Contract Manufacturing Organizations: A Guide to Understanding & Selecting CMOs
Last updated on January 19, 2023 by
Thousands of scientists and researchers work to discover new treatments each year to improve healthcare outcomes for physicians and patients. This requires extensive research in the lab, something in which scientists specialize. It’s also something for which most companies have the budget.
However, the next step—manufacturing the treatment or part of the treatment—can get complicated. Not only does producing a drug substance or product call for comprehensive understanding and expertise in the development and manufacturing process, it also requires dedicated staff, equipment, and manufacturing facilities.
But, life science companies and their research teams don’t always have the experience, resources, or capital needed to build dedicated staff and manufacturing capacities to manufacture a product on an industrial scale. Taking a drug from discovery to FDA-approval to development and then through manufacturing is an expensive process due to the considerable staffing, facility, qualification/certification, and equipment needs of drug development and manufacturing.
Even if a company has the resources, or is interested in raising capital to fund the build out, it doesn’t always make sense financially. It can be a huge risk to build out manufacturing capacities for a drug or device that can fail in clinical trials.
What can you do when you have a commercialized drug you need to manufacture, but lack the resources and experience needed to produce it at scale, or wish to find a more cost-effective alternative?
From large pharmaceutical companies to biopharma startups, numerous organizations turn to contract manufacturing organizations (CMO) for help when they have a product or substance they need to manufacture quickly but do not have the resources on hand to do so. Hiring a contract manufacturing organization or contract development and manufacturing organization (CDMO) can be an essential step when you need someone to help handle the process of developing or manufacturing your drug formula.
By outsourcing drug development and manufacturing, businesses not only get their products to market quicker, they also free up time to focus on other areas, including drug discovery and marketing.
Depending on the CMO you’re interested in working with, you will be able to rely on their experience and expertise in product manufacturing throughout the development process, ensuring your products and biologics are developed and manufactured efficiently and effectively.
In this article, we’ll review CMOs, CDMOs, services and facilities, costs, and much more. Our guide will help you develop a stronger understanding of the benefits and drawbacks of contract manufacturing. With a stronger understanding, it will be easier to decide why you outsource, when you outsource, and where you outsource.
What’s a Contract Manufacturing Organization?
Contract manufacturing organizations (CMOs) can provide drug manufacturing services on a contract basis to companies operating in the life sciences industry.
They are most useful to companies that do not have the resources or expertise to manufacture their products in-house or want to outsource manufacturing to meet demand or save on the costs of building out manufacturing capacities and production teams. CMOs can often produce drug products more efficiently and cost-effectively than your company can on its own, as the process usually requires specific equipment and techniques when mass produced.
When a company doesn’t have the infrastructure or resources needed to manufacture a drug product or device at scale, they can outsource the work to a CMO. Outsourcing the drug manufacturing process is a viable way to produce a product on an industrial scale when you don’t have the ability to do so in-house.
CMOs are also sometimes referred to as contract development and manufacturing organizations (CDMOs). This happens when the organization also offers drug discovery and development services. However, in most cases, a CMO will simply offer manufacturing services for pre-formulated drugs, whereas a CDMO will handle everything from drug discovery, preformulation, and formulation development in addition to clinical trials—all development processes that occur prior to manufacturing—in addition to manufacturing.
Don’t worry too much about the different monikers, CMOs often offer the same services as CDMOs. What’s important is that you know exactly what you need accomplished and establish whether a potential CMO selection offers those services.
For example, if you have a pre-formulated drug, you’ll likely only need someone to help manufacture that drug. However, if you need help developing a product, working with a CMO or CDMO who offers support with pre-manufacturing processes will be your best choice.
The type of business model of your company can also be a factor in the type of CMO or CDMO you work with. CMOs are well known for working with biotech, biopharma and pharma companies. The type of work your company focuses on can play a role in which contract manufacturer you work with, as some will support specific industries.
Don’t be deterred by the size of your company either. CMO clients can range from segment to segment, including enterprises, small and medium-sized businesses, and even startups.
