Common Problems Between Pharmaceutical Companies and Contract Manufacturing Organizations (CMOs)


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Posted by Sam Ricchezza

pharma-companies-supplier-relationshipsIt is not uncommon for pharmaceutical companies to come to us looking to change their CMO relationship, usually due to a relationship issue that goes unchecked by both sides.  When issues are not highlighted by either the client or the CMO and tabled for discussion at the appropriate time, they tend to fester and irritate one side, the other or both.  You can tell when a relationship begins to sour, usually by the lack of responsiveness in communication or uncooperativeness in dealing with project tasks or quality-related items.  When this begins to happen, don’t be too surprised if a client starts looking for alternative supply sources.

From our experience, there are really three main sources of relationship problems between clients and CMO’s. These are:

The first problem is centered on expectations about timelines

Usually, the on-boarding process is much more involved than most people think it would be. For example, depending on the regulatory status of a new product or a product being transferred in, there’s a certain amount of work that needs to occur; work that’s dictated by the FDA, Health Canada or the EMA that has to be completed before you can successfully transfer a project into a new facility. That timeline is usually underestimated by both sides.  Everybody wants to do it quickly and everyone wants to start right away. In practice, there’s quite a bit more involved and the process needs to be thoroughly considered and mapped out before the work is begun.

The second problem has to do with budgets

Again, because of all the work that is typically required to be conducted, the time and effort behind this required work needs to be properly budgeted in advance of the project being started.

The third problem involves the expectations around roles

Who is responsible for key elements of a technical transfer or the on-boarding of a project for example. Things have to be clearly identified, especially as they relate to the responsibilities surrounding Quality. So having a Quality Agreement in place that clearly defines up front which side is responsible for each aspect of Quality is good practice. Aspects such as:

  • Who sets the product specifications?
  • Who’s responsible for providing the product specifications?
  • ,Who is responsible for manufacturing records?
  • Who’s responsible for changes to specifications and manufacturing procedures?
  • Who approves change controls, rework procedures and deviations?
  • Who’s responsible for the final approval and release of materials, of batches, of any regulatory materials that are required for a potential submission?
  • Who is responsible for customer complaints?
  • Finally, how is all this going to be communicated and who should be included in the communications?

Having an agreement governing the business relationship that defines who will be responsible for what tasks or what aspects of the relationship is very important and it needs to be clearly identified up front. So, having a Quality Agreement and a business agreement are both very key elements.

The best thing to do is to have a project management team on both sides, one each for the client and the contract manufacturer, and have multiple levels represented in both organizations. That can eventually morph into a relationship management team that can oversee both the business aspects and the operational aspects of the relationship. If you can set that up correctly then you’ll achieve consensus on how project is to be moved forward, how you begin a project, what expectations are around communication, and of responsibilities.

So the more varied the levels within both organizations are included in the process, the better you can manage the expectations.  It’s not uncommon to find conflicting, or worse, competing objectives that they need to meet in their own job functions or in terms of their personal objectives. So it’s important to have that balance. With multiple levels you can have top-level executive oversight to look at it from a strategic standpoint, a middle management aspect to ensure the execution of a project is completed on a timely basis, and then the lower levels that are actually executing the tasks and making sure the work gets done appropriately and properly.



Sam Ricchezza

is the Vice President, Business Development for WellSpring Pharma Services. He has over 18 years of business development and marketing experience in the pharmaceutical contract development and manufacturing industry. He has held a number of progressively responsible business development positions over the course of his career with Patheon, DPT Laboratories, AAIPharma and WellSpring. Sam is also a member of “Contract Pharma’s” Editorial Advisory Board.

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