Biotechs are at the forefront of pharmaceutical innovation, driving new therapeutic approaches ranging from monoclonal antibodies to mRNA, cell, and gene therapies. But bringing these breakthroughs from lab bench to patients is an intricate journey that often depends on robust, strategic partnerships with CDMOs.

The collaboration between CDMOs and Biotech companies differs from that with traditional pharmaceutical companies (mainly marketing small molecules), reflecting each partner’s structure, needs, and development stage. Biotechs typically engage CDMOs early, often from lead optimization or preclinical phases, seeking scientific guidance, formulation support, and regulatory preparation. These partnerships are agile, informal, and heavily reliant on CDMO’s technical expertise, as Biotechs often lack internal CMC resources. CDMOs act as strategic partners, filling data gaps and accelerating timelines toward first-in-human trials. In contrast, traditional pharma companies tend to engage CDMOs for capacity expansion, specialized technologies, or cost-effective commercial supply. Their projects are usually better characterized, governed through formal processes, and supported by in-house CMC expertise. While Biotech-CDMO collaborations are defined by scientific innovation and flexibility, traditional pharma-CDMO partnerships emphasize operational rigor and long-term scalability. As CDMOs evolve, they offer integrated early-development platforms for biotech clients adapting their governance, capabilities, and culture accordingly.

Understanding how to build and maintain an effective interface between biotech companies and CDMOs is vital for accelerating timelines, ensuring product quality, and enabling long-term commercial success.

Early-Stage Collaboration: R&D and Process Development

Biotech innovations typically emerge from a research-driven mindset focused on mechanism of action, proof of concept, and early clinical results. CDMOs support in high-throughput screening, molecular biology, cell line and vector development, in vitro and in vivo studies. Additionally, CDMOs bring a different but complementary focus: robust process engineering capabilities, scalability, quality systems, technology platforms, and regulatory compliance that enable efficient scale-up.

For a successful and mutually beneficial partnership, alignment begins during the early development phase. Even before a clinical candidate is selected, discussions about manufacturability, formulation feasibility, and process development should be underway. This collaboration ensures that development strategies anticipate regulatory expectations, potential scale-up constraints and reduce the risk of costly redevelopment further down the line.

Clinical Trial Manufacturing: The Critical Middle Ground

The manufacturing of clinical trial material is a pivotal but often underestimated phase in the biotech product lifecycle. CDMO’s role shifts from technical collaborator to operational executor, managing GMP production, labeling, packaging, and sometimes even clinical supply distribution.

Clinical trial manufacturing introduces several layers of complexity:

• Production must occur under strict timelines tied to trial start dates.

• Yields may be low and processes still under optimization.
• Regulatory documentation must be developed in parallel with ongoing studies.

For early-stage biotech companies, delays at this stage can be existential. A well-integrated CDMO mitigates this risk by offering flexible capacity, small-scale GMP suites, and adaptive planning tools.

Tech Transfer: Turning Science into Process

Tech transfer is a multifaceted process that translates lab-scale protocols into industrial production, whether for clinical or commercial use. For biologics and advanced modalities, this often involves transferring not just methods but knowledge: rationale behind process conditions, critical quality attributes, and material behavior.

Challenges frequently arise from incomplete documentation, different equipment footprints, or unaligned analytical methods. These risks can be mitigated by:

• Engaging in structured tech transfer planning

• Assigning cross-functional leads from both sides
• Using a defined acceptance criteria checklist

Tech transfer success depends on clarity, consistency, and collaboration not only between teams but also between technical philosophies.

Supply Chain Integration: Beyond Manufacturing

A common misconception is that CDMO collaboration ends with batch production. In reality, supply chain integration is equally essential, especially for biotech companies developing global clinical or commercial programs.

Key supply chain concerns at the biotech-CDMO interface include:

• Lead times and raw material security

• Cold chain and temperature-controlled logistics
• Forecasting accuracy and capacity alignment
• Inventory management and regulatory labeling

Miscommunication in these areas can lead to stockouts, compliance issues, or financial penalties. To prevent such issues, successful partnerships build integrated planning cycles that include demand review, scenario planning, and real-time visibility dashboards.

Regulatory Interface: Coordinated Compliance

Regulatory approval is the culmination of years of development but it also requires meticulous preparation. CDMOs are deeply involved in the preparation of Chemistry, Manufacturing, and Controls (CMC) sections of regulatory filings, as well as in responding to agency queries.

