How to Keep Costs Down During Initial Stages of Contract Manufacturing Organization (CMO) Engagements

In this article we discuss ways to reduce your CMO engagements

Posted: August 31, 2016

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Tags: Blog | Cost
API Manufacturing and Pharmaceutical Manufacturing
By Ed Price, President, PCI Synthesis

Bringing a new drug or treatment to market safely and effectively is the top goal of biotech and life science firms, but understanding and keeping costs in check is critically important. Getting a new drug from discovery through clinical trials to approval can take at least ten years, with the average cost for each successful drug estimated at $2.6 billion.*

If you have questions about how to keep costs in line, please contact us

Because of this, understanding the costs of each phase and how to keep them in check is important. This is the first of several articles that will look at the costs to consider at the start of an engagement with contract manufacturing organizations (CMOs). We call it the familiarization and optimization phase, or technology transfer (if we are transferring in a process that has already been developed) or process development (if we are starting from scratch and are developing a process to be scaled up eventually) that sets the foundation for a successful program, but other CMOs use different terms to describe the same phase.

First, it helps to understand that each new molecule is completely different. So scaling up, manufacturing and commercializing is completely different for each project. That said, there are commonalities to the process, and the key lies in setting the groundwork during the familiarization phase.

What happens during the familiarization phase?

The familiarization and optimization phase, which can take eight to 16 weeks, sets the tone for the whole program. Starting with a kickoff meeting, the sponsor and our team will meet to share all the technical information they have, including an overview of already-conducted work (whether in-house or elsewhere) and review appropriate scientific literature. We also determine the quantity and types of raw materials, the chemistry and analytical requirements.

During this stage, you can expect to pay $6,000 to $10,000 per week; some may offer fluctuating fees based on the work being done. At PCI we prefer a flat rate to reduce any budget surprises. With us, the flat rate includes Ph.D. scientists, analytical development as well as developing a project timeline, placing the order for the raw materials, etc.

We then start work to make sure the yields are reasonable and that the end-synthesis can eliminate impurities to meet FDA requirements and ICH guidelines.

To keep the familiarization project on time and on budget, here are some key considerations:

Sharing of technical information

This is the most basic, but most essential requirement. By sharing all technical knowledge, CMOs don’t have to reinvent the wheel in their discovery processes, or when developing reports for FDA filings. Since time really is money, the more knowledge, information, concerns and history that can be imparted by the sponsor to the CMO, the better. Likewise, by communicating honestly with the sponsoring company, CMOs can ensure that there are no surprises along the way.

Establish weekly meetings and reports

Some start-up sponsors often don’t realize the depth of work that goes into their projects – and steps that need to be taken to address the FDA, which continually raises the bar. Because of this, weekly meetings are important and can be eye-opening. The most cost-effective teams have close collaboration with at least six-to-seven team members from both the sponsor and CMO side looking at the same technical problem, germinating ideas, and producing on-time, on-budget programs. Additionally, weekly reports provide historical information that can be used when implementing new projects and enable a realistic touchpoint for estimated time and resources required.

Focus on efficiency over cost

It sounds reasonable that a biotech company looking to engage with a CMO is going to ask about their rates, yet forming a decision based on costs can be a huge mistake. An experienced CMO, one that operates efficiently, may have higher rates but can complete the project in less time, with fewer mistakes, which translates into less billable hours worked.
In my experience, I’ve seen companies look to save costs by outsourcing a project to an overseas CMO only to find they needed to start the project all over because of problems in acquiring certain raw materials, or because of too many process impurities.

Expect the unexpected

Even with the most experienced professionals or most efficient processes, problems happen — some raw materials can cause delays, or process yields can be lower than expected. When this happens, however, the key is to not get sidetracked. If a yield is not good, that may not be the best time to go into lengthy development to analyze why, but to simply go back and redo it or add additional starting material.

The road to drug development – from discovery to research to manufacturing and commercialization – can be filled with twists and turns, smooth sailing and a few potholes. Yet companies that communicate and collaborate with experienced CMO partners and establish sound and efficient processes will keep costs down in the long-run, while ensuring delivery of safe and effective new chemical entities.

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About the Author

Ed Price CEO of PCI Synthesis
Ed is the President and CEO of PCI Synthesis (PCI), he serves as a co-chair of the New England CRO/CMO Council and sits on the Industrial Advisory Board for the Department of Chemical Engineering at UMass, Amherst. Ed is also a long standing member of the American Chemical Society and advises the Bulk Pharmaceutical Task Force of the Society of Chemical Manufacturer’s and Affiliates (SOCMA).

Do you have questions? Talk to Ed.