Life Science Leader Magazine Supplements

CMO 2016

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Page 33 of 63

CMO/SPONSOR SYNERGY PARTNERSHIPS LIFESCIENCELEADER.COM THE CMO LEADERSHIP AWARDS 2016 34 By S. Wollowitz CMOs AND PHARMA SPONSORS: WHO'S THE RHINO AND WHO'S THE TICKBIRD? CMOs And Pharma Sponsors: Who's The Rhino And Who's The Tickbird? S U E W O L L O W I T Z President, Wollowitz Associates LLC iotechnology and phar- maceutical sponsors and outsourcing service provid- ers are in the same type of relationship, if not on the same savannah. The relationship is symbiotic — to a far greater extent than a mere mouthful of insects. But the fact is the sponsor and the service provider also want and need different things from the relationship. They agree on what a sponsor wants from a service provider, but what the service provider wants for itself is a rarer focus of discussion. Let's start from the side less discussed. CMO NEEDS SPOKEN ALOUD Mid-last year, I read an interview with Samsung BioLogics' President and CEO, Tae Han Kim, at OutsourcedPharma. com. Kim took the unusual step of talking about what a CMO business needs, from a business perspective, to be world class. "I define the CMO champion as having the largest, top-quality manufacturing capac- ity, the largest revenue, and the greatest profit," Kim said. While some might disagree with his comments, they were honest: For a CMO business to be viable, it needs to operate at high capacity, it needs reasonable operating margins, it wants return customers so there is less marketing spend required, and preferably long-term agreements with sponsors to stabilize finances. But does a sponsor select a CMO because it has the largest revenue and the greatest profit margins? Probably as much as a CMO would pro- vide quotations only to those sponsors with the largest sales volume. What sponsors want out of CMOs — should want out of CMOs, or how they should rate CMOs — is the subject of an article once per month in some periodical or in some blog, authored by people on both sides of the fence. Are CEO Kim's the universal traits that make a CMO "world class"? TRACEABLE TRAITS In my experience, what becomes impor- tant in an outsourcing relationship is how to ensure the two parties effectively contribute to the business goals of each company. This is easy when the goals are aligned, but often they are not, and it becomes more challenging if the parties' measures of success for even the same activities differ. While on-time batch release or a successful FDA audit may represent shared business goals, there are surrounding and various other activities that require compromise to get to business successes for both parties. Two of the most challenging areas are in production scheduling and managing scope changes. While both parties want on-time delivery of ordered goods, the desirable delivery schedules are not always aligned. Sponsors are frus- trated by long lead times and elongated production schedules, by back orders on raw material inventory, and a seemingly B The rhinoceros and the tickbird have a symbiotic relationship. The tickbird eats insects off the rhino, providing food for himself and insect control for his or her host. But would you say that the tickbird and rhino have the same needs and wants? Does the rhino want a nest on his or her back, and does the tickbird want to go swimming?

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