The vision of Life Science Leader is to be an essential business tool for life science executives. Our content is designed to not only inform readers of best practices, but motivate them to implement those best practices in their own businesses.
Issue link: https://lifescienceleadermag.epubxp.com/i/85321
BIO DI B O DATA PO NTS A POINTSI By Eric Langer, president and managing partner, BioPlan Associates, Inc. Top Mistakes Made By CMOs And Their Clients O utsourcing in the biopharmaceutical industry continues to evolve and become more sophis- ticated, and both biotherapeutic developers (clients) and their CMOs recognize the need for efficient and hassle-free relationships. But year after year, our annual study shows that critical elements of this relationship have not improved. Our 9th Annual Report and Survey of Biopharmaceutical Manufacturers examines, among other critical industry issues, the CMO-client rela- tionship from both perspectives. We evaluate and quan- tify the issues so outsourcing partners can address chronic weaknesses and strengthen their relationships. We identified 19 factors affecting client selection of CMOs, asking clients to rate factors as either "important" or "very important." Our study shows that "establishing a good working relationship" remains the top factor considered by biotherapeutic developers when considering a CMO, with a leading 96.8% of respondents considering this either "important" or "very important." Beyond operational proficiencies, clients are demanding their CMOs develop softer skills. For example, some contribut- ing relationship factors such as "sticking to a schedule" remain a major concern. But this issue shows a steady decline during recent years. As a "very important" problem it declined from nearly 60% five years ago to 44% this year, suggesting fewer mistakes and problems in scheduling are occurring. Interestingly, the "good working relationship" factor remains ahead of other major issues such as "comply with my company's quality standards" and "effectively handle cross- contamination issues." Complying with the client's quality standards may be non-negotiable, so these latter operational factors are minimum performance issues if a CMO is even to be considered. Thus, as CMOs become increasingly profi- cient, it will become more difficult to differentiate themselves on scientific attributes. Soft factors such as relationship development and showing cost-effectiveness may become increasingly important selection criteria. CMOs looking at strategic ways to differentiate themselves might look beyond these prerequisites to the next tier of critical issues. The trends suggest that communication and management skills are increasingly becoming top-of-mind factors for clients when selecting the ideal CMO. During the last seven years the most critical attribute rank- 6 The CMO Leadership Awards 2012 ings have shifted to some extent. However, the "establish a good working relationship" factor is always a top con- tender. The factor moved from the number four spot in 2006 to the number two spot in 2010, and to the number three spot this year. As the industry matures, customer service and establishing good client-vendor relationships should become more important attributes. Maintaining good client-vendor relationships is important to clients, and it is likely that poor communications between clients and vendors is a major factor in the persistent "working relationship" issues. COMMUNICATION PROBLEMS EXIST ON THE CLIENT SIDE, TOO When we looked at the relationship from the CMO perspec- tive, we also found communication issues to be prevalent. CMOs identified 11 of the most common mistakes clients make in the contractual relationship and rated as either "very" or "somewhat" common. We discovered that 86% of CMOs believe clients don't communicate with them effec- tively. This was tied with two other common mistakes for the top spot: "clients don't build in sufficient time for the project" and "clients want to contain cost by doing limited developing runs, but still expect successful full scale manu- facturing." Both of those problems can be traced to unre- alistic expectations — expectations that can presumably be managed at the outset of the relationship through more effective communication. Interestingly, of the top five most common mistakes made by clients, all of those mistakes declined in percentage of respon- dents from last year, except one: clients not communicating effectively. This year's 86.1% of CMOs indicating this to be a "very" or "somewhat" common problem is a step up from both 2011 (84%) and 2010 (80.4%), and indicates that communica- tion issues are only becoming more important over time. As outsourcing continues to become more widespread, clients will expect CMOs to improve their service offerings — not only from a technical standpoint, but also from a communications and relationship management perspective. Ensuring good communication will continue to be critical, as deficiency in this area not only translates to the "working relationship" issues on the client side, but also to the unre- alistic expectations problems from the CMO perspective.