How To ID The Best CDMOs
By Louis Garguilo, Chief Editor, Outsourced Pharma
It takes a certain, trained perspicuity to identify the CDMO right for you.
If you are a small biotech (pursuing any modality or drug class/therapy), says Inceptor Bio CEO Matthias Schroff, you most likely will not have the weight to ensure an external partner’s “real focus on producing for you.”
He says this from experience, having been the CEO of three early-stage biotechs.
“What I’ve learned over the years is that there’s a huge difference among CDMOs regarding how they treat smaller partners. With many, you're second or third tier in importance to them.”
What kind of CDMO identification process might that be?
The CDMO, The Workers
It's difficult to recommend specifics, Schroff replies, other than to emphasis outsourcing is “a people business.”
On a day-to-day basis, it's the skilled professionals and managers who you actually work with, and who can help ensure – or doom – chances for a lasting and positive relationship.
Equal to the company – the particular CDMO itself – “working with the right people in the right company is key.”
Nailing down both components is the major challenge of outsourcing, Schroff says.
Hardworking, connected, motivated, and workplace-satisfied skilled employees will for the most part stay put at their place of employment. Those are the professionals you try to identify at a CDMO.
However, some will end up leaving your CDMO, and disruptions (Covid; the economy; personal reasons) can increase the leave rate.
That’s where the CDMO itself proves whether it's the organization for you.
“Part of the challenge stems from when the experienced people leave, does the culture of the CDMO itself start to change?”
It won’t, Schroff says, if the CDMO, starting with the CEO, is in fact a strong purveyor of a positive work and customer-facing culture. Still, not every new or existing employee at a company will be the right fit for your company.
Therefore:
- Every CDMO, like every company in any industry, has a corporate identity and culture, and it should start at the executive management level. That’s how stability is maintained.
- At the same time, your CDMO interface – your day-to-day relationship – hinges on the specific scientists, engineers, and other skilled workers and managers performing and producing for your company.
- Assess both the company and the individuals separately, and then overall as a single unit providing you services.
The Assessment
Executives and employees at biotechs start out wearing different hats, and take on overlapping responsibilities. Everyone pitches in; everyone has a say. That’s a hallmark of small organizations that, frankly, often drives professionals to biotechs from larger pharma.
With that in mind, I ask Schroff if as CEO of a biotech, he is tightly connected to the CDMO selection process. If he is, how does he and his employees understand which is the right CDMO with the right people a priori?
“I am involved,” he replies. “I go to the CDMO and have interactions with their upper management. You get a feeling for how important you will be.”
“Of course, the sales team for the CDMO, they are promising everything. But during your due diligence you can get a good sense of whether they are genuine, or they are just ‘selling.’
“What are the chances that once they have a contract they behave differently?" There's no one-hundred-percent predictability, says Schroff, but you need that penetrating mindset.
Obtaining references from other biotechs can help. Overall, though, he doesn’t believe there's “a list with items you can just tick off, and everything will be fine.” There needs to be some “reading between the lines” to make a final selection decision.
“I consider myself lucky," Schroff interjects. "I’ve had teams that were good at finding the right relationships most of the time. Still, there were times we made mistakes.”
Promises Made …
One of those wrong decisions materialized, Schroff tells me, because of his team’s trust in some CDMO “promises” that were offered, but never kept.
“This was in terms of capabilities and knowhow that it turned out they really didn't have,” explains Schroff.
“It affected our timelines. When we realized what was happening, that they couldn't deliver on their promises, we had to switch and find somebody else.”
Apropos Schroff’s points above that identifying the right CDMO is part art, part science – and intuition born of experience – why was it he and team failed the CDMO selection process in this case?
Was there an element of poor due diligence?
“Well, I would say maybe that was part of it,” he replies.
“This was some time ago. I was at an early-stage company. Maybe in hindsight, we didn't have the experience to do that reading between the lines. Perhaps we had to make our mistake to learn from it,” he says with a smile.
“Luckily,” he quickly adds, “it didn't overly harm our company, although there was a negative impact."
He now has some 20 years further experience. Today, he says, nobody should have to learn through their mistakes when it comes to outsourcing. Everyone in our business should at least understand you need to look very closely, at all levels, at any CDMO you are pursuing – or that is pursuing you.
A World View
Schroff grew up and was educated in Germany. The first company he became CEO of was based there. He subsequently moved to the U.S., and has been working at organizations in this country since 2018. (He became CEO of Inceptor in May (2023).) In ending our conversation, I ask him if he has any geographic preferences for outsourcing.
Not necessarily, he replies, and then says with a laugh, “But the bad experiences I’ve had were with German CDMOs!”
“Seriously, we work with CDMOs around the world – China, the U.S., Switzerland … and yes in Germany – I’ve also had very good experiences there as well.
“Again, it comes down to the companies themselves and the skilled workers within.”
Capabilities, capacity, all these elements are important, and it’s important how companies present themselves to sponsors. “These factors are universal,” Schroff says.