A strong interface must cover:

• Early alignment on regulatory expectations (e.g., ICH guidelines, FDA/EMA requirements)

• Coordination of documentation timelines
• Clarity on roles for GMP inspections and audits
• Unified narratives for product comparability and process changes

Regulatory misalignment can cause months of delay. Early-stage planning and open communication throughout development mitigate these risks significantly.

Building the Right Interface Model

The Biotech-CDMO collaboration model is shifting from a transactional approach (outsourcing execution while retaining all strategy) to co-development of products and investing in strategic partnerships with shared risk.

Successful Biotech-CDMO interface typically shares three characteristics:

1. Cross-Functional Engagement: Involving QA, Regulatory, Project Management, and Supply Chain—not just R&D.
2. Governance Structure: Regular joint steering committees, issue escalation paths, and KPIs.
3. Cultural Fit: Shared values around transparency, accountability, and problem-solving.

The Future of CDMO-Biotech Collaboration

Looking ahead, the lines between Biotechs and CDMOs will continue to blur. We would see more co-development models, risk-sharing agreements, and even equity-based partnerships. Digital transformation—through data integration, advanced analytics, and AI-driven process optimization—will further enable real-time collaboration and innovation.

Ultimately, the ongoing evolution of Biotech-CDMO partnerships is reshaping the pharmaceutical industry for the better. By combining scientific ingenuity with operational excellence, these collaborations promise to deliver new therapies to patients more efficiently and reliably than ever before.

Conclusion

As biotech products grow in complexity, so must the partnerships that support them. CDMOs are no longer just service providers—they are co-navigators in the journey from innovation to commercialization. Strengthening the interface across technical, operational, and regulatory areas is essential for ensuring that breakthrough therapies reach the patients who need them, faster and more reliably.

For both Biotech companies and CDMOs, the future lies in collaboration—not as a reactive necessity, but as a proactive strategic asset.

Hi George, I have a quick question for you: “do you know what level of CDMO capability exists within Europe for Ampoules and PFS manufacture of hormonal products?”

This was the question I received from one of our partners some time ago, worried that the options might be limited in this area, and she would struggle to identify a suitable CDMO in case a change of source would be required in the future.

I don’t think that my reply was very reassuring since there are not so many European CDMOs that are able to manufacture high potent steriles. There are around 30 of them mentioning that they can offer this kind of technology, but if you look deeper, you will see that most of them can fill glass vials only. For amps and PFS the number should be around 10-20. And if you look even deeper, you will see that most of them can go up to OEB 4. So, depending on the toxicity level, the annual volumes required, and the timelines for a tech transfer for such a product, options can be indeed limited. Let alone pricing.

Therefore, my reply was that it will not be a walk in the park to identify a CDMO for this, but for sure finally someone will be able to do it.

There are around 330 European CDMOs offering commercial batches of finished dosage forms and they operate around 540 manufacturing sites in the continent. Some of them are pure CDMOs and some are what we call integrated ones. The difference is that integrated CDMOs market their own products while pure offer only contract development and manufacturing services to their customers without a product portfolio of their own.

According to our research, 42% are pure and 58% integrated CDMOs.

It does not come as a surprise I think that most of CDMOs can offer OSD forms like tablets and capsules. Of course, within OSD there are more technologies other than tablets and capsules and if someone is looking for a CDMO able to produce pellets for example then they should have to restrict their search a lot. The options get even more limited if someone is looking for niche OSD technologies like spray drying or hot melt extrusion. So, although in total there are 227 European CDMOs offering OSD forms, just a small portion of them can offer technologies that separate the best from the rest.

And the same more or less goes for Steriles. Although there are 156 European CDMOs offering sterile products like amps and vials, if someone is looking for sterile bags then immediately their options go down to 18! Let alone if a combination of parameters is needed like high potent steriles filled in bags. Then this is 1 figure number…

This kind of information is important in my eyes not only to pharma companies looking for suppliers but also for CDMOs that they want to understand their competition. There are many external manufacturing departments in different organisations that don’t have the time to spend in analysing the CDMO market. And there are very few CDMOs that spend time in understanding the competitive environment in which they operate. In both cases, this lack of understanding can result in missed opportunities. Pharma Companies with big product portfolios, end up with huge complexity in terms of the number of suppliers they work with and CDMOs don’t know what kind of competition their offering faces. And this can have an impact on their pricing decisions resulting either in loosing business or leaving value on the table.

