CMO Industry Spotlight: Interview with
Industry Insider Tom Wagler

Tom Wagler, Ph.D., MBA is currently the Director of Small Molecule Contract Manufacturing at Biogen Idec, Inc.
At the time of this interview Dr. Wagler was with Sepracor.

1. What is your official title?

I'm the Senior Director of Chemical Process Research and Development here at Sepracor.

2. How long have you been in your current role? Before that?

I have been with Sepracor for nine years. Prior to Sepracor I was with FMC Corporation and Bristol Myers Squibb. At all of these companies I was primarily involved in CMC related activities.

3. At Sepracor, what categories do the majority of your projects fall into (commercial, med. chem., development, etc)?

All of our projects fall into the area of API Process Development. Our mission is to provide safe, economical, scalable and commercially viable routes to active pharmaceutical ingredients (API's). We focus on supplying API throughout the drug development phases in a manner that assures that Drug Substance is not on the critical path. We support API route selection and 'phase appropriate' development starting from the first IND enabling toxicology batch manufacture and culminating with phase III process validation and technology transfer of a commercial manufacturing process. With a large development pipeline but limited staff of about 15 process chemists and limited budgets we rely heavily on an outsourcing strategy to leverage our productivity. Our preferred strategy is to focus our internal efforts on solving critical chemical development challenges and than managing external CMO's to support development.

4. Do you do projects in a particular geographic area? If so why?

We do not focus on particular geographic areas. We work globally. We like to pick the right place for what needs to be done while balancing cost, quality, and time. Early intermediates and regulatory starting materials tend to come from Asian CMO's (India and China) as a way to mitigate cost. In recent years, we have also grown more comfortable with outsourcing phase I API to Asian CMO's as quality improves and risk lessens. However, we still tend to favor US and European CMO's to support later phase API. When possible, we still prefer to retain the final few API steps in house. There is always a trade off between quality, speed and cost as well as risk/benefit. Often, the real skill is knowing how to leverage and manage the wide assortment of global CMO's to one's advantage.

5. On an annual basis approximately how many projects do you outsource to CMO's?
This, of course, depends on the development pipeline, budgets and the percent of projects in Phase I, II or III. A typically number is about twenty five (25) projects on an annual basis ranging in size from grams to tons that are actively outsourced and managed by my group. This includes supply chain development of the key intermediates, multi-step API production and FTE outsourcing dedicated to supporting more basic process research and route scouting activities. It doesn't include routine synthesis of impurities, reference compounds, radiosynthesis, etc which is totally outsourced. Generally we handle increasing project demands by outsourcing more rather than increasing permanent internal headcount. Using CMO's to manage peaks and valleys is a strong benefit offered by outsourcing, especially in the uncertain world of drug discovery/development.

6. What are your top 3 main criteria for CMO Selection? Your selection process?
Our top three criteria are cost, quality, and speed. Quality means technical quality as well as regulatory/compliance quality. There's a trade-off between cost, quality and speed. We select CMO's that have some competitive advantage in at least two of these criteria. We then try to build solid relationships with preferred suppliers and utilize each in the particular areas where they do offer a competitive advantage. Apply the 'right' CMO to the 'right' tasks at the 'right' time and the rest is easy. Being 'scientists' we actually place a premium on technical skill and innovativeness. To me, it is still superior process chemistry knowledge and creativity that can really set one CMO above others in creating competitive advantage. But it's still never simple; for example tech transfer of a well-established process to a CMO doesn't necessarily require superior technical skill, but rather a different criteria. Certainly there are many other criteria such as financial stability, project management ability, flexibility, etc that are considered for CMO selection. And of course, it's a never-ending process as CMO's change and we change over time.

At Sepracor we do not have a structured, SOP driven, CMO selection process. Our selection process is based on experience and due-diligence with input from various functional areas including chemistry, analytical, quality, engineering and commercial technical operations. Sometimes it's as simple as a 'gut-feeling' or intuition. Most decision-making is based on our technical discussions with CMO's, their quality systems, and adequate IP protection. Although harder to quantify, there is also an element of how well we feel we can work with and relate to a particular CMO. We also rely on reputation and references.

