Improve CMO performance. For greater flexibility and higher speed

Why most CMO optimisation projects fail
and
how you as a leader in the pharmaceutical industry can still secure results

  • Optimise CMO
  • Supply Chain & CMO
  • Accelerate projects
  • Supply Chain & CMO
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George Station Master

Why do so many Contract Manufacturing Organization (CMO) optimisations fail?

Many of these CDMO optimisations fail because:

  • Nobody really feels responsible for the result (the implementation is usually entrusted to different departments concurrently)
  • Is not being carried out actively enough
  • The internal team and the payroll provider's team are not pulling in the same direction.
  • Because the solutions being developed are too theoretical and not practically implementable.

If your CDMO's performance isn't where it needs to be, you'll know the symptoms:

  • The costs are too high
  • Delays to productions or deliveries happen from time to time (but not always).
  • The production quality is sometimes shaky.„
  • There are sometimes frustrations within the internal team regarding collaboration.

And with many companies, despite repeated attempts, there is no real fundamental change.

That's not unusual!

In the pharmaceutical industry, CMO and CDMO optimisations fail not because there's a lack of knowledge about what needs to be done, but often because no one consistently takes responsibility for or can manage the implementation.

In the pharmaceutical industry, CMO refers to Contract Manufacturing Organisation and CDMO refers to Contract Development and Manufacturing Organisation. **CMO (Contract Manufacturing Organisation) Optimisations in Pharma** refer to ways in which pharmaceutical companies can improve their outsourcing of manufacturing processes to external specialised companies. These optimisations typically focus on making the manufacturing process more efficient, cost-effective, and compliant. Examples include: * **Streamlining supply chains:** Finding CMOs with robust supply chain management and ensuring seamless integration with the pharmaceutical company’s existing systems. * **Improving quality control:** Implementing stricter quality agreements and auditing processes with CMOs to ensure consistent product quality and adherence to regulatory standards. * **Reducing lead times:** Working with CMOs to shorten production and delivery schedules through better planning, communication, and capacity management. * **Cost reduction:** Negotiating favourable contracts, optimising batch sizes, and identifying opportunities for economies of scale with CMO partners. * **Risk mitigation:** Diversifying the CMO base, ensuring business continuity plans are in place, and conducting thorough due diligence on potential partners. **CDMO (Contract Development and Manufacturing Organisation) Optimisations in Pharma** go a step further than CMOs, as they offer both drug development services (such as formulation, preclinical and clinical trial support) *and* manufacturing. Optimisations in this area are therefore broader and aim to improve the entire lifecycle from early-stage development through to commercial production. Examples include: * **Integrated development and manufacturing:** Selecting CDMOs that can seamlessly transition a drug candidate from development phases through to large-scale manufacturing, reducing the need for transferring between multiple parties. * **Accelerated drug development:** Leveraging the CDMO's expertise and resources to speed up formulation development, analytical method development, and process scale-up. * **Technology transfer improvements:** Ensuring robust and efficient technology transfer processes from the pharmaceutical company's internal R&D or from an earlier development phase with the CDMO to the manufacturing stage. * **Regulatory support integration:** Working with CDMOs that can provide integrated regulatory support throughout the development and manufacturing process, ensuring all documentation and compliance are handled effectively. * **Lifecycle management optimisation:** Utilising the CDMO's capabilities for continuous process improvement, post-approval manufacturing changes, and generic product development. * **Strategic partnerships:** Forming long-term, collaborative relationships with CDMOs that can provide a broader range of services and contribute to strategic decision-making regarding drug development and manufacturing. In essence, optimisations for both CMOs and CDMOs are about enhancing efficiency, reducing costs, ensuring quality and regulatory compliance, and ultimately accelerating the delivery of medicines to patients. CDMO optimisations are more complex due to the integration of development services.

When optimising contract manufacturers, it's usually about costs or cost structures. In addition, it's about reliability, quality and delivery capability, as well as:

  • Communication structure
  • Specifically defined Key Performance Indicators (KPIs)
  • Operational improvements
  • Coordination between the internal team and the contract manufacturer

And of course, additionally, on GMP topics that affect both customers and suppliers.

