“The least expensive CDMO on the first day of bidding may not be the optimum value CDMO three years later.”
Choosing a contract development and manufacturing organization is not about who quotes the lowest unit price. It’s mainly about who keeps your clinical timeline intact.
Prakash Savarirayan is a life sciences procurement leader with more than two decades of sourcing experience, over a dozen years of it in biopharma, including senior roles at Takeda (formerly Shire) and Roche’s Spark Therapeutics. He has led complex CDMO partnerships, supported M&A integrations, and built governance models across small molecules, biologics, and gene therapy, and now advises pharma and biotech clients in consulting capacity.
In the latest PharmaSource podcast episode, Prakash explains why getting CDMO selection right matters more than negotiating the lowest price, how procurement earned a strategic seat at the table, and why the right partner protects both patient safety and enterprise value.
Procurement’s New Mandate
Procurement’s job used to end at the purchase order. Prakash argues that in biopharma, the function has fundamentally changed from a back office function to a strategic driver of quality, supply continuity, and enterprise value.
“Earlier in the industry, success was largely defined, amongst other things, by securing supply at a lower price. Today, procurement responsibilities directly influence clinical and commercial timelines, enterprise risk, and regulatory exposure, impacting both short- and long-term margins, and at the end of the day, patient safety.” This means procurement now needs to be in the room before decisions are locked in, not after.
“It means procurement is, most importantly, involved before any technical or commercial decisions are locked in. Under the broad umbrella of cost containment and supply protection, procurement supports things like make versus buy due diligence, development pathways, and risk analysis. At that point, procurement is not enforcing constraints or making independent decisions. We’re actually providing options via things like supply discovery and market analysis, thereby enabling our stakeholders to make better decisions for the business.”
Look Past the Technical Presentation
The most polished marketing pitch need not imply the safest partner. When Prakash evaluates a CDMO, technical capability is the entry ticket, not the deciding factor. He looks for operational maturity, transparency, regulatory understanding, and the ability to scale with the program. Above all, he wants a partner that raises problems early. This is a theme PharmaSource has explored in its guide to strategic supplier selection, where collaboration and transparency rank alongside capability and cost.
He explains his point of view with a story about a biologics program that looked flawless on paper.
“We were once evaluating a potential manufacturing partner for a biologics program. And from a technical standpoint, certainly the CDMO appeared highly capable. They had the necessary equipment, strong quality record, and available capacity. However, when procurement and supply chain dug deeper, we identified that a significant portion of the critical raw materials used in the process came from single-source suppliers with long lead times. So this created continuity risk that was not immediately obvious from the technical assessment alone.”
“Selecting a CDMO isn’t just about whether they can manufacture the product, but about whether they can support the product through inevitable disruptions. And the best partner need not be the one with the most impressive technical presentation, but the one that demonstrates transparency, risk awareness, and the operational discipline to navigate challenges successfully.”
Match the Partner to the Program’s Stage
Bigger is not automatically better. Prakash pushes back on the instinct to chase the most prestigious name, arguing that the right CDMO is the one right-sized for the customer’s actual needs.
“It’s about the fit and not about prestige. An early-stage biotech does not need the same partner as a mature commercial brand. You match parameters such as flexibility and governance capability to the product phase and as to where it’s going.”
That view reflects a broader industry debate over whether small biotechs are better served by nimble, specialized partners than by the largest players. PharmaSource has explored this tension previously, including in a podcast with Gijs Vissers of Nordic Pharma on the benefits of strategic CDMO partnerships over multi-sourcing.
Governance That Surfaces Problems Early
A signed contract is the start of the work, not the end. Prakash describes good governance as a structured cadence at both the steering and operational levels, with clear decision rights and defined escalation paths. Crucially, it should be disciplined without being heavy.
“Governance should not be heavy. It must be institutionalized, of course, disciplined at a more granular level, with preset agendas. But governance is related to learnings and must benefit everyone, both the client and the service partner. When governance works well, it reduces surprises, or at least these surprises arrive early enough in the collaboration to solve in a partnership fashion.”
