A contract manufacturing organization (CMO), more recently referred to (and more commonly used now) as a contract development and manufacturing organization (CDMO) to avoid the acronym confusion of Chief Medical Officer or Clinical Monitoring Organization in the pharma industry, is a

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

that serves other companies in the

pharmaceutical industry The pharmaceutical industry is a medical industry that discovers, develops, produces, and markets pharmaceutical goods such as medications and medical devices. Medications are then administered to (or self-administered by) patients for curing ...

on a

contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...

basis to provide comprehensive services from

drug development Drug development is the process of bringing a new pharmaceutical drug to the market once a lead compound has been identified through the process of drug discovery. It includes preclinical research on microorganisms and animals, filing for regu ...

through

drug manufacturing Pharmaceutical manufacturing is the process of industrial-scale synthesis of pharmaceutical drugs as part of the pharmaceutical industry. The process of drug manufacturing can be broken down into a series of unit operations, such as milling M ...

. This allows major pharmaceutical companies to

outsource Outsourcing is a business practice in which company, companies use external providers to carry out business processes that would otherwise be handled internally. Outsourcing sometimes involves transferring employees and assets from one firm to ...

those aspects of the business, which can help with

scalability Scalability is the property of a system to handle a growing amount of work. One definition for software systems specifies that this may be done by adding resources to the system. In an economic context, a scalable business model implies that ...

or can allow the major company to focus on

drug discovery In the fields of medicine, biotechnology, and pharmacology, drug discovery is the process by which new candidate medications are discovered. Historically, drugs were discovered by identifying the active ingredient from traditional remedies or ...

and drug marketing instead. Services offered by CDMOs include, but are not limited to: * pre-formulation, *

formulation Formulation is a term used in various senses in various applications, both the material and the abstract or formal. Its fundamental meaning is the putting together of components in appropriate relationships or structures, according to a formula ...

development, * stability studies, * method development, * pre-clinical and Phase I

clinical trial Clinical trials are prospective biomedical or behavioral research studies on human subject research, human participants designed to answer specific questions about biomedical or behavioral interventions, including new treatments (such as novel v ...

materials, * late-stage clinical trial materials, * formal stability, * scale-up, * registration batches and commercial production. CDMOs are contract manufacturers, yet they provide development as a standard part of their services. Their customers are not only expecting competitive pricing, but also regulatory compliance, flexibility on the production capability and on-time delivery. Overall it is required that CMO complies with

good manufacturing practice Current good manufacturing practices (cGMP) are those conforming to the guidelines recommended by relevant agencies. Those agencies control the authorization and licensing of the manufacture and sale of food and beverages, cosmetics, pharmaceutic ...

from their client and regulatory bodies such as the

Food and Drug Administration The United States Food and Drug Administration (FDA or US FDA) is a List of United States federal agencies, federal agency of the United States Department of Health and Human Services, Department of Health and Human Services. The FDA is respo ...

Overview

The pharmaceutical market uses outsourcing services from providers in the form of

contract research organizations In the life sciences, a contract research organization (CRO) is a company that provides support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis. A CRO may provid ...

(CROs) who work on very early-stage drug development on very small scale providing medicinal chemistry services. These are now often called CDROs as they provide some small scale development work. CDMOs work on the scale-up and later stages of drug development often preparing materials ranging from hundreds of grams to multi-kilo amounts. As the drug moves through the various clinical stages, the volumes tend to grow as well. Commercial scale amounts could range to metric tons. Over the years, the concept of a comprehensive single-source provider from drug development (a one-stop shop) through commercial manufacture of drug substance and drug product has been tried to varying success. CDMOs are a response to the competitive international nature of the pharmaceutical market as well as the increasing demand for outsourced services. The best-positioned service providers focus on a specific technology or dosage form and promote end-to-end continuity and efficiency for their outsourcing clients. With lower-cost international manufacturers capturing an increasing percentage of the contract manufacturing market, specialization may be an effective hedge against loss of market share.

History

Before the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

, 75% of the candidate that outsourced services were small and mid-sized biotechnology and pharmaceutical companies. Following the

, the CMO industry started to be funded by

private equity Private equity (PE) is stock in a private company that does not offer stock to the general public; instead it is offered to specialized investment funds and limited partnerships that take an active role in the management and structuring of the co ...

as a result of a substantial growth and a more qualified management. The one-stop CDMO concept could be the direction the industry is heading by offering the whole spectrum of development services (e.g. development, production and analysis). The acquisitions that have been finalized in 2017 in CMO and CDMO industry brought some of these companies to a level that allows them to compete with global bio/pharma companies. The value of the

mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...

