A Start-Up’s Guide to Choosing Their First CDMO: Breakfast Session Bulletin

Throughout CPHI North America 2023, several Breakfast Sessions were held to start the day off right with a complimentary breakfast and a networking and learning session for our attendees. With insightful presentations from industry experts and partners, the CPHI North America Breakfast Sessions had something for everyone looking to fill their brains and their stomachs. 

A good partnership is not just about delivery 

A good outsourcing partnership between CDMOs and their customers is not just about accomplishing a particular task or goal, but also the process and journey taken throughout the partnership. For start-ups especially, it is important for CDMOs to foster a communicative working relationship to successfully manage current projects and foster and develop potential future ones. Shanmugam listed three key points for establishing solid partnerships: transparency, trust, and stewardship, with all three feeding into and bolstering the other. Transparency and communication regarding the management and handling of a customer’s product and budget builds lasting trust and relations for any CDMO, big or small. While so-called ‘hard’ skills and resources such as next-gen technology platforms are obviously important and a USP for any service provider, it is transparency, trust, and stewardship that Shanmugam stated will allow a CDMO to stand out to existing and potential customers. 

The buzzword of the session was customer-centricity. An essential component for CDMO and service businesses, Shanmugam advised the room to “make the customer your central attraction; make them happy and meet what is needed.” While he acknowledged procedural and regulatory challenges could impede a CDMOs ability to meet their customer’s needs, he was optimistic about most customers understanding and appreciating the effort that outsourcing partners will put in should they keep customer-centricity at the forefront of their decisions. 

What drives outsourcing decisions 

Most critical drivers of outsourcing decisions can be categorised into six general categories, Shanmugam stated: cost reduction, access to expertise, accelerated timeline, globalisation, risk mitigation, and flexibility and scalability. With start-ups some of these limitations or pain points play an even larger role in their decision-making when choosing a CDMO partner. Such decisions become a balancing act between each of the six drivers: if there is a supply chain disruption, will the CDMO be equipped to meet deadlines within budget? Are there specific regulatory compliance requirements and expertise needed for the product in question and if so, how will this affect the expertise available? Additionally, these drivers may affect the type of CDMO required at each stage of drug development and manufacturing from preclinical through to commercial. Some stages may require the services of a large-scale CDMO while others might need only a niche service provided by a select few companies. Start-ups in particular may be in need of small-scale/niche outsourcing partners if they work with new concepts, formulations, or other innovations. All of these aspects must be taken into careful consideration for start-ups to work with the best possible outsourcing partner for their needs. 

Outsourcing models for start-ups and CDMOs 

Start-ups must also consider the different types of collaborative models available when working with CDMOs, of which Shanmugam lists three: tactical, preferred provider, and strategic. Comparing each model can help start-ups choose the right partner for their needs. Tactical outsourcing models best service short-term needs based on specific tasks or projects. Preferred providers offer long-term relationships with contractual agreements that have an established set of services and programs available. Start-ups may choose these partners for their reliability on similar projects. Strategic outsourcing models approaches the partnership with a risk-sharing mindset, which may appeal to some start-ups at the early stages of a project. 

Similarly, three business models for CDMOs were outlined by Shanmugam. Best of Breed (BoB) models are the best at what they offer, often in niche technologies and services but they may not offer everything a start-up requires. One-stop shop (1SS) models, the most common, offer a comprehensive set of services, usually within one process chain (development, packaging etc.). Hybrid models takes the best of both models, whether by horizontal or vertical integration, and can thus offer a portfolio of packages while also offering niche solutions.  

By understanding what drives outsourcing and the different collaborative and business models available, start-ups can thus begin the process of searching for, vetting, and choosing the right CDMO partner for them. 

The growth and appeal of outsourcing 

Shanmugam concluded the session with an appeal to the running theme throughout the breakfast session: considering and balancing every aspect of the decision-making process in order to establish a successful, long-term relationship. Both hard skills and expertise such as capacity and capabilities must be balanced with equally important ‘soft skills' such as transparency, flexibility, and a growth mindset. Only then can start-ups successfully establish a lasting presence within the industry and grow not only their company but also their network and partnerships for years to come. 

Are you a start-up working in pharma, biotech, or digital and/or medical devices? Interested in what CPHI has to offer for start-ups? Apply for our new Start-Up zone at CPHI Barcelona with packages designed to jumpstart your company's journey of innovation at the heart of pharma. For more information, click here.