Another area that is interesting to shed some light on, is this of specialization. In which technologies (if any) different manufacturing sites in Europe focus on. Are the majority of sites focus on 1 technology or they are what we call multipurposed? This can be considered important in some cases, and it has to do with the type of products a pharma company has in its portfolio. A generic pharma company with various product types, may find as a strong point if its suppliers (CDMOs) have multipurposed sites, since they will be able to allocate to such sites various products of different technologies, reducing as a result complexity in their supply chain.

On the other hand, a pharma company offering only sterile injectables to their customers, may find it reassuring that their suppliers (CDMOs) have manufacturing sites focusing only on such products. This might be because a high degree of expertise as well as higher cost efficiency can be expected from such sites on the specific technology.

External manufacturing network departments of different pharma companies may be happy to know that there is enough of both types of CDMOs. 56% of CDMOs specialize in 1 technology and 44% can offer more than one.

The question is those CDMOs who focus on something, where they focus on? the answer is that the majority focus on OSD (18%), and then Steriles (14%) and Liquids/semi solids (10%) follow. But here there is a catch!

If we take a closer look and we take into consideration the European region where different sites operate, we will see that different regions have different patterns when it comes to specialization. Multipurposed sites are much more common in South and Eastern Europe compared to Central Europe and UK/Ireland. So, if a pharma company is looking for a CDMO with multipurposed facilities in UK or Germany, it will have a much harder time to identify one compared to someone looking in Poland or Greece for example.

There must be a reason behind this discrepancy between European regions when it comes to specialization, but we can analyze this in future articles.

For the moment, lets keep in mind that there are many CDMOs in Europe, some of them big, some of them mid-size but most of them small and relatively unknown. But they are unknown because very few external manufacturing departments spend time to get to know their suppliers and their capabilities, let alone build a strategy behind their external manufacturing network optimization. And this is a pity because without a proper strategy in this area, managing external partners becomes more and more expensive.

And while CFOs and Supply chains will argue forever how a preferred supplier looks like, it is for the best of the company to get to know the CDMO market and then decide how to build its strategy.

After all identifying the right CDMO should not be like looking for a needle in a haystack…

The end of the year is the time to put your thoughts together, look back at what happened over the last 12 months and make plans for the ones that will follow.

So, I was thinking of the discussions we had with our partners all these previous months, their worries, their plans, and the challenges they faced in the pharma CDMO industry. Some of them were simple, some of them more complicated but all of them generated interesting discussions.

There were questions about the industry such as what will be the needs of pharma companies in the near future, who are really our competitors, what are other CDMOs doing better than us, is our level of cost within the market range? And then there were questions about internal challenges certain people at the top management faced, like what is the right profitability measurement that we need to use in order to capture more efficiently the impact of new business and discontinuations. Or discussions about the strategy to be followed and how realistic the targets are when it comes to business plan expectations, both in terms of timelines but also of figures.

Finally, there are those discussions we had with pharma companies, that face problems with their current CDMO, they want to understand if what they pay to CDMOs is fair or they have other concerns like for example wanting to add in their pipeline a new product and they can’t decide if they have to develop it from scratch or to in-licence it.

Playing all these discussions in my head, different thoughts come to my mind. I think for example how difficult is to convince internally that from now on, on top of gross profit we need to start also looking at contribution margin for new quotations and this is because our manufacturing site is not underutilised any more and fixed costs are already covered by existing products. So, we don’t need to cover every time all our fixed costs and add on top a margin, especially when the customer is not ready to pay this amount. It might sound easy, but I dare you to try make this discussion with the CFO of a CDMO, who has set the profitability target for new business at 30% and overall EBITDA level of 15%.

Similarly, presenting to the board the impact of discontinuation of a loss making product, it is much trickier than it sounds. If the product is discontinued, but the direct labour cost related to it remains, what is really the impact? And if fixed costs of the site do not go down, what will happen to the profitability of other products that will remain in site? Will they have to absorb more fixed cost from now on? And then what will be the impact on their profitability? To me these are very interesting discussions but rarely people have the time to dive deep into the figures and make this analysis. Let alone that starting such a discussion may trigger other discussions about cost cutting. And nobody wants to start talking about this. So, unfortunately the convenient way of approaching the matter is to continue doing things the way they used to be done up until now.

