No longer just a safety valve, pilot-scale outsourcing has become a strategic tool for pharmaceutical manufacturing. Outsourcing sponsors, who typically look for help during early clinical phases, tend to be lean, small-to-mid-sized firms that want more than just a clean place to park their first blockbuster for a few years. They often expect contract manufacturing organizations (CMOs) to provide chemistry, separations and packaging expertise. Full-scale CMOs follow FDA-sanctioned recipes to the letter and ask few questions.At one time, large drug makers took on contract work, but as the industry's fortunes have improved, many mega-pharmas have rededicated manufacturing capacity to their own products. They're also less likely to outsource. Today, many large pharmaceutical firms avoid CMOs except for intermediates and products at the end of their life cycle. They may make exceptions for a 33-step synthesis that includes several esoteric reagents or proprietary catalysts. "Even then," comments Vijay Samant, CEO of San Diego-based Vical, Inc., "when they outsource it's usually to make room for pipeline products."Outsourcing needs change during any product development cycle. Early in drug development, small-to-midsized sponsors seek out flexible manufacturing partners who can adapt to changes in schedule, batch size and product requirements. Flexibility becomes less desirable as development proceeds and supply chains become more predictable. "At later stages," says Samant, "capacity, cost, and the ability to help commercialize the product become much more important."Perform Due DilligenceWhen selecting a pilot-scale CMO, due diligence is critical. Research everything and anything related to your potential manufacturing partner. Get references, visit their site and ask for documents related to FDA inspections. "Get to know people who work there "your success depends on those relationships and building trust," says Roy Musil, director of quality at Althea Technologies, San Diego.Because manufacturing relationships are complex and involve many different services, you may be looking for a one-stop shop that can manufacture and fill the product, plus provide technical expertise. Unless they're looking for a very specific skill set, most sponsors don't relish the idea of schlepping their products from one contractor to another. "What you want is a smooth flow all the way through to your clinical-trial materials," adds Michiel Ultee, Ph.D., senior biopharmaceutical director of Princeton, N.J.-based Laureate Pharma. Contractors should be honest, and state immediately if a project strains their technical, scientific, or engineering capabilities. Don't be afraid to put wavering negotiators to the test. Ask how they would handle a difficult reaction, scale up a particular step, or negotiate an unexpected problem "and to be as specific as possible. "An honest contractor will turn down projects outside their comfort zone," says Kevin Lesnewski, marketing manager for DSM (Greenville, N.C.).The price of manufacturing services is just one component of outsourcing economics. Everyone knows that a drug in Phase I is worth a thousand leads, and the value of time in an industry where lost opportunity is measured in millions of dollars per day. Needless to say, experience is critical. At the very least you don't want them learning on your time when they're supposed to be making Phase III-worthy material. "No big pharmaceutical company will hire a CMO inexperienced with the scale, the molecule, or the process you offer them," says Samant of Vical, "which is why it's so tough to break into contract manufacturing." Excluding lower priced CMOs in Europe or Asia would clearly be a mistake. However, a convenient location can be an advantage, particularly when workers from the contracting company need to visit the manufacturing facility regularly, or camp out there for weeks at a time. "Travel and living away from home burns out people quickly and can stretch a small sponsor's ability to carry out day-to-day operations," Samant explains.If you choose a company outside the U.S., native language may not be a top priority, but you must be sure of the organization's fluency in English. That includes the subtle, complex English used for business and technical communications as well as the colloquial language required, for example, in the Chemistry, Manufacturing, and Controls (CMC) section of a FDA Investigational New Drug (IND) document. "You don't want your batch records coming back in German," muses Roy Musil of Althea.Metaphorically, you also want to "speak the same language" as your contractor, share similar business philosophies, and feel reasonably assured that your ongoing communications will be smooth, cordial, and on your terms. You're not marrying your contract manufacturer; you're "only" doing business with them. However, corporate culture clashes can be uncomfortable. After considering all other hard selection factors, choose a partner based on rapport and how well interacting teams get along. Expectations should be congruent. Both partners need to be able to see their business benefits and to have reasonably similar expectations of what the partnership will mean in terms of deliverables, product quantity and purity, delivery dates and money. In many cases, the contract manufacturer also may need to be able to work with the type-A personalities who sometimes tend to aggregate at small, undercapitalized pharmaceutical firms.Science, TechnologyAt the pilot stage of development, sponsor needs go beyond recipe-following, so scientific and engineering knowledge is most critical, says Vical's Samant. Small-molecule contract manufacturers, especially start-up or virtual company hires, must be skilled enough to offer alternate chemistry, biology, and engineering when those methods will save time and money in Phase III and post-approval.Expertise in catalysis, asymmetric synthesis, and process optimization add value to small-molecule contractor relationships at this level. Biotech scale up requires different skills, for example, of cell biology and media optimization, with added emphasis on downstream processing, since half the cost of protein manufacturing is consumed by purification. Especially when in comes to downstream process development, what's expected of contractors varies considerably. Full-service biotech development firms like Laureate Pharma possess competencies in purification as well as in basic cell science and media optimization. "A purification that gives a 25% yield might be okay early on, but we shoot for a minimum of 50% for production-worthy processes," states Laureate's Ultee. Technology matches between sponsor and contract manufacturer are usually a fast read. Either they're experienced with yeast or they're not; they either perform hydrogenations or they don't. But sometimes matches are not clear-cut, particularly