In earlier blogs we compared the perspectives of purchaser and supplier in the reconfigured supply chainand then looked at the purchaser in a little detail. Let's now look at the journey being taken by the Contract Manufacturing Organization (CMO).
As noted in my last post, the widespread use of CMOs by branded pharmaceutical producers is relatively new. CMOs have been around for decades, but were often associated with relatively low volumes of specialist batches, for instance those required in the early stages of drug development for clinical trials. CMOs focused primarily on manufacturing and typically avoided product development or product marketing. This meant the focus of quality and compliance could apply to a relatively small footprint of activity. The CMO would submit product to meet the purchaser's stringent quality controls, while the branded pharmaceutical producer effectively tested and inspected the product for compliance. In this scenario the risk to patient safety was low and neither regulator nor purchaser had undue cause for concern.
However, the CMO industry is growing at rates projected at 12% per annum through 2016. The buyer wants more from the CMO than specialist batches. The buyer's objective now is to build significant capacity, flexibility and cost effectiveness into its manufacturing supply chain. In addition to ramping up manufacturing capacity to meet this demand, the CMO must build a new level of competence in quality and compliance as the buyer is pushing that responsibility onto the CMO.
The biggest challenge facing a CMO is to find a compliance model that fits its lean operating model. The compliance model that runs in big pharma is regarded by the CMO as heavy-handed, inflexible and expensive to run. in short, CMOs need to develop a model for compliance that's both lean and flexible, yet delivers the level of quality assurance required by their customer (the branded pharmaceutical company) and ultimately by the regulator.
In my next post I'll comment on the regulators perspective.