Stuart Levy (SGL Chemistry Consulting, LLC) and Martin Osterhout (Roivant Sciences) for their initial review of this article.

About The Author:

Sue Wollowitz, Ph.D., is a pharmaceutical development consultant and educator. She is interested in CMC tactics and strategies in small companies that increase operational quality and best support project goals. Wollowitz has led pharmaceutical operations at Medivation, Inc. and held various positions at Cerus Corp. and Dow Chemical Corp. She is the holder of 32 patents and the author of over 20 publications. Wollowitz has a Ph.D. in organic chemistry from the University of Wisconsin-Madison and further training at CNRS in France and at the University of Chicago. She can be contacted at suewollowitz@gmail.com, or on LinkedIn.