1. What roles do contract research organizations (CROs) and contract manufacturing organizations (CMOs) play in the drug discovery/development value chain today, and how will their role change in the future?

With 80% of innovation taking place outside of Big Pharma - here defined as the top 25 pharmaceutical companies - CMOs must be able to support the different requirements of small (and virtual) pharma and biotechnology companies. Regardless of the size of the customer, it is critical to build a true partnership with each customer that enables it to focus on core competencies while the CMO focuses on a proactive service and solution package. This works especially well when the right quality and project-management systems are in place to allow for fast and flexible action if/as requirements change during the project.

In the future, we will likely see a handful of giant CMOs offering everything from discovery to commercialization, with the more specialized CMOs (such as SAFC) remaining focused on specific technologies and markets. It will be interesting to see how these giant CMOs will maintain flexibility while staying on top of all new technologies.

2. How have the requirements by pharma companies changed over the years, and how can suppliers manage to live up to them?

The requirements have become more stringent as regulations have tightened, but they have also changed based on the type of company. There is a difference in the way a small pharma company operates versus Big Pharma. Even with recent increases in outsourcing by Big Pharma, the vast majority has not embraced a strategic outsourcing philosophy for their APIs or registered key intermediates. On the flip side, many of the small pharma companies are more open to outsourcing partnerships because increased productivity is one of their key drivers over cost.

Despite declined in-house innovation, many Big Pharma companies use internal resources to manage their outsourcing activities. Cost becomes a big driver here, as the company may use different specialized CMOs during development, but choose to tap into internal manufacturing capacity for the final steps of their process(es) to reduce supply risk.

There tend to be three exceptions to this approach, where Big Pharma will outsource despite cost:

• Due to a lack of internal expertise or capability related to a technology area; these are often niche or very complex technologies.
• If a drug is in-licensed or acquired from a smaller company, many Big Pharma companies will maintain the existing supplier due to the risk and associated costs with technology transfer at such a critical phase of development. This practice especially increases in the case of biologics and drugs on an accelerated approval path.
• When critical raw materials or specialized services are not within Big Pharma's core competency.

3. Which new business models, like project-based or value-based outsourcing, could turn out to be the most promising guarantors for a successful cooperation with the pharmaceutical industry?

There is no one-size-fits-all business model. A CMO's strategy must be adaptable to the different needs of big and small pharma companies; this is even more important as many projects start small but end within Big Pharma. In this case, value-based projects are often more successful.
For example, if a CMO is specialized - in highly active, highly complex chemistry, or in a niche technology - it will add value even post-acquisition. In addition, many of these projects might get on a fast-track approval path, so it is unlikely to risk changing the CMO at such a critical phase.

4. The establishment of shared risk/shared reward partnerships has increased significantly. Can these partnerships accelerate drug discovery and fill up the innovation pipelines?

Yes. In fact, I strongly believe that these risk-shared partnerships will accelerate innovation in drug discovery, especially if these partnerships are mutual and share a best-practice approach between partners - it allows for combined speed, flexibility and intellectual curiosity of the research organizations. It also takes advantage of the tremendous experience Big Pharma has managing complex supply chains and overcoming potential regulatory hurdles.