7. Outline the typical steps or information you provide initially to a CMO? What process do you use (describe) to initiate a project?
The more information we can provide the better. However, sometimes we don't have it. Asking a CMO to essentially repeat what we know works and have developed internally is generally easier than asking a CMO to be the engine behind developing a new process. That's why we like to have a varied toolbox of CMO's so we can match the project to the right CMO. First we provide to the CMO a clear understanding of the stage and nature of the potential project. A phase I IND enabling 'fit for purpose' API project without a well-defined scale up route is clearly different from a phase III validation project. Next we provide the CMO with an understanding of what we need to accomplish. Next we have a technical discussion with the appropriate CMO staff and we provide as much information as possible about process chemistry, methods if available, specifications, etc. We discuss the level of collaboration and support that can be provided from our own internal staff. If it's chemistry we have run ourselves, we provide Laboratory Process Descriptions and share first hand experience. If it's chemistry we have acquired externally, we provide what we know and usually offer our own opinions and impressions.

Like most, to initiate a project we provide a written Request for Proposal to the CMO and solicit a written quotation or proposal in return. If it is a new CMO, due diligence in the form of a technical and quality audit may be appropriate. For new CMO's Master Manufacturing Agreements need to be drafted. For existing CMO's , a work order, which summarizes the scope of work, is usually written. Finally, a purchase order is provided and an internal project manager is usually assigned to manager the relationship as the primary point of contact.

8. After a project is awarded what are your expectations, what do you want to see happen?
Obviously we want the project to be successful and to run as planned, on time and on budget. Assuming we have selected a CMO that has the required technical/quality ability, the major task is usually insuring excellent communication and project management. It is important to neither over manage nor under manage the relationship. It's important to foresee problems and bring the necessary resources into play as needed. Our standards our high and at the end of the project we expect satisfactory delivery of all mutually agreed deliverables. We get very disappointed when a CMO doesn't deliver to the level promised. Deliverables are usually much more than the chemical in the bottle. Often we are buying process/technical knowledge just as much as the actual material. Good quality campaign reports, structure elucidation and purity data, methods, etc. are very important to us as a requirement towards developing robust, well understood chemical processes.

9. Do you use Agents? Why or why not? For domestic or foreign manufacturers?
Generally we do not use Agents. With the World shrinking and global communications being as efficient as they are we don't often find the need for Agents. We prefer to work directly with a supplier or CMO to be certain communications are as transparent as possible. However, there are many areas where an Agent can add a significant value. This is particularly true for smaller pharma companies that might not have the same resources (chemistry, strategic sourcing, quality, regulatory, etc) that are available in mid/large pharma or those inexperienced with running a 'virtual' business model.

10. Besides yourself, what other resources are used throughout the selection and execution phase of a project?
CMO selection and execution depends on input from many functional disciplines. Process chemistry, analytical chemistry, process engineering and tech transfer, quality assurance, formulations development, legal, finance and commercial technical operations all play a role in selection and execution.

11. Considering a successful outsourcing project:

a. What did you do to help insure success?

First and foremost we insured success by selecting the right CMO. We have found that success is largely a function of making sure that we understand the project and the CMO's capabilities and the CMO understands the project along with our needs. Setting the right expectations and deliverables are important. Misrepresenting the depth of understanding or state of development to a CMO is detrimental. Likewise, failure of a CMO to appreciate their own technical or quality limitations with respect to a given process usual ends with a damaged relationship. We like to set the right expectations and deliverables upfront in a written work order. We have found that taking the time to think through details and capture them on paper can highlight gaps and understanding and have a positive effect. We try to communicate in great detail what the deliverables and expectations are. This can slow things down but if it's defined then everything is out and in the open. After deliverables and expectations are well-understood, good technical communications, collaborative problem solving and solid project management mark our most successful projects. A final important element to consider is the way in which we manage and interact with the CMO. We are equally responsible for being a good, responsive, organized partner. If we don't practice good relationship management, there can be multiple unproductive interactions at multiple levels and the relationship can quickly become 'unmanageable'.

