CDMO’s, also known as Contract Development and Manufacturing Organizations, has become a mainstay of the pharmaceutical industry in recent years. With the COVID-19 pandemic raging on, these organizations have now cemented their status at a minimum specifically within the biopharmaceutical game. As biopharmaceutical companies race to develop such a coronavirus vaccine, they take bigger risks to reach the finish line, thus making it necessary to outsource their drug production functions in order to hedge these risks through not fully investing resources internally but rather externally solely on a contract basis.
In this article, we explore how pharmaceutical/biopharmaceutical managers should go about picking a CDMO with whom to work. There are several important factors that go into this previously explained very important decision, and as such careful research should be reflected in this task. The factors that should be considered are resources, oversight, and compatibility. Each of them is discussed in further detail below, and a prime example of a worthy CDMO is further discussed afterwards. Some other noteworthy companies are also noted.
Resources – we don’t mean money, personnel, or time (which can be involved), but instead specifically refer to capabilities, capacity, and technology. Overall, it is a consistent trend within the industry for medications to become even more precise to end-user needs, and as such, very specific resources are required in the different niches of drug production processes. One drug’s production process may be indefinitely variant to that of another. The specific capabilities that the CDMO specializes in, the flexible capacities that the CDMO is capable of upsurging or bringing down, and the particular technologies that the CDMO is able to apply – all to support a robust, efficient production process – are all important resources that may be unique to the prospective drug in question.
Oversight – one of the riskiest and therefore most rate-limiting factors in the drug production process is regulatory compliance. Simply put: if the government does not approve your medication, your company may lose all that it’s invested in that drug or at minimum must make alterations to your process so that it passes the tests of their oversight organizations. Regulatory environments are undergoing constant change as advances in biomedical research are made, so it’s extremely important to work with a CDMO that has a regulatory affairs department that is akin to the latest in the evolution of pharmaceutical industry policies.
Compatibility – perhaps the most important reason to go with one CDMO over another is that one is willing to work with you rather than just for you. In other words, it’s important to find a long-term partner, not just a short-term provider. Once invested in each other, a long-term partner may work with you more extensively on actually providing you with the two aforementioned factors – resources and oversight – to get over certain speed bumps. As a general but very plausible example, a specific new technology that your company may not have yet may in-turn be required by an evolving regulatory framework for a specific region. A more compatible CDMO partner may be more willing to strategically co-invest in what you need rather than dishing you off to the next provider.
Now that we’ve explored what one should look for in working with a CDMO, let’s look through a prominent CDMO as a sample – Samsung Biologics. We’ll look into their headquarters location to see which markets they primarily serve, their current market capitalization to get a feel for how large the company is, and some cool news to examine what they’re up to amidst the current COVID-19/coronavirus pandemic.
– Headquarters location: Incheon, South Korea
– Current market capitalization: 46.58 trillion KRW
– Cool news: In addition to exciting recent deals with Panolos for solid tumor treatment, Kanaph Therapeutics for retinal diseases treatment, PharmAbcine for neovascular disorders treatment, and AstraZeneca for biologics therapeutics bulk drug substance and drug product support, Samsung Biologics has further been at the forefront of the COVID-19 fight which has unlike in some other industries caused an uptick in demand for their services. In April, 2020, Vir Biotechnology signed a $362 million deal with them to scale Vir’s manufacturing program of Vir’s prospective COVID-19 treatment. Then in May, 2020, GlaxoSmithKline signed with them for $231 million for production support across their entire biologics portfolio, which includes a coronavirus vaccine candidate actually in partnership with their rival Sanofi. With this kind of good business, they made the announcement of their construction of their $2 billion “super plant” to be at their Incheon headquarters, which is going to be as big as three normal-sized facilities combined, in August meant just to keep up with COVID-related orders.
Other prominent CDMO’s to be considered include:
– Lonza
o Headquarters location: Basel, Switzerland
o Current market capitalization: 42.37 billion CHF
– Catalent
o Headquarters location: Somerset, New Jersey, USA
o Current market capitalization: $15.13 billion
– Patheon
o Headquarters location: Durham, North Carolina, USA
o Current market capitalization: $183.77 billion (Thermo Fisher Scientific)
– Recipharm
o Headquarters location: Stockholm, Sweden
o Current market capitalization: $12.41 billion SEK
– Siegfried
o Headquarters location: Zofingen, Switzerland
o Current market capitalization: 2.70 billion CHF
Picking a good CDMO to work with is a decision of utmost importance. The hypercompetitive nature of the pharmaceuticals industry, even moreso in biopharmaceuticals in light of the ongoing pandemic, makes reflecting on these three important factors a critical task: resources, oversight, and compatibility. The top CDMO outlined above – Samsung Biologics – is a top example that should be evaluated by managers. Other important ones are Lonza, Catalent, Patheon, Recipharm, and Siegfried. Their expertise in these three areas, if specifically applicable to your company, may very well make them suitable companies to be considered.
