samedan logo
home > ebr > winter 2012 > take your pick
European Biopharmaceutical Review

Take Your Pick

Choosing a CMO is like choosing a spouse; compatibility and communication are key to building a successful relationship. And when the courtship is over, a detailed quality agreement will ensure you can delegate your manufacturing while keeping control of the product.

Companies choose to outsource their manufacturing or supply chain for many reasons. Sometimes it is due to a shortage of expertise to take those research ideas to large scale production. In other cases, companies choose to outsource because of lack of capital to build a plant, or their reluctance to raise or invest hard-earned cash by sinking it into concrete and steel in the ground. This is especially true for small start up companies whose success rides on one lead compound and, perhaps, several trailing compounds. Failure of the first compound may cause complete disaster for the company if they have invested in capacity and not retained the money to invest in the follow-on drug candidates.

So outsourcing part or all of the supply chain is a logical decision for many companies. However, choosing the right contract manufacturing organisation (CMO) and managing the relationship is no easy task. It takes careful selection, relationship development and an attention to detail to make the relationship work – for both. And I do mean both; a successful partnership involves give and take by both parties. At the end of the day, everyone needs to walk away feeling good about the outcome.

Deciding What to Outsource and to Whom

First, its important to decide which parts of the supply chain to outsource. It could be the active pharmaceutical ingredient (API), or bulk manufacturing and/or the dosage form production. With that decided, the next step is to determine who is available to meet the requirements of timelines, technology fit, scale and cost. Note that I put cost at the end – while cost is important, it is rarely the deciding factor for most successful relationships. There are many companies out there capable of producing a product, but who you end up with is often based on which partners are available, which are amenable to the company’s timeline and scale, and which you feel comfortable working with. In the past, it was mostly word of mouth and experience that led companies to a CMO, together with a copy of the Yellow Pages and various paper directories from trade associations. Today there are websites outlining services that make the task more comprehensive and reliable. But be cautious; a lot of companies claim to be able to do everything and while some may be legitimate claims, I have myself been burnt by a CMO who talked a good talk. Once into the project, it became clear we were paying them to learn. Not a very good situation.

Due diligence is the first step and is critical to ascertain technology fit and expertise, as well as to determine their compliance record and the ruggedness of their quality and compliance systems and business practices by auditing. Technology fit is a key element to address. If the CMO plant needs retrofitting to accommodate your process, this may add several months to a year to your timeline. Small engineering changes may be completed quickly with little impact on the timeline, but if equipment purchases are required, the timeline will be much longer because of the lead times needed in these cases. At this stage, significant communication with respect to the length of the contract is critical to allow each party to ascertain their desire for the relationship. In this case, companies become dependent on the CMO to transfer the process back to them, since the CMO will have scaled up and become the expert in the process and product. The audit is a necessity to highlight any potential deficiencies in their quality systems which should be addressed prior to contract signing. Reviewing their track record on the FDA website (if relevant) may indicate any warning letters that are relatively recent. Reviewing recalls can also be accomplished on the FDA or EMA websites, which might indicate some issues in their operations.

It’s best to get this done before the business negotiations are complete. The contract is critical and should reference the need to comply with GMPs and quality principles. However, it’s important to avoid the trap of putting too much on the quality side into the contract. This may need to change during the life cycle of the project, and if specified in the business contract, it opens the opportunity for renegotiations. A key message is that you can delegate the physical aspects of the manufacture to a CMO but should retain full responsibility and accountability for the product in the eyes of the regulator. How do you assure that? Through a technical or quality agreement.

Developing a Technical or Quality Agreement

Keep the details of the quality or compliance relationship separate in a technical or quality agreement. European companies require it, and although not codified in regulations in the US, the FDA expects it. This quality agreement should be drawn up by quality staff, with consultation of the legal department. However, do not let it be drawn into the legal department too deeply or you will end up with a document that is unworkable and unreadable to the practitioners. This should be completed and approved by both parties before any substantial work begins.

What format works best? The one you are comfortable with. That could be bullet points with who does what, tables with responsibilities clearly noted or a legalese document (written in plain language). It is critical to put in the document everything that needs to be defined. A typical quality agreement would likely cover the following topics:

General Introduction

Clearly defining the products and manufacturing steps involved, an introduction would also indicate which GMPs are applicable, dependent on where the market or license is. While most major GMPs are very similar, certain ones do have some slight differences. It should also cover roles and responsibility principles. Communication is critical, and so the expectations of modes, frequency and areas to cover should be defined clearly. It should also clarify and reinforce that the relationship does not stop after the last batch is made. Stability programmes, reserve samples, complaints, recalls and documentation continue well past when the last vial is sold.