12. What do you think the CMO did to help insure success?
The CMO understood their own abilities, the scope of the project and what we, as the customer, wanted. The CMO communicated problems in an open manner and brought the appropriate technical skills from within their own organizations to offer solutions and solve problems. The CMO had the technical competence we needed. One thing that almost never fails to win us over is when a CMO adds value by offering solutions that we may not have considered. We are never threatened by a CMO that may have superior technical know-how than we do. Finally, the CMO knew how to manage us just as much as we managed them. I am certain that for most CMO's working with disorganized clients who don't really know what they want is not a pleasant and easy task.

 

13. Consider an unsuccessful outsourcing project:

a. What didn't the CMO do right?

b. What could you have done differently to help it go right?

For one particular unsuccessful outsourcing project that comes to mind, we were greatly impressed by a superior business development presentation. All the right words were said and the CMO seemed to be exactly what we were looking for. However, there was a disconnect between the business development staff and the technical staff. Neither the technical skills nor quality systems were in place to successfully accomplish the project. Given tight timelines and budget, the project was initiated without conducting proper due diligence. As the project started, communication and transparency could not be established. The more things went wrong, the more the CMO avoided interaction. In the end, timelines were compromised and contingencies were not put into place since there was a failure to recognize a problem in a timely manner.

What we could have done differently was to have done better due-diligence in recognizing the abilities of the CMO instead of being lured simply by the attractiveness of a low price. We also should have been somewhat less trusting and more insistent about updates and communication. This was an example of a first impression and 'gut feeling' being completely wrong.

14. What did this CMO lack that you have seen elsewhere and would have expected?
This CMO lacked self-realization. For them securing a business prospect trumped all ability to accomplish the objective. Project Management expertise were lacking so recognition that there were serious problems did not occur until it was too late and critical timelines were compromised.

15. What would you advise an emerging pharma company to do if they are outsourcing their molecule for the first time and they are new to the industry?
One of the most difficult things to do is to be able to recognize the CMO's that offer real value from those that do not, especially in a world where there is no shortage of CMO providers and it is often difficult to differentiate services. Equally important is for the emerging pharma company to understand exactly what they want and need from a CMO. For emerging companies with only a few promising leads the outsourcing risk has to be balanced with outsourcing costs and benefits. My advise to any emerging pharma company considering first time outsourcing of part or all of their CMC activity would be to rely on the tested experience from others who may have worked with a particular CMO of interest or to rely upon recommendations. Pharmaceutical CMC outsourcing has become a mainstream activity. There are a number of very good forums, conferences, publications and trade shows dedicated to the outsourcing industry. Many outsourcing managers have a broad exposure to many CMO's and most are more than willing to discuss experiences. My advice is to seek references, ask questions and do not take things at face value.

16. Looking ahead how do you view capacity and the industry as a whole?
CMC outsourcing seems to be growing. Activities that were once considered to be core functions in the pharma industry are now effectively outsourced. The result is that strong talent that once resided predominantly in big pharma laboratories is now shifting to contract manufacturing laboratories. CMO's in China and India and elsewhere in the world are continuing to offer a competitive threat to US and European CMO's. However, US and European CMO's have effectively responded to the threat by focusing on areas where they offer value and competitive advantage. My view is that those CMO's that can attract the best technical talent and prove that they can manage CMC projects as well or better than their pharma clients will do well. The CMO world is getting crowded, and despite the fact that more and more pharma companies outsource, I think there will be significant consolidation as those CMO's that can't differentiate their offerings fade away. What companies want most from outsourcing is to be able to put the work in someone else's hands and at the end of the day rest assured that it's being done right so they can focus their own efforts elsewhere.