Guest Column | October 28, 2022

CDMO Selection In Our Post-COVID World

By Ray Sison


It’s official; according to the president of the United States, the pandemic is over. This means that trade shows are now in-person, with virtual attendance as an option, and CDMOs have finally returned to allowing in-person site visits after being forced to prohibit non-essential workers from entry for nearly two years. In December 2020, I wrote about the trade-offs, challenges, and opportunities in virtual versus on-site capabilities audits in my article, “CDMO Selection: Can We Eliminate the On-Site Audit?”. The answer, now more than ever, is no, but for different reasons than may have been considered pre-pandemic.

In a post-pandemic world, we need to explore a broader view of the new reality beyond virtual audits. With respect to CDMO selection, we do this in a framework that meets outsourcing objectives but in the context of recent experience. Here are a few concepts that are playing out:

  1. Supply chain objectives of quality, resiliency, redundancy, and transparency will be integrated into outsourcing with greater emphasis, even in non-commercial early development projects.
  2. The virtual audit as a tool will not replace on-site visits, nor will it be abandoned. Instead, the virtual audit will be used to improve transparency and communication among clients and their suppliers.
  3. Government initiatives and the requirements imposed upon CDMOs will be considered in the selection process and when negotiating agreements in an environment where public/private interests compete.
  4. During the pandemic we had no choice but to rely heavily on word-of-mouth, referrals, and recommendations instead of thorough due diligence. Given the points above and the additional effort needed to synthesize this information into an effective outsourcing strategy, subjective selection criteria need to be deemphasized going forward.

At its core, outsourcing is a subset of supply chain design and execution. For many clinical- and development-stage biotech companies/business units, I often see outsourcing viewed as a modular, discrete activity with short-term deliverables led by any of the R&D functions, without a cross-functional, integrated set of selection criteria. Increasingly, regulatory, clinical, and CMC may rely on a single or limited set of CDMOs for multiple services as the trend toward “one-stop-shops” continues. When creating a set of selection criteria at the beginning of an outsourcing project, supply chain representatives need to be included as stakeholders. For precommercial biotech companies, it makes sense to assign this function to a team member with supply chain experience or to bring in a subject matter expert in a limited role.

In the pandemic’s wake, a CDMO’s capacity to manage its workforce, procure/stockpile supplies, and continuously assess risk to its operations will need to be articulated in its internal processes and discussed with prospective clients.

Seen through the lens of supply chain, objectives take a greater emphasis, such as a CDMO’s ability to:

  1. Deliver commercial product that meets the quality requirements of regulatory agencies. The pandemic has demonstrated that this can be done with an accelerated review process. Operational efforts were also pressured to scale up and launch quality product to meet the national emergency. Going forward, CDMO partners will be expected to apply those practices in the next emergency and, under some circumstances, for new product launches in non-emergency scenarios. 
  2. Employ and balance strategies to strengthen supply chain resilience with sustainability efforts. Drug sponsors now routinely evaluate a CDMO’s supply chain strategies, e.g., warehouse capacity, procurement, and supply chain risk management as part of the selection process. In some cases, they are willing to pay more to avoid disruption.
  3. Build in economically viable redundancy to its procurement and internal supply chain strategies. The cost of building in resilience and redundancy, especially if onshoring is part of a supply chain strategy, will add to the overall cost of outsourcing and may work against making pharmaceuticals more affordable. This can be counterproductive to manufacturing essential drug products in the U.S. and add to the drug shortage list if not thoughtfully implemented.
  4. Allow a level of transparency that enables potential disruptions to deliverables to be anticipated, planned for, and avoided through collaboration among stakeholders. Companies that outsource need to enable processes that allow a high-level supply chain viewpoint, such as the “control-tower” model whose objective is to create visibility across outsourcing partners.

As part of creating enhanced visibility, refinements to the virtual audit will be an important tool if done correctly. This will require cooperation among sponsors and their CDMOs. I do not recommend forgoing an in-person audit in favor of a virtual audit. However, an all-of-the-above approach is beneficial in CDMO selection and periodic business reviews. In preparation for a site visit and for some stakeholders, a virtual component makes sense. The near-term challenge will be in finding the correct balance of scope and content. Sponsors should be sensitive to the resource burden needed to support comprehensive virtual meetings. To combat this, CDMOs have an opportunity to leverage technology, control the narrative, and find efficiencies in sharing/presenting common agenda items.

Federal Government Initiatives

U.S. government agencies such as DHHS, ASPR, and BARDA have long been working with industry in preparation for national emergencies. With Operation Warp Speed in 2020, there have been several highly publicized government collaborations with pharma companies and CDMOs. More recent executive orders and initiatives to further investment in manufacturing infrastructure may have ongoing commitments that impact plant operational planning. Priority access to manufacture critically needed drug products demanded during national emergencies will stand in conflict with normally scheduled operations.

During the selection process and in negotiating supply agreements, sponsors need to be aware of how the national interests could impact CDMO operations and/or how their potential partners are integrating government relationships into their overall business strategy. With this information, they need to fully understand how to negotiate fair agreements that anticipate possible future national emergencies and meet their corporate and supply chain objectives.

How Will New Outsourcing Players Fit In?

Separate from a discussion on contract negotiation, the amount of new capacity in the U.S. is encouraging. In the past few years, it has been exciting to welcome several new players in the contract aseptic filling space. The arrival of small-scale, high-value filling to support the growing number of new biologics coming onto the market should lessen long lead times and create much needed competition, if they can collectively maintain quality, retain their staff, and keep critical items in stock.

Many investors are looking for opportunities within the drug shortage and essential drug lists. Since the majority of these drug products are high-volume, low-margin parenterals, the new CDMOs are often not a good fit. I had an opportunity to catch up with several legacy vendors at a recent trade show and I was impressed by how many high-speed filling lines have been brought online across multiple facilities in the U.S. to support vaccine manufacture. But I wondered how these lines would be utilized between national emergencies and what variables and conditions would make them economically viable for drug shortage/essential drugs.  

The Path Forward

New variables discussed here and other unknowns are now being brought into the CDMO selection process. A robust process must assess their impact on the client/supplier relationship and the likelihood of success of a project. Post-COVID, we need continual improvement to our robust selection process.

During the lockdown, I participated in CDMO searches where we could only rely on references, recommendations, previous experience, and price to make critical supply chain partnering decisions. I would refer to this as the “Yelp” approach, as in the online app that rates businesses solely on unverified user reviews. While there is a role and place for subjective metrics, I fundamentally disagree with decision-making using this mindset for the following reasons:

  1. The stakes of supply chain design and execution are too high to overemphasize subjective metrics.
  2. Any given set of selection criteria will be unique to a sponsor.
  3. No two projects are identical.

Every outsourced project needs to develop its own unique and objective set of criteria that fairly evaluate the field to find the partner or partners that are fit for purpose. The opinion of a known or unknown third party has some value, but certainly not much weight.

About the Author:

Ray Sison is VP of pharmaceutical outsourcing and tech transfer at xCell Strategic Consulting and principal consultant, strategic sourcing and external manufacturing at SCMiND Consulting LLC. He began consulting in 2011 after recognizing a need for expertise in pharmaceutical outsourcing among the discovery- and clinical-stage pharma companies he served as a business development representative for Patheon and MDS Pharma Services. Based on his experience, Sison provides insight to the CDMO’s business and operations, helping his clients negotiate and achieve better outcomes. Additionally, he has developed processes and templates to streamline CMO procurement to save time and cost. In this series of articles, as well as online webinars, he continues to share best practices and case studies, helping improve the outsourced business model. You can reach him at or connect with him on LinkedIn.