The "X" Factor in Choosing a Contract Manufacturer

Choosing a contract manufacturer is one of the most important decisions you will make in a pharmaceuticals project. On what do you base your choice?

Some criteria are obvious: capacity, regulatory history, technical capabilities, specialties. However, these are basic factors, the numbers, if you will, and you should expect all good manufacturers to have good numbers. There is also the contractor's philosophy, and philosophy is what distinguishes a good contractor from a great contractor. Think of it as the "X" factor.

There's a high level of trust implied in the choice of contract manufacturer and developer. You want them to have a commitment equal to yours. They have to know the importance of your mission. And they have to embrace the mission as their own. When a small biotech company makes the initial decision to outsource, they are betting the company's future on the contract manufacturer. For a one-product company, it's a lot like entrusting their only child to a child care center. And, when a large pharma chooses an outsourcer, they are betting on an edge in a highly competitive game. For a large company, it's like recruiting a key player for their team.

Large or small, companies are entrusting the contract manufacturer with nothing less than the future. Living up to that trust is key to the successful philosophy. If this is done, the contract manufacturer becomes an important member of the project management team. Then, and only then, do you get the benefits usually claimed for outsourcing: guaranteed product quality, assurance of regulatory procedure, ensured supply, cost savings, expanded expertise, financial flexibility, and reliability in both product and performance.

However, there's a much larger benefit that supersedes all others. With trust in place and the contract manufacturer on board as a team member, outsourcing becomes a strategic asset, rather than a risk or tactical necessity. This frees up assets to create value in other areas of the company. It increases flexibility without a fixed overhead burden. It allows rapid reallocation of resources in response to changes in the market. It reduces time to market. And it minimizes capital investment prior to FDA approval.

Although the opportunities are truly huge, the pharmaceutical industry has only comparatively recently begun to use outsourcing in a big way. Yet the demand is such that contract development and manufacturing are already approaching $5 billion annually and growing at about 20% per year. This growth is being fed by both large pharmas, as they look for ways to stay competitive, and the growing number of virtual biotech companies who must, by definition, outsource their development and manufacturing.

The increased business that such growth bespeaks will no doubt go to the contract manufacturers and developers who demonstrate, not just good numbers, but a great philosophy, and who know how to translate it into practical terms. They are the ones who know how to stay within a budget and meet a schedule. They know you need your clinical trial results on time, because the investment community needs them on time. They know that communications is the heart and soul of a good relationship, because the only thing worse than bad news is no news at all. They are the ones who deliver the "X" factor. N/Ahur C. Solomon, VP of Business Development and a Principal of SP Pharmaceuticals, has extensive management experience in both pharmacy and managed health care. A Registered Pharmacist in several states, Solomon was national president of the Pharmaceutical Care Management Association.

For more information: Arthur C. Solomon Vice President, <%=company%>, 4272 Balloon Park Road NE, Albuquerque, NM 87109. Tel: 505-761-9230. Fax: 505-761-9229.