“Every CDMO is going to give you the Disney effect. I want to see what’s below the street. How is that organisation humming below the surface?” says John Philips, highlighting why superficial evaluations are undermining pharmaceutical outsourcing success.
John Philips, President at Innopath Consulting, brings over three decades of experience in CDMO partnerships, including leadership roles at Pii (Pharmaceutics International, Inc.), BioDuro-Sundia, Mikart, and Patheon. His focus on bridging the gap between early-stage development and commercialisation has given him unique insights into what makes CDMO partnerships succeed or fail.
In the latest PharmaSource podcast episode, John explains why cultural alignment between sponsors and CDMOs has become increasingly critical as the industry has evolved, yet remains dangerously overlooked in vendor selection processes.
5 step cultural evaluation
John describes how the “Disney effect” – where everything appears perfect during site visits – masks real operational culture. Just as Disney World maintains a pristine surface experience while running complex operations underground, CDMOs often present an impressive façade that may not reflect daily realities.
“Cultural due diligence starts with understanding each other’s values and how they’re embedded into the DNA of an organisation,” he explains. “It’s got to go further than skin deep.
John advocates for a five-step process that integrates cultural evaluation throughout the selection journey:
- Understanding Values: “Cultural due diligence starts with understanding each other’s values and how they’re embedded into the DNA of an organisation.”
- Cultural Assessment: “Ensuring that cultural alignment is in the DNA, is there consistency across all levels within the organisation, not just those client-facing?”
- Site Visits: Moving beyond surface-level assessments to see what’s ‘below the street’.
- Vendor Scorecard: Integrating cultural metrics alongside technical capabilities
- Long-term Relationship Building: Establishing an alignment charter for ongoing partnership
Red Flags and Early Warning Signs
The most common indicator of cultural misalignment is communication breakdown. John emphasises the importance of early transparency: “Be transparent on what problems you’re trying to solve. Are there problems with the molecule? Are there problems with your current vendor?”
He shares a telling example: “I had one client that came to me and said, ‘Look, our project is failing with this other vendor, they’ve spent 75% of the money, and we’re about a quarter of the way through.’ That transparency allowed us to work together to find solutions.”
Strategic Considerations for Small Biotechs
For emerging biotechs with limited resources, John emphasises the importance of finding a CDMO they can grow with. He breaks down decision-making into three categories:
- What you have to do
- What you should do
- What you could do
“Sometimes companies look at a cheaper option right now and then need to pivot later,” he explains, which can sometimes – but not always – be the right strategy.
John recommends developing an ‘alignment charter’ that outlines communication frameworks, governance structures and problem-resolution processes
“Throughout your discussions, you’ve actually started figuring these things out, and now it’s really just putting it on paper,” he explains.
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