Another difficult subject is to convince a board which intends to sell the company in the next years, that the 5 years business plan that is about to be created cannot be super challenging and unrealistic. Although it is nice to show to potential investors that in 5 years time, a CDMO can double its EBITDA, it is something that not all CDMOs can succeed in. Especially if the pipeline of new business is poor and new business will come from quotations that will be submitted in the future. But then, which Commercial Director or even which CEO will argue with the board that what you ask is unrealistic? The reply will be, if you believe that you cannot do it, we will hire someone who can. And so, second thoughts come to people’s minds and they avoid opening this subject.

Then, discussions about what price to give for new quotations and the strategy behind the pricing policy are the ones that intrigue me the most. Because there will always be this person with influence somewhere in the organisation who wants to standardize things. So, when the target for new quotations is for example set at 100 and profitability at 30, who will convince him that for the specific product that is about to be quoted with very high material cost, profitability cannot be 30 but it might be 15? Because if we stick to 30 it will be like adding 30% mark up on materials and this is something that is not acceptable by the market? So, is it better for the site which asks for new business to lose this opportunity and wait for the next, or is it better to provide a price with 15% margin and maybe win the business? And who will be responsible for this decision? Will it be the Site Head, the Business Development Director or the CFO? All of them have different priorities. Site head wants to add new business in the site as long as it is profitable, the Business Development Director wants to bring the customer in so to open the door for other new business also maybe for other manufacturing sites of the CDMO, and the CFO wants at least 30% profitability. If there is no common understanding and dialogue between them, then the one which is impacted negatively it’s the CDMO itself.

On top of all these, discussions about the growth strategy of a CDMO are also always interesting. How can we attract more new business, should we invest in Contract Manufacturing activity or into our own business (for integrated CMOs), in which technology should we invest. What the competitive environment that we operate looks like, what we can do better than our competitors, which are our direct competitors? I remember that when Fuliginous Management Consulting created the European CDMO Mapping including companies offering CDMO services, the number of companies in this database impressed me a lot. More than 330 companies offer CMO services for finished dosage forms of small molecules in Europe. Not, 100, not 200 but more than 330. This means that CDMOs that want to outperform should start adding more value to their customers in order to have some luck to increase their pipeline. And then discussions with our partners on what we can do better, where we should invest, what are the needs of the pharma industry start to take place. One way is to invest in new technologies that other CDMOs do not offer. Another way is to start offering services that we currently do not offer, like strong development capabilities. Because many CMOs have a “D” in their name, making them a CDMO, but how many of them can really develop a product from scratch? The truth is that not so many can do so efficiently.

But apart from the discussions we had with CDMOs over the last year, we also had discussions with pharma companies cooperating with CDMOs. Their main concern was to understand if what they pay for their existing products to different CDMOs is fair or if they can find synergies by negotiating prices or moving products to other CDMOs. Moreover, there are many pharma companies which suspect that the number of CMOs that they cooperate with, is big for the number of products they have in their portfolio. What is really the market average of the number of products vs the number of suppliers that a pharma company cooperates with? In a study that Fuliginous Management Consulting performed, the ratio of products / manufacturer has an average of almost 2.5. This means that a company with 100 products in its portfolio, cooperates on average with 40 suppliers. This was also a figure that impressed me, when I first found out.

And then we had of course discussions with several pharma companies, that wanted to outsource their production and they were puzzled to find the appropriate CDMO able to deal with the peculiarities of the specific product and having a good strategic match with them. The most interesting case last year, was a discussion we had with someone of the top management of a big VET pharma company who had asked more than 50 CDMOs if they can produce its VET, high potent, lyophilized product to be marketed in USA and all he got was negative replies. It was rewarding (also mentally) for us to find a solution for him, from a CMO that he had never heard before based in USA.

Approaching the year end, looking back but also looking forward, all these thoughts make me feel lucky that I have the opportunity to take part in such interesting discussions and being part of the solution. Politics inside organizations will never stop to exist, there will be different departments with different agendas and priorities, there will second thoughts in certain people’s minds but at the end of the day, all of those people work for the benefit of the organization. So, discussions around topics like the above should be made and progress will come only if people get out of their comfort zones. Strategic decisions should be based on information and having the knowledge of what the market is doing is something that always helps.

