INTRODUCTION
Persistent pressure to make medicines more affordable is one of the many reasons the practice of outsourcing manufacturing activities and services in the biopharmaceutical industry continues to evolve. Over the past thirty years, outsourcing has advanced from simple client-vendor relationships focused on identifying supply chain inefficiencies, improving operations, and reducing costs—which remain current outsourcing objectives—to true partnerships where accessing technologies and scientific expertise not possessed in house are the focus. Small molecule drug substance has one of the longest outsourcing histories, along with excipients and advanced intermediates, among biopharmaceutical products in part because of their long therapeutic history and relative lack of complexity compared to biologics. Industry Standard Research, a full-service market research company focused on the biopharmaceutical services industry, conducts annual benchmarking research to understand the preferences and practices of outsourcers as well as their experiences with specific CDMOs.
DISCUSSION
Methodology
To participate in the quantitative research, invitees are screened for decision-making influence and authority when it comes to choosing and working with contract manufacturers, and must have recent interaction with manufacturing service providers. Half of the respondents (48 percent) to the 2022 small molecule drug substance survey come from companies with an annual R&D of $1B or more, 30 percent work for mid-size companies with R&D between $100M and $1B. One-fifth (22 percent) of respondents represent new and emerging biopharmaceutical companies with an R&D less than $100M. The majority (60 percent) are based out of North America; roughly 30 percent from Europe, and 10 percent from Asia-Pacific. Respondents hold titles in Executive Management, R&D Management, Clinical and Commercial Manufacturing, CMC/Regulatory Compliance, and Purchasing and Procurement.
The surveys ask participants about the CDMO selection process at their organization as well as which contract manufacturer characteristics factor into their decision. Respondents are provided a list of 28 different CDMO characteristics and asked to select the five most important when choosing a manufacturing supplier as well as the single most important selection measure. Many of the selection criteria are the same characteristics on which sponsors are asked to gauge their manufacturing providers’ performance. Exceptions being merits like Prior positive experience and Low cost.
The majority of biopharmaceutical companies’ approach to choosing a CDMO involves a group decision where multiple stakeholders weigh in. This group may be composed of the C-suite or include members of the Board of Directors at a small company, and at a Large Pharma it may have members from as many as a dozen different functional groups who weigh in their opinions. The result of a mixed group with varying priorities in an outsourcing partner often leads to a handful of attributes being identified as the single “most important” by roughly 10% of the respondent group. Sometimes one attribute will stand out from the others by a few percentage points. This clustering of attributes highlights how the essential qualities sought out in a CDMO vary by outsourced need, the role the person in the decision-making group plays in the wider organization, and company size.
2022 Findings
Focusing in on small molecule drug substance manufacturing, the overall results of ISR’s 2022 benchmarking research show the Proven ability to manufacture small molecule API captured the largest proportion of votes (15 percent) for the most important CDMO attribute. Has capacity to meet our demands, Reliable, on-time delivery and Strong regulatory track record follow in a three-way tie, each with 10 percent of respondents’ selections. Low cost rounds out the top five with 9 percent of the vote. See Figure 1 for the 2022 top ten selection metrics.
When we look at the most important CDMO selection metrics for small molecule API by company size, the data show alignment between large pharma ($1B+ in R&D) and non-large pharma (<$1B in R&D) on the number one attribute: Proven ability to manufacture small molecule API. However, their priorities quickly diverge. Large pharma oftentimes needs volume, and as a result, Has capacity to meet our demands takes second position among these respondents. Among non-large respondents, capacity lands in 6th position. Reliable, on-time delivery and A strong regulatory track record tie for 3rd place among large pharma outsourcers. These attributes also tied among non-large pharma respondents; however, among this subset of outsourcers the traits vie for second position.
Low cost and Track record for meeting quality performance metrics captured the same share of large pharma respondents’ votes as the most important CDMO characteristic (8 percent), landing in fifth-sixth place. Among non-large respondents, the Ability to smoothly scale up manufacturing and transfer technology and Low cost flesh out top five attributes with the highest proportion of votes.
How Do CDMO Selection Criteria Change Over Time?
The data show similarities and differences in how outsourcers prioritize contract manufacturer characteristics by company size, but how much do selection criteria change over time? Figure 2 relays the top ten attributes that received the largest proportion of votes for “most important” to CDMO selection over the last five years. This year’s top selection metric, Proven ability to manufacture small molecule API has been among the top five selection metrics for the past five years, earning an averaged rank of 3.2. However, in three of those years it tied for 4th place; last year the trait tied for third position. This activity shows that the attribute is gaining in importance among outsourcers. CDMOs’ business development teams should be prepared for the conversation with evidence of their company’s manufacturing track record when pitching new business.
Reliable, on-time delivery has the highest mean ranking over the past five years, at 1.8. The attribute tied for second position this year and has held onto second place for four of the past five iterations of the research, with the exception of 2019, where Reliable, on-time delivery secured the #1 ranking when choosing a small molecule drug substance CDMO.
Given the frequency of tied attributes when viewing those identified as “most important” it is not surprising to see that two attributes have tied in their average rank over the past five years: Strong regulatory track record and Prior positive experience. Interestingly, Strong regulatory track record has been in and out of the top five rankings between 2018 and the present. Earlier in the history (2018-2019) this metric captured first and second positions. But, in 2020 and 2021, regulatory track record landed in 6th position.
Perhaps events over the past few years have prompted outsourcers to rethink their prioritization of a CDMO’s regulatory history, as this characteristic climbed back up to second place after the brief hiatus from the top five.
While Prior positive experience landed in 6th position in 2022, its history of being a top selection metrics is solid, earning the trait a mean rank 3.4. In fact, 2022 is the first year it hasn’t been among the top five attributes identified as most important to CDMO selection. This attribute may be dropping in priority due to outsourcers need to increase the number of different CDMOs with which they are working. The past couple of years have put even the best risk mitigation plans to the test between the pandemic, supply chain, and logistics challenges; one of the ways outsourcers are dealing with these factors is by diversifying their portfolio of CDMOs and establishing back-up suppliers for their outsourced manufacturing.
Another development ISR has observed to be increasing since the start of the pandemic is the level of concern about assurance of supply and available capacity. Has capacity to meet our demands earned a spot in the top five rankings over the past five years, with a mean rank of 4.2. Similar to Proven ability to manufacture small molecule API, Has capacity to meet our demands has become more important to small molecule drug substance outsourcers over time. In 2018 and 2019, capacity ranked fourth in importance. In 2020 it dropped to 8th position before course correcting and tying for third place in 2021 and a 3-way tie for second place in 2022.
CONCLUSION
Even though the current top five and the mean top five CDMO selection attributes from 2018 to the present have been reviewed, one more attribute deserves a mention here and that is cost. Frequently top of mind for both drug innovators and CDMOs pricing their services, how much does cost truly factor into CDMO selection? An entire article could be written on the topic, but the highlight is this: when all other criteria are met, cost comes into play. Or when the state of the global economy is in question, cost comes heavily into play—as the data show Low cost rose to the top of the chart in 2021. However, now that economic concerns have been sidelined for supply and capacity concerns, the prioritization of a Low cost contract manufacturer has dropped a few notches, landing in 6th place with a five-year average ranking of 5.2.