Subcontracting can yield surprises, so a clear process of when and how subcontracting is done is crucial. There must be a clear understanding of how documentation is changed. For critical product document changes (master batch records, major product specific SOPs, and so on) you need active involvement of both parties as they both have a vested interest in having compliant workable documents. Raw material management should also be clearly defined. Can the CMO change the source without approval? Or will you delegate the responsibility for less critical materials but retain control over criticals? I advocate a tiered system for appropriate control and efficiency. Something as simple as batch numbering, and how expiry dating is calculated should be clearly defined, or you may have discordance between both companies – it could even lead to a recall. A clear definition of storage conditions and shipping requirements must be stated.

Quality Control

Clear definitions of what testing is expected can be included in the form of specifications and test methodology, with an understanding of who is involved if they are changed, for both parties. In process testing and sampling plans also help the CMO to implement an effective programme. After problems in the 1980s with 'out of specification' (OOS) testing into compliance at certain companies, a clear expectations of how OOS is handled is paramount. These procedures should be approved by both parties. The stability programme is also a cornerstone of QC activity and clear definitions of expectations should be made – does the company want to extend expiry or are they happy with the present situation? In the biological product field, and less so in the drug world, many QC tests rely on home grown reagents and standards. Be clear who is responsible for these and, if supplied by the sponsor, make sure there is a system in place to order these standards and reagents well ahead of time. You do not want your product to be held up because of a single reagent needed for release testing running out. Think through the process for specification changes: both parties own these. The sponsor has committed to the agency the standard expectations of product quality as described in the specifications. However, the CMO must be able to make the product. Clear cooperation is needed.

Quality Assurance

As you might imagine, the QA area has a multitude of elements described in the quality agreement. Documentation is a key area that must be addressed, and in addition to those elements described above, there must be a clear definition of those documents that the CMO and the sponsor own individually and together. There must also be a process for document change, specifying who does what and when (see Figure 1). In general, plant-specific elements should be delegated to the CMO, while productspecific elements are the responsibility of the sponsor working with the CMO.

How will deviations and investigations be handled? To prevent swamping the systems, delegate minors to the CMO with monthly or quarterly summaries supplied. Remember, you do not have to see every alert limit failure in the environmental monitoring programme. For major or critical, both parties should be involved (see Figure 2). At the least, a real time summary should be supplied with conclusions. Depending on the risk appetite of the sponsor, there might be even more involvement.

Batch disposition can be made by the CMO, but ultimately the sponsor is accountable. Risk appetite defines how involved you are. For high risk (and that may be economic), often the sponsor has the final release to commerce or clinic (see Figure 3). At the end of the day, you are responsible for all product released. Product complaints, alerts and recalls are areas that we hope never surface, but in the real world these events happen. Make it clear who does what and make sure communication is clearly defined. Both reputations are on the line when this happens.

Change is inevitable, especially after a scale-up, so a robust change control process is paramount. For small changes you can delegate to the CMO, but for more major ones both parties are on the line (see Figure 4). Again, define your expectations, including what is covered and how you will work through the change in an efficient, compliant manner. You might consider the product-versus plant-specific division for change control as well, but watch out for exceptions.

Auditing is critical, so define the routine auditing frequency and also the right to audit for cause. What constitutes ‘for cause’? The obvious is a string of failures, or adverse inspectional findings, to name but two. But a change in management may signal some issue at the plant that you are unaware of. Validation for plant-specific systems might be totally handled by the CMO with auditing after the fact. Product-specific ones, for example process validation and method validation, should involve the sponsor as well.

Your annual product review is a useful activity that can and should be used to discuss what is working and what needs adjustment. It serves as an opportunity for both parties to get together and discuss significant changes or issues and develop joint action plans.

Regulatory Compliance

You must decide how you are going to handle inspections at the plant. In the case of an inspection for your product, for example at a PAI or biennial GMP inspection, the sponsor should be present, but the responsibility lies with the CMO who is being inspected. But when a product-specific issue arises, then the sponsor should be called upon. So be prepared to be sitting in an ante-room for days with the possibility of not being called, if everything goes well. Also you need their cooperation in the case of submissions, so expectations should be defined.