Why this is important to you

If you are responsible for these areas:

  • Manufacturing and production, or their performance measurement
  • Supply chain stability
  • Management of CMOs and CDMOs / Third Party Management
  • Technology transfers

Then such failures are not just of theoretical interest to them! If these improvement projects do not work, they usually have to deal with troubleshooting, as this leads to delays, cost overruns, and consequently internal pressure.

The real problem:
Not the strategy, but the implementation!

Most organisations already understand:

  • Where the bottleneck is
  • Which suppliers have poorer performance
  • Where the costs are too high

The insight is not the problem, but the implementation and execution under real GMP conditions.

Quick digression: even AI won't change that. It's not the written texts or presentations that are lacking, it's the implementation in reality!

How to improve CDMO management

Cause number 1: unclear responsibility

The optimisation of contract manufacturers usually falls under the responsibility of various departments, such as:

  • QA
  • MSAT
  • Shopping
  • Produktion/Herstellung

These different departments all look after specific aspects of working with the contract manufacturer. However, the responsibility remains fragmented and usually results in:

  • Slow decisions
  • Different priorities (each department usually has different annual goals)
  • No one is solely responsible

What works well instead, in our experience, is:

  • An overall responsible person with the appropriate decision-making authority
  • Decision-making ability on all topics in collaboration with the contract manufacturer
  • Quick decisions by this overall manager

Important rule:

Without overall responsibility, there is no optimisation, only coordination. Coordination alone yields no results.

The optimisation of contract manufacturers usually falls under the responsibility of various departments, such as:

Reason number 2: lots of strategy but little implementation

Many initiatives fall short of their goal because they remain at a very theoretical level:

  • There are many analyses
  • Perhaps workshops too
  • And concept papers perhaps also in the form of complex SOPs

However, to achieve tangible improvements, it would require:

  • Real-world implementation under actual GMP conditions
  • Actual changes to the process (administrative processes and production processes)

Cause-Effect-Solution

Cause: usually an external consulting firm is behind it, which mainly focuses on strategy

Effect: no change in daily operations

Solution: applied and practical implementation in the organisation

 

Contract manufacturers improve through operational changes, not through PowerPoint presentations!

Reason number 3: there is a lack of real implementation
experience

Optimising for contract manufacturers requires mastering real-world challenges (and not just theoretical discussions).

  • Failed productions
  • Deviations
  • How are improvements achieved under GMP when they are only discovered shortly before or during validation?
  • Production pressure, time pressure

Without practical experience:

Many initiatives fall short of their goal because they remain at a very theoretical level:

Many initiatives fall short of their goal because they remain at a very theoretical level:

  • Will the solutions remain unrealistic and stuck at the theoretical level?
  • Does the implementation fail
  • Loss of trust within the team

Mini case study

A biotech start-up company is trying to improve the performance of its contract manufacturers through a global consulting firm.

Situation: unreliable deliveries, high deviations and delays

Actions: Strategy Workshop and Process Design (from the textbook)

Result: no measurable improvement after six months

Only through pragmatic implementation together with the contract manufacturer:

  • Significantly fewer deviations
  • Significantly more reliable delivery times and dates
  • Implementation requires people who have done something like this before – not just consultants who conduct analyses.

Reason number 4: there is a lack of coordination between the internal teams and the contract manufacturer

why this vote is critical

  • Specific KPIs of the contract manufacturer
  • Organisation of cooperation between contract manufacturer and customers
  • Communication

Typical problem cases include, but are not limited to:

  • Unclear, shared KPIs
  • Inconsistent communication, as different departments are involved on both sides.
  • There is a lack of concrete coordination across the various activities

This often results in the following problems:

Simple problems are repeating themselves without being sustainably resolved.

There are very slow or no changes at all.

a high degree of frustration on both sides

 

What works against it, in our experience:

Agree on the objectives in the form of KPIs clearly (sounds completely basic, but is often not done)

Give the joint projects a fixed structure with fixed responsibilities

Define escalations and how to discuss and resolve them in advance.

Cause number 5: over-complicated solutions

Why are pharmaceutical supply chains unstable?

This complex of causes is closely linked to the involvement of large consulting firms and often occurs together:

often improvement initiatives create new tools and processes:

new tools for reporting (always with an Excel pie chart!)

