Fundamentals Over Factors: How To Select Your CDMO

By Louis Garguilo, Chief Editor, Outsourced Pharma

Beware the selection of CDMOs for factors over fundamentals.

That’s the quixotic caution I’ve been pondering these past months. It’s an injunction against entanglement in a spreadsheet of details when choosing a CDMO.

It has become a difficult task.

The fear is we have continued to add factors we deem as crucial to the selection process, and have arrived at a point where we actually talk ourselves out of opting for the best CDMO for our needs.

Breaking Down the Advice

What are we talking about here – factors overtaking fundamentals.

First, let’s consider the proliferating factors, starting with one of my favorite examples.

Outsourcing professionals will tell me that at CDMO site visits they always eat in the employee cafeteria to gauge the atmosphere. Are the employees tired and grumpy, or chatty and happy?

Well, when I worked at a CDMO, our cafeteria food deserved complaining about, and we loved doing it. I wonder if that impacted our ability to land new clients. It certainly shouldn’t have.

Of more consequence (and more seriously), even some of these factors for evaluating CDMOs may take on more meaning than they should: 

• initial responses to RFPs
• specific facility locations
• exact time to project start-up
• worker turnover

These factors can shine some light on an organization, but even in the aggregate do they roll up to crucial considerations for selecting the best CDMO for your needs?

Now let’s consider a different set of evaluations, those indicative of overall fundamental soundness.

These include:

• operational longevity, or on the other hand (and not always positive or negative), newly formed operations
• standing/reputation within the industry and with other sponsors
• project-start to -end strengths and capabilities
• a broad assessment of customer service/responsiveness.

Take as comparison “worker retention” versus operational longevity.

To start, most readers will agree few if any CDMOs who operate on the margins of good quality or who habitually underperform in regard to outcomes or customer service, will last long. They are, if you will, fundamentally flawed.

On the other hand, outstanding CDMOs may at times suffer bouts of employee departures. Maybe these employees don’t measure up. And who is coveted by competing employers? The best talents.

How about project start vs. project completion times?

You are in a hurry for development services and materials. You have darned good reasons to be. But if CDMO A, who promises you an earlier project start time than CDMO B, but you learn takes longer to complete projects (due to various causes), a short front-end wait pays on the backend.

In both these examples, the former are factors; the latter fundamentals. And while I will agree with you this is quite nuanced, consider:

Fundamentals are foundational business and operational aspects most likely to determine the reliability and long-term success and of an outsourcing partnership. 

Factors, on the other hand, are granularities that for the most part do not in fact add up to clear picture of a CDMO’s worth, but that are starting to clog up your selection process.

Risk of Short-Term Thinking Over Strategic Partnership

By focusing on a bevy of factors (e.g., the lowest comparative cost; facility closest to home; fastest projected delivery time), you risk overlooking critical aspects, such as:

• end-to-end quality of services and integration of the different departments at a CDMO
• the ability to manage scientific, engineering or regulatory challenges that become essential for long-term success and schedule maintenance

A dispersed criteria for selecting CDMOs creates a tendency to prioritize the mundane over the prophetic, short-term considerations over long-term stability.

We’ve mentioned price a few times above; it’s always a touchy subject. But I believe most all of us have gotten the message by now that selecting a CDMO predominately because they offer the lowest (or comparatively low) price might save money initially, but could lead to requests for more money via new “work orders,” which might indicate an unrealistic (or truthful) proposal, or the cutting of corners in some areas of the organization (e.g., investments in facility upkeep and equipment).  

Factor-focusing, then, does not in fact uncover those potentially hidden details you are looking for.

Just the opposite; it may lead to missed opportunities to work with the right CDMOs.

Performing adequate due diligence is always vital. However, the particulars of which matter; the measuring of narrow criteria should not cloud your judgement of whether ta CDMO is fundamentally strong, and capable of supporting a relationship and your needs over time.

Can Strike A Balance

Wrapping up here, I’m certain the thought has occurred that this is not an all one or the other discussion – factors vs. fundamentals.  

A balanced approach to due diligence and final selection involves specific factors important to you and your project, and an eye towards overall fundamentals of a CDMO. This might be achieved with technical teams performing one type of review, and a management team another.

But the nagging concern is presently we are out of balance.

We are not both optimizing for immediate (technical and project) needs, and allowing for a wider view that would include more, very good, CDMOs.

Returning to a greater focus on overall fundamentals will better ensure you select the correct external partner to start with, and one you can rely on long term.