The type of product you are developing or manufacturing can play a factor in who you work with as well. CMOs and CDMOs help develop and manufacture a wide variety of products, whether it’s a drug product, therapeutic, medical device, or biologic, and provide valuable guidance and support throughout the processes.
What Types of Contract Manufacturing Are There?
There are many different types of contract manufacturing organizations. This can include general CMOs or more specialized organizations—organizations that specialize in pharmaceuticals, medical devices, or consumer products. The specific type of CMO you should partner with will depend on the specific needs of your product and your manufacturing requirements.
The three primary ways you can categorize contract manufacturing are: contract structure, supported industries, and services, tools, and materials:
You can choose between different types of contract manufacturing agreements. They include private label manufacturing, labor/service subcontracting, individual component or part manufacturing contracts, and end-to-end service contracts.
Some contract manufacturers specialize in certain industries. It’s important to choose a manufacturer that understands the needs of your customers as well as your industry’s market and regulations.
Services, Tools, & Materials
In addition to the types of contract agreements offered and industries supported, CMOs will also have different manufacturing processes and types of tools or materials they use. This will not only determine whether or not the organization can help you, it will also have an impact on the quality of the products and how quickly the products can go to market.
What Services Do CMOs Provide?
CMOs and CDMOs offer different manufacturing and development services for specific types of drugs and medicines. Some organizations only handle commercial manufacturing, while others provide both development and manufacturing services.
When it comes to manufacturing, contract manufacturers and developers offer can include:
For development services, these organizations can include:
- Analytical services
- Preclinical research
- Clinical trial support
- Regulatory support
- FDA review
- FDA post-market safety monitoring
Depending on where your drug product or device is in its development stage, you’ll be looking to start a certain place. For example, if you need help with formulation, reliability, and stability, the CDMO will begin by helping you develop the product.
If you’ve already completed development, and have an approved drug on your hands, the CMO will likely begin with commercial manufacturing once you’ve both agreed on specifications. If you’re still working on approval, they will be able to significantly scale up production to meet demand once the drug has been developed and approved.
Here’s a typical example of a biopharma company working with a CMO: you provide your formula or the design to the contract manufacturer who then takes care of all the processes to produce your product based on the details you provided. Then, the manufacturing organization would make a mockup, which they test for reliability and feasibility. Afterwards, both parties analyze the results and agree upon final specifications. From there, the contract manufacturer can start producing your product and deliver the amount specified within a negotiated time frame.
As you can see, product development often covers a wide range of tasks, from drug discovery to formulation and testing to regulatory compliance, clinical trial support, and more. Each service can include a number of tasks as well.
For example, clinical trial support can include synthesis and purification services. This means a CMO can synthesize and purify a drug substance or product for you if needed. Analytical services can also be included. This means your CMO can provide stability testing, impurity analysis, and method development and validation, all to support the development of your product.
Furthermore, regulatory support can help you navigate the regulatory requirements of development and manufacturing and can help you prepare and submit regulatory documents, including investigational new drug applications and clinical trial applications.
Some CMOs even help conduct clinical trials. These services include site selection, study monitoring, and more. CMOs that provide clinical research services typically have experience and expertise in this area, and can help ensure that clinical trials are conducted efficiently and effectively.
Site selection services can include identifying and selecting the most appropriate clinical trial sites, based on factors such as patient population, location, and availability of facilities and personnel.
Study monitoring services can include providing on-site monitoring of clinical trials to ensure that they are conducted in accordance with the study protocol and good clinical practices. This includes monitoring data collection and management, patient safety, and regulatory compliance. You may even be able to use a CMO for clinical research, depending on the scope of their services, expertise, and staff.
What Does Contract Manufacturing Cost?
The cost of using a contract manufacturing organization (CMO) will vary depending on a number of factors, including the complexity of the manufacturing process, the quantities being produced, and the length of time required to complete the process.