Additional processes

complex reporting processes with new metrics derived from many other metrics (making it very difficult to estimate whether changes will have good or bad effects on these metrics)

what happens because of that

  1. The team doesn't want to use these new tools and finds shortcuts or excuses.

  1. The entire implementation is getting slower and slower.

  1. Every change must always be discussed again and again.

what really works is:

  • Very simple, focused actions and implementations (please forget the 20 KPIs - that won't get you any further).
  • Setting practical priorities that align with the workflow. So not „we want more profit“ but rather "we want to reduce our production costs by identifying the cause of our many rejected batches and improving that process".
  • Practical solutions that can be implemented immediately (not a new complex AI tool that will be ready in two years, but a solution that works directly on the production line without IT).

Simplicity is the new currency! The simpler, the better!

Many of these problems can be stabilised quickly if the operational bottlenecks are clearly identified.

Reason number 6: Real workflow is ignored

Real working processes are rarely as they are written down on paper or as they are depicted in an organisation chart. Take the trouble to trace actual work packages as they are really processed.

The problems often lie in the fact that:

  • real workflows are ignored, and project participants rely solely on SOPs
  • Often, there are simply not enough resources to process operations as prescribed (for example, obtaining all required approvals - approvals are simply „clicked through“ instead of being properly checked).
  • Production pressure and time pressure

The consequences are then:

  • Changes cannot be implemented at all
  • The team is falling back into its old process because the new process is barely feasible.

The problem therefore is:

  • A plan based on the theory of written procedures (SOP)
  • Effect: the new process is simply not implemented or not implemented sustainably
  • Solution: Implementations must be based on the current reality and not on a theoretical ideal state.

Reason number 7: no return
inform stakeholders

Cause number 7: failure to provide feedback to stakeholders

The process of change does not end with the publication of the document. That's where it begins! It is often necessary to make changes after a few months. For this to happen, it is important that all involved parties continue to be informed about the status and the implementation.

If the parties involved are not kept informed, the following often happens:

  • The others are losing confidence.
  • It's possible the initiative will fall asleep.
  • The project is losing priority and therefore also resources.

What really works is:

Simple messages like the proposed improvement methods work and run

Show progress

To prepare everyone involved from the outset that changes will be necessary after a few months.

Reason number 8: weak leadership by the contract manufacturer

How to better control CMOs.

Many organisations relax once the associated documents and contracts have been signed and published internally.

In many structures, there is a lack of:

  1. Clear success objectives that are mutually understood by both parties

  2. Structured performance reviews that take place regularly (not just a mandatory year-end review)

  3. Active management of supplier-customer relationships

Result if this is not done:

  • Recurring, similar problems
  • You are losing control more and more.
  • What happens at the contract manufacturer is becoming increasingly difficult to predict

What works is:

  • Let's create a collaboration structure! Simple but clear!
  • Track the contract manufacturer's performance with clear metrics
  • Actively managing and proactively approaching contract manufacturers; the CMO also needs to know what they *really* want (sounds obvious, but is often missing).

Cause number 9: no active risk
management

How to reduce risks in pharmaceutical supply chains?

By that, I don't mean a risk management document, but the consideration of what you actually do in a problem case.

The optimisation of a supplier has these three major risk areas:

How to improve CDMO management

  • Compliance Risk
  • Risks in manufacturing and the processing of orders and deliveries
  • Risk of dependence

What often happens, but doesn't work out:

  • The risk is identified but not actively managed (it is dormant in a risk analysis).
  • as clear escalation paths are missing, problems „explode“ late on

What works instead:

  • Identify the risk
  • Active editing and improvement
  • Monitoring of risks and, where possible, prediction of circumstances under which a problem might arise

Many project failures happen due to risk issues rather than strategy issues.

Successful CMOs and suppliers
improvements can look like this

  • A clear structure for this collaboration has been established
  • Practical implementation
  • Experienced leaders of this collaboration on both sides
  • Simple solutions
  • Trust is good, but (reasonable and simple) control is better

Key experiences from many projects

Many failures arise from incorrect implementation rather than an incorrect strategy.

clear responsibility that „caring“ is the most important success factor

Strategies without an implementation plan and execution yield no results.

Practical implementation trumps theoretical consulting

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Dr Georg Astl

Dr Georg Astl is the founder of Eoswiss Pharma. He is the author of numerous specialist articles and a speaker at professional events.