The stakes are highest in early-stage programs, where small issues compound fast. Prakash shares a case where governance routines turned a looming problem into a manageable one.
“I recall a situation where a CDMO identified a potential capacity constraint that could have affected the timing of future manufacturing campaigns. And because we had governance routines, we had that discipline with clear escalation paths and executive visibility; the issue was raised earlier. And we were able to evaluate alternatives, adjust schedules as a cross-functional team, and secure the necessary capacity before it impacted the overall development program. Had that same issue surfaced a few weeks later or a month later, the consequences could have been much more significant, potentially affecting clinical timelines and increasing costs.”
“Once a clinical milestone is missed, you rarely get that time back.”
Systemic vs. Accidental Problems
Every long partnership is susceptible to trouble. Skill lies in telling a one-off from a pattern. Prakash distinguishes between accidental problems, which even smooth-running organizations face, and systemic ones, which reveal a broken operating model.
“An equipment failure, a shipment delayed because of severe weather, a key raw material arrives damaged. Now, these events are disruptive, but they are generally isolated, and a mature organization contingency plans and responds pretty effectively. Systemic issues are different. They indicate an underlying weakness in the partner’s organization. If batches are repeatedly delayed because production schedules are poorly managed or quality deviations keep occurring because procedures are not consistently followed, those are not isolated incidents. They are symptoms of a larger operational problem.”
He distills it into a rule any team can apply.
“An accidental problem is when something goes wrong despite a good system. A systemic problem, which is the one that we should really watch out for, is when something goes wrong because the system itself is broken. The first can usually be managed. The second can consume your entire team.”
Total Cost of Ownership
This is the heart of Prakash’s argument. Price is table stakes; total value is the real measure. He makes the case with a head-to-head bid that looks obvious until you run the full math. The principle is one PharmaSource has documented in its CDMO pricing report, which stresses that total cost of ownership matters more than unit price.
“Imagine two CDMOs bidding on the same program. One comes in fifteen percent lower on manufacturing costs, which looks pretty attractive on paper. However, during due diligence, it’s discovered that they have a history of slower technology transfers, more frequent deviations, and longer turnaround times for investigations and change controls. If that results in even a single delayed batch, additional quality oversight, repeated technical reviews, or a missed clinical timeline milestone, then the apparent savings disappear very quickly. Suddenly, your technical team is spending hundreds of additional hours managing issues, your supply chain team is adjusting schedules, and your leadership team is participating in escalation calls. By contrast, the slightly more expensive CDMO may execute consistently, manage deviations effectively, communicate proactively, and deliver batches on time. So over the life of the relationship, that partner often creates significantly more value because they reduce risk, they preserve timelines, and they minimize the internal resources required to manage the relationship.”
“The invoice only shows the purchase price. Total cost of ownership captures everything else you have to spend in time, in resources, risk, and opportunity cost to get the outcome you need over the lifetime of the relationship. In the pharmaceutical industry, especially during clinical development, losing a month can be far more expensive than paying a few percentage points more for manufacturing.”
On the perennial tension between cost and quality, his philosophy is that the two are not opposites.
“Quality and reliability are cost levers. Cutting cost at the expense of quality will always reappear later downstream, usually multiplied. Quality is always at the top of the list of priorities in the biopharma world. After all, we’re talking about products that go into human bodies. Quality leads to patient safety, and as we all know in the pharmaceutical industry, patient safety is number one.”
One Piece of Advice for a First-Time Buyer
For a biotech choosing its very first CDMO partner, Prakash’s guidance is clear, and it puts price last.
“I would recommend starting with prioritizing capability alignment and communication maturity, and not price. You want a flexible partner who’s nimble, who understands uncertainty and knows how to co-manage it with you in the spirit of the partnership. Price should certainly be optimized, no two ways about that, but it’s not the starting point.”
Looking ahead, he expects procurement to become even more embedded in enterprise leadership, acting as the company’s outward-facing link to its supplier ecosystem and delivering what he calls a win-win value proposition for employees and supplier partners alike.
