External Manufacturing in BioPharma

External Manufacturing (ExM) is the practice of outsourcing specific stages of drug development and production to external partners.

In the biopharmaceutical industry, where 90% of biotechs rely on contract manufacturers to develop therapies (source: Bioplan), it has become a critical function for delivering results.

External Manufacturing involves collaborating with contract manufacturing organizations (CMOs), contract development and manufacturing organizations (CDMOs), and other suppliers to handle various aspects of drug manufacturing, quality control, and supply chain management.

This framework shows both the key drivers for companies choosing to outsource (outer circle) and the capabilities required the manage external manufacturing (inner circle).

Strategic drivers for external manufacturing

There are a number of drivers for pharma and biotech companies choosing to outsource development and manufacturing to third parties.

1. Operational Efficiency

• External manufacturing allows companies to focus on their core competencies while leveraging specialized expertise from external partners. By outsourcing certain functions, such as manufacturing, companies can streamline operations and reduce costs. It enables faster scale-up and capacity expansion, especially for novel therapies like cell and gene therapies, where demand can surge rapidly.

2. Speed to Market

• External Manufacturing accelerates drug development timelines by leveraging external expertise and established processes. Faster tech transfers and efficient collaboration with CMOs enable quicker product launches, benefiting patients and revenue streams.

3. Access to Technology and Capacity

• External manufacturing provides access to cutting-edge manufacturing technologies and facilities that may not be available in-house. This is crucial for producing complex biologics and personalized therapies. Companies can tap into additional production capacity without significant capital investments, ensuring flexibility and responsiveness to market demands.

4. Risk Mitigation:

• Diversifying manufacturing sources reduces the risk of supply disruptions due to unforeseen events (e.g., natural disasters, regulatory issues, or equipment failures). Dual-sourcing allows companies to spread risk across multiple partners, ensuring continuity even if one supplier faces challenges.

5. Quality and Compliance:

• CMOs and CDMOs adhere to stringent quality standards (e.g., cGMP) and regulatory requirements. Collaborating with them ensures consistent product quality and compliance. as they undergo audits and inspections, contributing to overall product safety and efficacy.

6. Environmental, Social and Governance (ESG)

• As the pharmaceutical industry commits to net zero science-based targets and wider ESG goals, outsourcing to the right partners is a key way to make an impact. More than 80% of PSCI member companies’ emissions are in the supply chain, it is imperative that partners are selected based on ESG commitments and worked with to proactively improve their footprint.

External Manufacturing capabilities

External Manufacturing professionals play a multifaceted role, ensuring collaboration, compliance, and efficient production by working with a range of internal stakeholders (including Procurement, Supply Chain, Quality and R&D leads) and with external contract development and manufacturing partners.

To be effective in external manufacturing, there are a number of key areas of responsibility:

Project Management

• Building Strong Connections: External manufacturing professionals act as relationship leads, fostering robust connections with external partners such as contract manufacturing organizations (CMOs) and business collaborators. These relationships are critical for effective collaboration, problem-solving, and successful project execution.

• Delivering to a timeline: ExM leaders ensure a regular cadence of communication between the company and external parties to ensure the project timeline is met. They organize meetings, share information, and align goals to drive efficient operations.

Quality and Compliance

• Adherence to cGMP Regulations: External Manufacturing oversees quality control processes, ensuring compliance with current Good Manufacturing Practices (cGMP). They manage deviations, product release, and change control to maintain product integrity and regulatory compliance.

• Risk Mitigation: By addressing quality issues promptly, ExM professionals mitigate risks related to product safety, efficacy, and regulatory approvals. Their vigilance ensures that the company’s reputation remains intact.

Capacity Planning

• Resource Allocation: External Manufacturing gathers capacity information from external partners. This data informs resource allocation, production schedules, and capacity utilization. Efficient capacity planning ensures optimal use of manufacturing resources.

• End-to-End Planning: ExM supports robust end-to-end planning, considering factors like production volumes, lead times, and resource availability. They balance supply and demand to meet production goals.

Supply Chain Oversight

• Materials Procurement: External Manufacturing manages raw material procurement, ensuring timely availability for manufacturing. They collaborate with suppliers to maintain a reliable supply chain.

• Logistics and Distribution: From shipping to packaging, ExM oversees logistics. They ensure that products move seamlessly from manufacturing sites to distribution centers or end-users. Effective supply chain management prevents disruptions.

Risk Mitigation

• Addressing Supply Issues: External Manufacturing proactively identifies and resolves supply-related challenges. Whether it’s shortages, delays, or quality concerns, they evaluate cost-benefit scenarios and recommend solutions.

• Regulatory Preparedness: ExM professionals stay informed about industry changes and regulatory updates. By anticipating potential risks, they prepare contingency plans and adapt swiftly to changing requirements.

Strategic Partnerships

• Long-Term Relationships: External Manufacturing will find strategically valuable contract manufacturing partners and forms stable partnerships them. These relationships extend beyond transactional interactions. They contribute to stability, knowledge sharing, and mutual success.

• Business Review Meetings: ExM leaders conduct regular business review meetings with CMOs. These sessions focus on continuous improvement, performance evaluation, and alignment of strategic goals.

In a recent episode of the PharmaSource podcast, Federica Fraschetti, External Manufacturing lead at MSD explained how to collaborate effectively with contract manufacturing partners.