The sharp spike in outsourcing in the pharma industry started a couple of decades back and has since influenced the sourcing and manufacturing strategies of all major pharma companies. Today, there are several complex factors that companies are applying to select their suppliers.

It is critical for pharma companies to choose the right Contract Manufacturing Organization (CMO). If a company makes a mistake in hiring a contractor, they are likely to face cost overruns and delays. With the right set of tools, choosing a CMO will not require unending investigation. With such tools, firms will be able to make a meaningful, objective, and thoughtful choice through an orderly procedure.

Supplier Selection Criteria

Earlier, choosing an appropriate CMO was relatively straightforward. Only five factors were considered as selection criteria:
  • Cost – Can the CMO supply the product at a price lesser than competitive suppliers or in-house production?
  • Capacity – Does the CMO have the capacity to fulfil sales demands?
  • Quality – Does the CMO conform to the quality standards of the sponsoring firm?
  • Competence – Can the CMO manufacture the products in question?
  • Legal – Does the CMO hold all the essential manufacturing authorizations?
There are a few more factors that must be taken into consideration such as cash resources, communication, delivery, continuity, and commitment.
Some of the less tangible selection benchmarks that have been added into the equation include:
  • Environmental awareness and waste reduction
  • Health and safety of employees
  • Human rights and the need to deal with people with respect

Key Considerations in Choosing the Best CMO

Here is a list of key factors that pharma companies must take into consideration while choosing the ideal CMO:
If your production needs are small, will you raise production in favor of a bigger client, a more profitable product? Look at the other clients that the CMO is working with. If you are a small firm, do you wish to compete with a large company for the same manufacturing space? There is a risk of being delisted and there are major penalties to being out of stock.
Open and clear communication channels are key to a profitable transfer or growth of your product. When you know your team members, it is easier to offer valuable insights into how a company works and what they value.
The speed with which a CMO responds to a crisis is an indicator of future dealings. If they are sluggish from the start, there is little chance of any improvement once they acquire a contract. Do not forget that a CMO’s business development team wants new business and they will do anything to get it. So, it is important for a pharma company to focus on the people that they will be dealing with.
Quality of Compliance:
It is important for a CMO to have a good track record with all regulatory authorities including FDA. CMOs must ideally not have any recalls attributed to them. Ask for a recent inspection report that they have gone through. Find out if they have done anything wrong in their shop and if they have received a warning letter. Firms will not get approval with a CMO if they have been issued a warning letter.
Does your CMO have the wherewithal and know-how needed to build your product? Do you wish to be their first encounter with a product? Most pharma companies do not wish to be a CMO’s test case of their product type. Besides, does the CMO have the appropriate scale of equipment? These are some of the questions that companies must ask before choosing a CMO.
Geographic Location:
The closer the CMOs are, the less burdensome travel becomes. Your QA team must go in and do an audit and if they are local, the travel is going to be a lot easier. Otherwise, you are booking hotels and flights and managing other expenses that just adds to the cost.
Most pharma companies focus initially on price, but a good price isn’t the only factor if there are supply interruptions due to quality issues, late deliveries, apathy or account neglect. Contract Manufacturing in India is slowly becoming big, especially with major pharma companies moving their manufacturing to India.