There is a time in most peoples’ lives when they have to move from biking with support wheels to biking with 2 wheels. Apart from support, support wheels offer also stability, security and peace of mind. There is not much to worry about, you just have to move your legs and make sure you keep an eye on the road or the park. On top of this, usually a parent is with you to guide you and support you even more, whenever needed. When the time comes to get rid of the two additional wheels, a kind of transformation journey is required. You still continue to do the same thing (biking) but the challenges are many more. You need to adapt to the new reality, start focusing on different things, most important of which is to keep going since now you need to maintain a minimum velocity to stay upright. There is no support anymore when you turn, no guidelines from the parent when to break and this little rock or the sudden blow of wind can make you lose your balance. Let alone the fact that you gradually move away from the safe park and you start biking on the road.

To my eyes, the situation is similar when a pharma company decides to divest a manufacturing site and one fine day, instead of being part of a bigger family, the manufacturing site is left alone. Even if another CDMO acquires the site from the pharma company, it is often the case that it will remain independent with its own financial statements and resources. And although in such situations, during the first years of this transition, the site is protected (revenue protection, product volume protection etc.) this protection period is short. It can be three or four years, but this is not enough in the CDMO environment and the main reason is that in order to fill a site in three to four years you need to start preparing quotations now.

But it’s not only this. There are so many things that need to change in such situations. As it is the case when start biking alone on two wheels, a stand alone CDMO has no support or guidelines anymore from the parent company and no more secured business, and complexity increases dramatically. Instead of having to serve one customer, there is a need to start satisfying many more, instead of worrying about sticking to the production plan, attention to cost and profitability is required and among other things suddenly there is competition!

This means that there are many things that need to change in order to meet the new requirements and number one is the mentality. The mentality of the people working in the manufacturing site. And experience has shown that this is the biggest challenge of all.

Because it is difficult to change the mindset of people and explain that from now on they should be responsible for the profit and not just the cost, that OTIF should be at the same levels as this of the rest of the industry, that prices should be at the same levels as the rest of the industry and at the end of the day customers are those who pay their salaries and not the parent company anymore. From the moment that ownership changes hands, the people in the site need to start a journey; what I call a transformation journey.

But let’s deep into some details to understand the stages of this transformation journey. As mentioned above, one big change is that stand alone CDMOs need to bring in new business. And usually there is a reason that the pharma company decides to get rid of such manufacturing sites. It can just be due to a change in strategy, but it might well also be due to high cost, low utilization level, high investment requirements etc. So, if there is a manufacturing site with low utilization rate and with volume security (or revenue protection) for a predefined period of time, bringing in new business should be the number one priority. But its not only this. If costs are high and the new ownership wants to make profit, bringing in new business is not enough. You need to bring new business at the right price. The price that will allow good amount of new business to come in and at the same time to bring the desirable margin. And in order to do this, you need to know the market that you operate. You need to know what different customers are willing to pay for specific products and you also need to know what competition is offering.

On top of this, quality expectations should match those of your most demanding customer and delivery performance the same. As if this was not enough, as the years go by, the new owners will ask for growth. They will need to understand what is the cash flow, what is the expected profitability for the next 3-5 years, monitor the inventory levels, the working capital etc. They will even reach to a point where they will ask for cost savings! This does not necessarily mean layoffs, but it can mean that procurement department should make market research to find cost savings to raw and packaging materials, by negotiating with current suppliers or changing suppliers. The way of calculating the cost for new RFQs can be improved and the same goes for the pricing strategy and investment management.

Flexibility and customer service is another crucial area of attention. Form the very simple to the most complicated tasks. If competition provides a new quotation in two to three weeks, you cannot provide yours in a month. If a customer wants to split each batch to 5 different SKUs, you cannot afford to decline its request. When there is a failure in a batch and the customer is out of stock, you need to try your best to produce the batch again as soon as possible.

And then, there is contract management. As a stand alone CDMO, you need to make sure that your contracts protect and not harm you. You also need to be aware for contract clauses that enable you and for those that constrain you. And of course the entire organization should review a contract before it is signed and not just the legal team.

For all of the above to take place, new procedures and new tools will most probably be required. New KPIs, new monitoring systems and finally organizational changes cannot be avoided. There are dozens of new needs that have to be addressed and they need to be addressed fast, before existing volumes start moving out of the manufacturing site. And most importantly, all these changes need to be carried out without the support of a parent company. Just like starting biking with two wheels, except the transformation journey of a CDMO often proves to be a much more demanding challenge.