In general, CMOs charge a fee based on the total number of hours required to complete the manufacturing process, the cost of raw materials, and the cost of any specialized equipment or facilities needed.
It can be difficult to provide a specific cost for using a CMO without knowing the specific details of the manufacturing process. However, a CMO will typically provide a detailed quote for a specific manufacturing project, taking into account the specific requirements and constraints of the project. Instead of providing vague prices for you, we recommend you contact several different CMOs to determine the costs of contract manufacturing, and to compare their quotes to identify the most cost-effective option for your project.
What are the Advantages & Drawbacks of Using a CMO?
Like many services and solutions in the life sciences industry, there are both advantages and drawbacks to using a contract manufacturing organization. Let’s review:
Hiring a CMO offers several advantages that can play a vital role and make a huge difference in both small and large businesses’ operations.
- Cost reduction: Contract manufacturers can often produce products more efficiently and cost-effectively than your own company could on its own, as they have specialized equipment and development/manufacturing expertise.
- Increased capacity: Contract manufacturers can provide additional manufacturing capacity when needed, allowing you to meet demand without having to invest in additional equipment or personnel.
- Added flexibility: Contract manufacturers can provide flexible manufacturing solutions, allowing your company to scale production up or down as needed.
- Guidance and expertise: Contract manufacturers have extensive experience and expertise in manufacturing and can provide guidance and support throughout the manufacturing process.
- High quality results: Contract manufacturers are subject to strict quality control standards and can ensure the manufactured product meets the highest quality standards.
- Specialized technologies: Depending on the contract manufacturers, you can gain access to greater technological capabilities, relying on specialized technologies and equipment that you may not have in-house.
In other words, when you work with the right contract manufacturer, you can experience cost savings, increased capacity, production flexibility, access to specialized equipment, and more.
Hiring a CMO also presents a number of potential drawbacks. These can include:
- High organizational fees: Depending on the fees, some CMOs can actually be more expensive than manufacturing a product in-house, making it important to compare several different contract development and manufacturing quotes.
- Lack of control: When outsourcing to a CMO, you might have less control over the manufacturing process, as the CMO will be responsible for producing the product.
- Communication: Effective communication and collaboration between your company and the CMO is essential for the success of the manufacturing project, and poor communication can lead to misunderstandings, mistakes, and delays.
- Compromised quality: While many CMOs can produce high-quality products, this can actually vary depending on the experience and expertise of the individual CMO. It is important that you carefully evaluate every potential CMOs’ qualifications and track record before engaging with them.
- Intellectual property: When you use a CMO, you risk exposing your intellectual property, whether its a trade secret or some proprietary information; although you can protect yourself from this through different patents and trademarks, the CMO could potentially use the information for competitive advantage; make sure there are clear agreements in place to protect your company’s intellectual property rights.
It’s important to carefully consider the pros and cons of working with a CMO. While doing so can be cost-saving, it can also lead to higher costs depending on the organization. The same goes for quality.
You will likely end up with a high-quality drug product, but it is still entirely possible to end up with something that is low quality and does not meet ISO standards.
When to Use a CMO or CDMO?
It can be appropriate to use a contract manufacturing organization to develop a drug when:
- You do not have the necessary equipment or expertise to manufacture the drug in-house.
- You need to access specialized equipment or facilities, such as clean rooms or sterilization equipment.
- You need to conduct preclinical research or clinical trials, and want to work with a CMO that has experience and expertise in this area.
- You need to scale up production quickly and efficiently to meet demand.
Using a CMO can be a valuable option when developing a drug. The extensive experience and expertise in the manufacturing of pharmaceuticals CMOs generally have can make it much easier to get a high-quality product to market faster. They can also provide valuable support and guidance throughout the drug development
Whether you should outsource drug manufacturing to a contract manufacturing organization (CMO) will depend on a number of factors, including your budget, the complexity of the drug, and your in-house expertise and resources.
Outsourcing drug manufacturing to a CMO can be a cost-effective option if you do not have the necessary equipment or expertise to manufacture the drug in-house. Rather than spend the money that you may not have to build out capacities in-house, you can work with a CMO to produce the drug for you.
