Newsletter Winter 2019 - David Bergstrom - Strategies to Approaching CMC New Product Development and Manufacturing Outsourcing Resources

Strategies to Approaching CMC New Product Development and Manufacturing Outsourcing Resources

David H. Bergstrom, BS, MS, PhD

CMC Consultant

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If your company is developing a new product, your team will—at some point—have to consider a CMC (Chemistry, Manufacturing & Controls) and outsourcing strategy. How should your company develop such a strategy?

 Business Model and Corporate Strategy

The first step is to understand the company’s overall business model. Does the company plan to fully develop and gain NDA approval, then manufacture, commercialize, and market its own product? Alternatively, does the company plan to develop a prototype product ready for a first-in-man evaluation, maybe gain a patent, and then license the prototype and patent to an organization that will gain NDA approval and eventual commercial success? Or does the company’s plan fall in between these two ends of the spectrum?

The company’s larger corporate strategy also affects strategic outsourcing. Corporate strategies drive a buy versus build decision when it comes to outsourcing a company’s new product development and/or commercial manufacturing capability. Examples of corporate strategies include: “Bring a large number of products to market with lower risk by being in multiple therapeutic areas” or “Develop and commercialize new pharmaceutical products with greater efficacy and safety profiles by employing advanced drug delivery techniques and technologies.”

 Selecting a CRO or CDMO

The second step in developing a CMC and outsourcing strategy is to consider different CROs (Contract Research Organization) or CDMOs (Contract Development and Manufacturing Organization) that the company will work with. CROs and CDMOs come in various shapes and sizes. Some are large and have the full breadth of capabilities, from basic research and development to commercial scale production, packaging, and distribution. Other organizations, including university laboratories open to funding and collaborations, are smaller and perhaps niche capability providers.

If the company’s business model is to only develop a prototype, get a patent, and then license the product, either a niche CRO or full service CDMO will meet its needs. Smaller CROs will typically be less expensive and quicker in delivering CDAs (Confidentially Agreement), timelines, costs, deliverables, and proposals, allowing for a more rapid project progression. On the other hand, a large CDMO will be more rigid and slower in putting the necessary business agreements in place. Despite what full services CDMOs promise to smaller companies, the small company’s project will be a lower priority in the CDMO’s overall customer portfolio. A Development Agreement with the smaller company will only bring a short-term finite source of revenue for the CDMO in contrast to a long-term Commercial Supply Agreement with a company committed to full development and commercial production.

If the company’s business model is to develop and commercialize its products, then either a small CRO or full service CDMO will suffice. The small CRO may allow the company to move through an early screening/feasibility assessment more rapidly than a large CDMO. However, the small CRO would need to perform a Technology Transfer to the full service CDMO for full development under GMP conditions in order to supply CTMs (Clinical Trial Materials) and eventual scale-up, validation, and analytical method development required for later stage development and eventual commercialization. This need for Technology Transfer usually results in high costs and loss of time to market.

If the company’s business model is to develop pharmaceutical products in multiple therapeutic areas employing different physical product presentations and formulations (e.g., tablets, creams/ointments, solutions, oral sprays) for a wide but shallow product line, the company may consider CROs/CDMOs. However, the company should wait until its development pipeline and commercialized product line mature and increase with certainty as part of the “buy versus build” decision.

If the company’s business model is to improve the safety and efficacy profiles of a pharmacologically active substance through proprietary drug delivery technologies, then a small or large CRO/CDMO or university laboratory would work. Although a Technology Transfer would be involved, proprietary enabling technology can provide advantages to offset that consideration. What should be kept in mind, however, when working with university labs is the university lab’s “research mindset” and approach, which typically means little experience in pragmatic product development that leads to regulatory approval and commercialization. Additionally, universities usually charge generous overhead fees on top of the laboratory’s proposal and cost of working with the lab. Most universities are also aggressive in leveraging university-owned intellectual property in terms of licensing fees and downstream royalties on commercial sales revenue.

With all these things in mind, a few other considerations in selecting the most appropriate and capable CRO/CDMO for your project are: (1) business processes, (2) facility, and (3) people.

Business Processes

Business processes include: getting the CDA in place; receiving the initial early development and feasibility timing and cost proposal; and obtaining amendments, downstream licensing, and commercialization agreements. The timing of CDA and development proposal turnaround is a clear indicator of how the later stage proposals and project progression will proceed.

Additional questions to consider are:  

·       How will the project be managed? Does the CRO/CDMO have a formal project management system and named individual?  

·       Does the organization have an explicit and well-documented quality policy, including process performance metrics and systems governing SOPs (Standard Operating Procedure)?  

·       Will you communicate with the laboratory person performing the function or an intermediary that relays information back and forth to you as a client?  

·       What is the frequency of in-person meetings and phone calls for project status updates? 

·       Will meeting minutes documenting project progression and key dates for deliverables be issued?  

·       Is there an established escalation process for dispute resolution due to changes in scope, changes in timeline, invoicing, and unfavorable results?  

 Overall, you should expect all business processes to be client-friendly, quick, and flexible to meet the needs of your company to the greatest extent possible. 


The physical plant and laboratories are important, especially if the data generated is intended to be used as part of any regulatory submission. You would always want to know that your product is well-cared for. Questions to consider in evaluating the facility are: 

·       Does the facility support CGMP (Current Good Manufacturing Practice) compliance? Can it pass a preapproval regulatory inspection?

·       Is the water system up-to-date and tested regularly? 

·       Is the air handling system installed and documented properly to assure no cross-contamination between your product and another company’s product? 

·       When was the last regulatory inspection? Were there any observations issued by the inspector? Ask for a copy of the EIR (Establishment Inspection Report).


One of the most important aspects in working with a third-party provider is active involvement with the CRO/CDMO. Do not think that once the contract is signed that you can expect deliverables 6 months later without any communication, input, and decision-making on your end.

The provider will need your direction and decision on many matters along the way. You should be timely and responsive to the CRO/CDMO’s questions. Additionally, you should consider your service provider’s suggestions on approaches, associated risks, and timings. Although the service provider has confidentiality obligations, it can still make suggestions based on learnings from previous projects, which could lower costs and increase efficiency for your company.

You should also identify an internal advocate for your project within the CRO/CDMO. This does not necessarily need to be the most senior individual, but should be someone who connects with you, your project, and your company’s mission; oftentimes this person will have a personal reason for their particular interest in your program. This internal advocate can be effective in moving along the contractor’s resource allocations and priorities.


There are several issues to consider when identifying and working with the appropriate CRO/CDMO, some of which are hard issues and others soft. Kinexum is uniquely positioned in its ability to assemble a multi-functional team of experienced industry and regulatory experts to provide both strategic advice and tactical operational oversight and management to move your project from a good idea through regulatory approval and eventual successful commercialization.