Choosing the right organization to develop drugs is the single most important decision a small or mid-size pharmaceutical company is faced with after selecting the molecule and indication. There are many different types of organizations to choose from. Some organizations are CMO’s (contract manufacturing organizations) while others are CDMOs (contract development and manufacturing organizations). What’s the difference?

Contract Manufacturing Organizations

A CMO’s primary focus is manufacturing. A CMO makes most of its revenue through manufacturing commercial batches for clients. Volume of product manufactured a year and profitability of the product are their focus. Many large CMO’s serve a variety of pharmaceutical companies and they have built an impressive array of capabilities from manufacturing biologics, sterile fill finish, to manufacturing large quantities of solid oral dose tablets and capsules. They have large modern facilities and hundreds if not thousands of qualified manufacturing, QC, and QA staff. Early phase R&D to serve small and mid-sized companies with preclinical, phase 1, or even phase 2 clinical batch manufacturing is not the focus for CMO’s. Early-stage drug development is highly unpredictable and CMO contracts are usually not very flexible. Typically, CMO’s tech transfer in products developed elsewhere and strive to perform an excellent and efficient job with large scale manufacturing.

Contract Development and Manufacturing Organizations

Within CDMOs there are a variety of companies; some which focus on only research and development and do not have cGMP capabilities, others that also have cGMP clinical manufacturing capabilities, and companies that are focused only on clinical manufacturing and packaging to support large and complex clinical studies but lack early-stage formulation development strength. To succeed, a small or mid-sized pharmaceutical company must consider their options carefully and select the right partner for the right phase of their drug development program.

Early-stage pharmaceutical companies often don’t have large R&D budgets and are in the process of raising funds while continuing drug development. It becomes important to deploy capital efficiently to meet critical development milestones to demonstrate value to investors for securing additional capital. Critical milestones include patent applications, completing pre-IND communications, completing formulation development, getting through necessary nonclinical studies, filing successful INDs, and initiating phase 1 and phase 2 clinical trials. Such sponsor companies don’t have internal R&D lab capabilities and often don’t have strong CMC (Chemistry Manufacturing and Controls) experts on their teams. Selecting R&D companies that have the right experience, expertise and capabilities in formulation development, regulatory documentation, IP expertise, project management, and small-scale cGMP batch manufacturing is critical. Selecting the wrong development partner would lead to disastrous missteps, budget overruns, and delayed timelines.

Once proof-of-concept phase 2 studies are successfully completed, the formulation is optimized and finalized, and additional funds become available, the sponsor is then ready to engage a traditional larger CMO to focus on phase 3 clinical supplies manufacturing and subsequent commercial manufacturing of the product. The early stage CDMO must ideally still be involved in tech transfer and advocate for the sponsor to ensure successful pivotal phase 3 clinical batches are manufactured before completely handing over the project to the sponsor and the CMO.

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