in 2017 was likely to exceed $20 billion, below are some examples of these M&A: Another aspect of these acquisitions is coming from CMO that are acquiring manufacturing site from bio/pharma companies. In 2017,

Pfizer Pfizer Inc. ( ) is an American Multinational corporation, multinational Pharmaceutical industry, pharmaceutical and biotechnology corporation headquartered at The Spiral (New York City), The Spiral in Manhattan, New York City. Founded in 184 ...

established a manufacturing site in Liscate, Italy, which was followed that same year by

AstraZeneca AstraZeneca plc () (AZ) is a British-Swedish multinational pharmaceutical and biotechnology company with its headquarters at the Cambridge Biomedical Campus in Cambridge, UK. It has a portfolio of products for major diseases in areas includi ...

in Reims, France. Novartis Sandoz acquired a site in Boucherville, Canada in 2018, as well as Glaxo Smith Kline, which began manufacturing out of

South Carolina South Carolina ( ) is a U.S. state, state in the Southeastern United States, Southeastern region of the United States. It borders North Carolina to the north and northeast, the Atlantic Ocean to the southeast, and Georgia (U.S. state), Georg ...

in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

Samsung Biologics Samsung Biologics Co., Ltd. is a global contract development and manufacturing organization headquartered in Songdo, Incheon, South Korea. The biotech division of Samsung Group, its core services range from late discovery to large-scale commerc ...

built three manufacturing plants with a capacity of more than 360,000 liters, making it the world's largest contract-based manufacturer in the biopharmaceutical sector at a single site as of 2018. The industry has experienced an increase in private equity investment and this has led to the consolidation of choices in the CDMO industry as many larger CDMOs have been formed. Many of those are active at aiming to be larger scale suppliers in the CDMO environment but the number of attractive acquisitions are limited. One could argue that this has had both positive and negative effects on the industry. Larger pharma companies like the idea of a larger CDMO while smaller pharma companies tend to see it more difficult to get the kind of service they expect.

Advantages

The bio/pharma companies used to build and staff dedicated manufacturing capacities for drugs in development only to see them canceled if the product failed in Phase III of clinical research; working with a CDMO limits that financial risk.{{Cite web, url=http://www.pharmpro.com/news/2016/11/cmo-report-two-thirds-pharma-manufacturing-outsourced, title=Two-thirds of pharmaceutical manufacturing is outsourced; preferred providers pick up largest share, last=, first=, date=, website=Pharmaceutical Processing, publisher=, access-date=November 16, 2016 Using a CDMO also allows drug and biologic manufacturers to get advantage of specific expertise and capability. Some CDMOs are specialized in manufacturing of specialty products or formulations which some pharmaceutical companies may not have the capability to produce in-house. In these situations, contracting with a CDMO may be a faster and less costly solution than developing new manufacturing capabilities.

Disadvantages

The pharmaceutical client using the services of a CDMO does not have direct control of the project in regard to scheduling, cost,

quality Quality may refer to: Concepts *Quality (business), the ''non-inferiority'' or ''superiority'' of something *Quality (philosophy), an attribute or a property *Quality (physics), in response theory *Energy quality, used in various science discipli ...

, or accountability yet should be heavily invested to work closely with the CDMO partner to ensure success.

Data security Data security or data protection means protecting digital data, such as those in a database, from destructive forces and from the unwanted actions of unauthorized users, such as a cyberattack or a data breach. Technologies Disk encryption ...

can be an issue when considering a CDMO, as

intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...

and other proprietary

data Data ( , ) are a collection of discrete or continuous values that convey information, describing the quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted for ...

are exchanged between client and service provider. One of the major risk remains in the lack of control over the CDMO's compliance for the client, for example when an

FDA warning letter An FDA warning letter is an official message from the United States Food and Drug Administration (FDA) to a manufacturer or other organization that has violated some rule in a federally regulated activity. The FDA defines an FDA warning letter as: ...

is issued, a resulting interruption of production may result in major delay or interruption of shipping thus it is critical to properly vet the selected CDMO. The rise of the CDMO industry led to an increase of inspectors from various divisions of the

(e.g.:

Center for Biologics Evaluation and Research The Center for Biologics Evaluation and Research (CBER) is one of six main centers for the U.S. Food and Drug Administration (FDA), which is a part of the U.S. Department of Health and Human Services. The current Director of CBER is Vinay Pras ...

Center for Drug Evaluation and Research The Center for Drug Evaluation and Research (CDER, pronounced "see'-der") is a division of the Food and Drug Administration (United States), U.S. Food and Drug Administration (FDA) that monitors most drugs as defined in the Food, Drug, and Cosmet ...

References

Drug manufacturing Contract research organizations Contract development and manufacturing organizations Outsourcing

Overview

History

Advantages

Disadvantages

See also

References