The decision to outsource drug manufacturing to a CMO should be carefully considered, taking into account the potential costs and benefits. It can be worth comparing the costs and benefits of outsourcing to a CMO with the costs and benefits of conducting the manufacturing process in-house.
What Should You Look for In an Organization?
The type of CMO you should consider partnering with will depend on a number of factors, including the specific drug you are developing, the stage of development, and your budget. It is important to carefully evaluate the qualifications and track record of any CMO you are considering partnering with, and to compare their services and fees with those of other CMOs.
When selecting a CMO, consider some of the following factors:
- Experience and expertise: Does the CMO have experience and expertise in the manufacturing of the type of drug you are developing?
- Equipment and facilities: Does the CMO have the necessary equipment and facilities to manufacture the drug, including clean rooms and sterilization equipment if needed?
- Regulatory support: Is the organization familiar with regulatory requirements and capable of providing support and guidance on how to comply with these requirements?
- Clinical trial support: Can the CMO provide support with clinical trial research, including site selection, study monitoring, and FDA review?
Carefully evaluate the qualifications and experience of the CMO you are considering partnering with. Ensure that they have the necessary expertise and resources to support your drug development project.
What’s the Difference Between CMO & CDMO?
The main difference between a contract manufacturing organization (CMO) and a contract development and manufacturing organization (CDMO) is the scope of services they offer. Simply put, the main difference is development.
CMOs are companies that provide manufacturing services to other organizations, while CDMOs are companies that offer both development and manufacturing services.
CMOs typically specialize in a specific type of manufacturing and offer services such as product development, formulation, and packaging.
CDMOs, on the other hand, offer a broader range of services, including not only manufacturing, but also product development and regulatory support. CDMOs may even offer additional services such as quality control and supply chain management.
In short, CMOs provide manufacturing services for pre-formulated drugs and CDMOs provide a more comprehensive range of development and manufacturing services. The decision of which type of organization to use will depend on the specific needs of the sponsoring company and the stage of development of the product.
What’s the Difference Between CMO & CRO?
The main difference between a contract manufacturing organization and contract research organization (CRO) is manufacturing, and the type stage at which you work with each. While you’ll want to work with a CMO when it’s time to manufacture a drug, you’ll want to work with a CRO when you need support conducting research studies.
CMOs sometimes offer services in drug discovery and development that CROs also provide, creating some overlap. However, CROs and CMOs offer different ranges of services. Specifically, CROs can help with work related to research, including study design, data management, and statistical analysis, but cannot help with contract manufacturing.
CMOs for Development & Manufacturing, Excedr for Leasing
All drugs go through extensive and expensive journeys before securing FDA approval and becoming available to patients. It is a significant undertaking, riddled with risk, oversight, and regulation. Sometimes taking it in-house doesn’t make sense.
Generally speaking, CMOs and CDMOs can help throughout every step of drug development and manufacturing. What services they can provide simply depends on the specific organization you’re considering. Whatever your needs are, these contract manufacturers and developers can typically help you navigate the process and mitigate the risks of drug development and manufacturing.
Bringing a new drug to the marketplace requires extensive resources, technical expertise. When you choose the right CMO or CDMO partner, you give your drug development and drug manufacturing program a competitive advantage and speed up the time it takes to get a product to market.
Performing research prior to development and manufacturing often takes place in-house. Your work often requires top-of-the-line technology and equipment as well. However, high-quality lab equipment is often costly. Upfront costs and service contracts will take a huge bite out of your budget, making prioritizing equipment procurement and research a huge challenge.
Leasing lab equipment with Excedr is a cost-effective option for biotechnology, biopharmaceutical, and pharmaceutical industries performing research and development in-house.
When you need new or refurbished equipment in your lab to improve results or accelerate R&D, you can rely on our leasing program to get you the instrument you need in order to get you to the point where you have a formulated product and need the services of a CMO or CDMO.