Person in the Plant

This can either be a bone of contention or a blessing. Create a value added proposition by empowering the person in plant (PIP) to make decisions, on deviations/investigations, change control, lot disposition and other items needing rapid response. This is especially true if the plant is on the other side of the world many time zones apart. But a PIP need not necessarily be involved all the time. You can take a risk-based approach to deciding the level of involvement, but for critical products there is usually one involved all the time. Define expectations in a procedure that you share with the CMO. Make the PIP available in real time for decision making and make it clear the escalation process for those that the PIP can not make. They will become an effective conduit into the plant if these elements are addressed. Should it be a manufacturing person or a quality person? In routine operations, the value of the PIP is when things need to change or when issues arise, and these are almost always quality issues, so the person should ideally report to quality, but they can be of any discipline, so long as they know the product and process and understand quality and compliance.


This should include items that can change, such as a person’s names, phone numbers and email addresses, and other variable items. Also make it that the addendum is updated simply without the need for reevaluation of the quality agreement.

Remember that your strategy might not remain static as more experience is gained working with the CMO. Initially, you might define a very tight control, which remains that way through the life of the relationship. However, as experience is gained, you might slacken off the level of control. Consider the first phase as a qualification period. It might be that you define the principles in the agreement. Or conversely, you might have to exercise tighter controls if significant issues arise that are not rapidly fixed. Consider the relationship as evolving in a life cycle manner rather than static.

Routine Operations

Now is the time to take out the approved quality agreement and put the principles into action. When you are operating routinely according to the agreement, and all systems are functioning, the relationship should look different to the start-up phase. During start-up or technology transfer, expect to see lots of interaction between both parties on many fronts. Later, during the ‘steady’ phase when things are going well, the interactions can be quite simple (see Figure 5). The two key players are logistics and quality. Logistics plans the production schedule in the short and long term, and tracks the goals to ensure they are met. Thus the two logistics groups (CMO and sponsor) must be in clear and frequent communication. Likewise, the two quality organisations should be well connected, with frequent communication. For most production projects that is all that is required. When and if some quality-related issues that could disrupt the scheduling of logistics surface, it is critical that the logistics and quality group communicate effectively to manage each other’s expectations. In addition, when an issue arises, other technical people can be brought in to tackle investigations. That could include manufacturing or process science at the sponsor side. However, this involvement must be carefully managed, or the systems will suffer overload.

As defined in the quality agreement, there should at least be an annual meeting of minds to look at how things are progressing and what is working or needs improving. But it is not a once-ayear activity. All progressive companies have adopted continuous improvement programmes that continuously monitor their performance and make adjustments as needed. The annual meeting is rather a ‘summing up’ of the year.

While following these principles will not guarantee success, failure to think through these points and plan for the future is almost certain to lead to issues arising, stress, poor decision making, if not failure.

Read full article from PDF >>

Rate this article You must be a member of the site to make a vote.  
Average rating:

There are no comments in regards to this article.

Peter Calcott is President and CEO of Calcott Consulting, and is focused on delivering solutions to pharmaceutical and biotechnology companies in the areas of corporate strategy, supply chain, quality, clinical development, regulatory affairs, corporate compliance and enterprise e-solutions. He is also an Academic Programme Developer for the University of California, Berkeley’s Biotechnology and Pharmaceutics Postgraduate Programmes. Prior to this he held senior roles at PDL BioPharma, Chiron, Immunex Corporations, SmithKline Beecham and Bayer. Peter holds a PhD in Microbial Physiology and Biochemistry from the University of Sussex and completed his post-doctoral work at McGill University in Montreal, Canada. He has authored over 80 original research papers, reviews and books. Email:
Peter Calcott
Print this page
Send to a friend
Privacy statement
News and Press Releases

Winners of the 2021 CPhI Pharma Awards have now been announced

Milan, 10 November 2021: CPhI Worldwide announces the winners of the 18th edition of the CPhI Pharma Awards, hosted live in Milan, with winners spanning some 10 distinct categories. The Awards seek to recognise ‘Excellence in Pharma’ , assessing entries from the industry leading companies and individuals.
More info >>

White Papers

Stripping the confusion out of PVC curtains... and a new seat range.

Teknomek Ltd

With the ever-growing trend towards modularisation of clean rooms and laboratories; Teknomek have responded with a new range of PVC strip curtains, suitable for use in environments where maintaining clean airflow is critical. This new PVC curtain range includes specialist perforated and electrostatic discharge alternatives to the standard options of clear and polar (-25oC) versions.
More info >>




©2000-2011 Samedan Ltd.
Add to favourites

Print this page

Send to a friend
Privacy statement