when the contractor can offer a better way to make something. During Phase I or earlier, the goal is to get pure product into pills or vials any way possible. Later, the process must make sense economically and from the perspective of manufacturability.Just as large and small sponsors expect different things from contract manufacturers, contractors tend to specialize according to client size. "Large firms with in-house development teams generally limit contractor relationships to manufacturing and occasional feedback on how the process should evolve," notes Vical's Samant, "but typically it's 'my way or the highway'." By contrast, smaller sponsors thrive on 50-50 relationships, even partnerships. They appreciate the kind of input that makes them say, 'Gee, we didn't think of that.'" That's why, says Samant, small sponsors should avoid contractors who are used to working for mega-companies and vice versa.Time Is of the EssencePilot-scale contract timelines tend to be short, unpredictable, with little room for error. "Due to limited capital, each day saved is often critical for smaller firms," says Leo Pavliv, vice president of operations for Cumberland Pharmaceuticals, Nashville, Tenn. "Timing becomes so critical that delays and lot failures put the firms' very existence on the line." To avoid disasters, Pavliv urges smaller firms to learn how much material they need, accumulate reserves, if possible, and evaluate conservation strategies that can mitigate a potential catastrophe.Another strategy is to partner with a manufacturer with a built-in "risk buffer" that includes management, facilities, finances, human resources, and contingency plans for unforeseen disasters. Pavliv recounts a recent sterility failure during an outsourcing project at another firm that cost millions of dollars and wasted several months. CMOs who build risk aversion into their proposals still suffer occasional mishaps, but they can sometimes shield sponsors from the most severe consequences. As part of their proposal and estimate, contract manufacturers should be prepared to provide details on who will do what, when it will be done, and what other projects are ongoing. Sponsors should then ask themselves if this workload can reasonably be completed in the required timeframe, with a buffer built in for unforeseen contingencies. In most cases, problems that require a few twelve-hour shifts to fix are reasonable; those that can only be solved by every employee working double shifts for a month are unmanageable.Regulatory HurdlesHiring a contract manufacturer without relevant regulatory experience would be unthinkable, but also look for an active dialogue between manufacturing and quality assurance/quality control (QA/QC) groups, as well as the ability to satisfy regulations for all jurisdictions in which a product is likely to be sold."It's extremely expensive to have a product approved in the United States, and then have to switch contractors to obtain EMEA [European regulatory] approval," says Kevin Lesnewski of DSM.Contractors, especially foreign CMOs, should have their own regulatory personnel and compliance protocols in place. Compliance means having paperwork ready for audits, everything validated, and being able to pass sponsor and agency inspections.Cleaning validation, which straddles both regulation and quality issues, is especially critical to assure that busy plants don't mix yesterday's diazepine with today's sulfonamide. "Find out whether FDA inspectors, who have the final word in regulatory matters, have seen the place," says Laureate's Ultee.If regulatory filings are required, make sure that the contractor can do its part, for example, preparing the CMC section of an IND, or relevant sections of Drug Master Files or Biologics Master Files. A contractor with a good track record of dealing with the FDA is a big plus.The Quality ShowsEven at the pilot stage, contract manufacturers must demonstrate quality at every stage of manufacture " not just for the end-product " and be able to validate that quality. FDA frowns on "testing in quality," which claims to establish process quality from the putative quality of the final product. "It's not enough to say that your protein formulation contains no viruses," Althea's Musil explains. "CMOs must demonstrate that materials and media were free of viruses and that no infectious agents were introduced into the product during manufacture. That means demonstrating integrity from the cell bank onward." Testing in quality is less of an issue for low molecular weight compounds, Musil points out, where the molecule is more easily characterized. Other quality questions to consider: How long has the contractor been running similar processes on similar molecules? What products have they made successfully, and when? How long has their team been working together? FDA warning letters, although notable, needn't be deal-killers, provided the contractor has resolved the issues or instituted a program to reinstate approval. Select a "best of breed" target profile before selecting a contractor, suggests George Cantrell of management consulting firm ADR North America, Ann Arbor, Mich. "The profile should include the best attributes of all your candidate contractors, which then serves as a benchmark for making your selection." Once you've chosen a supplier, employ a single-supplier, long-term sourcing strategy based on continuous improvement, setting goals and monitoring performance iteratively. Sponsor and contractor must review their business activities and commit to improving them continuously. "You know you'll never reach perfection," comments Cantrell, "but it's a mistake to think anything is ever as good as it gets. You can always do better. However, you need to create an expectation, and means, of measuring continuous improvement with your chosen supplier."Possible metrics include year-on-year cost improvement, tightened control limits and potential breakthrough projects as identified by the inter-company team of supplier and customer. These breakthrough projects may be innovations outside of the manufacturing " for example logistics, packaging and communications " that lead to improved cost and operational efficiencies.Other specific areas to monitor include quality, logistics, lead times, flexible batch/delivery sizes, process improvements, cost reductions, mutual economic benefits, closer relationships and plans for ongoing improvement. How can you tell whether your potential business partner is committed to continuous improvement? Not that differently than you'd pick up any other negative trait, believes Cantrell. "You often can sense whether the person sitting across from you is committed to what you're trying to do, willing to work more flexibly and reduce lead times, or more interested in the next project on his agenda. If they're not committed, they won't be successful and it will show."