Policy shifts, tariff threats and a wave of U.S. investment announcements have left outsourcing leaders asking the same question: do you consolidate to fewer, deeper CDMO partnerships, or spread out to protect supply?
That was the debate at CDMO Live Americas in Boston, where a panel session explored manufacturing network optimization. The session, sponsored by ROIS, brought together:
- Joseph Graskemper, General Manager, Early Phase Development & Manufacturing, Biogen
- Gretchen Peck, Senior Director, Strategy & Program Management, Pfizer
- Amber Meriwether, Corporate Strategy, Astellas
- Kimberlee Steele, Chief Commercial Officer, ROIS
Four networks, four starting points
Graskemper oversees external early phase development and manufacturing at Biogen, from GLP tox through phase two. Biogen’s network spans more than 50 sites from early phase through commercial, and his remit covers a little under half of them.
Pfizer’s external supply organization manages more than 300 contract manufacturers alongside 35 internal facilities, said Peck, who recently moved into strategy and business excellence for the company’s pharmaceutical sciences division. Pfizer CentreOne, the company’s CDMO arm, sells internal capacity to other clients. “Even though they have different arms of accountability, there is definitely one network strategy,” she said.
Astellas has one of the most diverse portfolios among mid-sized pharma companies, Meriwether said, spanning small molecule, large molecule, cell therapy and gene therapy. It runs about 11 internal sites and pairs them with external capacity depending on each asset’s modality and life cycle stage.
ROIS, the CDMO arm that emerged from Rovi Pharmaceuticals, focuses on sterile injectables with capacity above 800 million units a year, Steele said. Historically a European business, it bought a large U.S. site last year and is directing much of its expansion there, across biologics, high-potency oncology and ADCs.
Early phase decisions have late phase consequences
“Early phase decisions do have late phase consequences, and in the environment we’re in today that rings even more true,” Graskemper said. His team now discusses phase two supply with a commercial lens, and conversations about when to go “U.S. for U.S.” start much earlier than they used to.
No flow diagram settles it. Asset life cycle stage, modality, whether the molecule is first or best in class, the CDMO’s platform and its capacity utilization all feed the decision. Trade and tax considerations can be directional at one sponsor and prescriptive at another.
Steele sees the same shift from the CDMO side. Sponsors increasingly arrive saying a product has to be made in the U.S. because that is the intended market and the most efficient route. Demand for European manufacturing persists, driven by lower costs and existing capacity, but she has “seen a huge uptick” in U.S. requirements.
No framework, just scenarios
“We’re making these decisions five to ten years out, and policy is moving daily.”
Amber Meriweather
Astellas builds scenarios instead of relying on a single rule, Meriwether said. Network decisions look five to ten years out while policy moves almost daily. The team optimizes across where intellectual property is generated, which markets will drive an asset, what follow-on programs sit behind it, whether to invest capital in infrastructure for that modality, and how mature and constrained the external market is.
“It is not one size fits all for our portfolio as a whole,” she said. “It’s what is right for this asset and this program.”
Peck outlined the four questions Pfizer asks when considering a move:
- Technology: Does the needed technology exist in the target region today?
- Value: Does moving the product create enough value to justify the effort?
- Product fit: Is the move right for the product and the patient, given where demand sits?
- Absorbable cost: Can the product, at its current life cycle stage, absorb the cost of the change?
Some moves never clear the bar. “We have very late-stage products that are single site, single CMO that just have to stay there through their life cycle, because the cost and the barrier to move them is not justifiable,” Peck said. Complex technology or a 30-year-old regulatory filing can make a transfer unrealistic.
The risk on both sides of consolidation
Biogen has been through significant M&A, and Graskemper acknowledged the contradiction in the industry’s messaging, with talk of consolidation, regionalization and acquisition all at once. Each direction carries its own risk. Over-consolidate and too much sits with a single supplier. Diversify and “every single point you bring into your network is a potential point of failure.”
“A diversified network does not mean a more resilient network,” he said. “It could just mean a network with more headaches.”
He pointed to dual sourcing inside a single partner as one option. Several CDMOs now operate across the U.S. and Europe, which lets a sponsor regionalize without adding a new relationship.
Three Astellas programs reached clinical proof of concept in the past six months, Meriwether said: an engineered small molecule, a cell therapy and an antibody. Each has a different risk profile, market maturity and capital requirement, so each needs its own supply answer.
Digitalization: a tiebreaker that builds trust
Digitalization is a criterion in partner selection at Pfizer but rarely the deciding one, Peck said. Technical capability, complexity and economics come first. Between two equal options, digital maturity gives one an edge. Pfizer is working with key partners to integrate systems so information flows both ways, because each new placement makes the site a growth partner.
Steele made the CDMO case. Digital tools let a CDMO show clients where product sits in manufacturing, where materials stand and how quality questions are progressing. “It’s full transparency, and I’m a full believer in it,” she said. The more information a CDMO shares, the easier it is for sponsors to manage the relationship, and the stickier it becomes when a sponsor places multiple programs with one preferred vendor.
Meriwether agreed that digitalization sits within a broader set of factors, and said transparency makes the benefits of a relationship visible sooner.
“Strategic partnership”: a term in need of a definition
“When I hear ‘strategic partnership,’ I shudder a little”
Joseph Graskemper
“When I hear ‘strategic partnership,’ I shudder a little,” Graskemper said. Transparency, collaboration and delivery are baseline expectations of any good partner. “You get strategic when you start talking about the vision and what you’re going to do together over a 5, 7, 10-year span.”
Pfizer defined partnership formally years ago, Peck said. A CDMO must pass two tests: a fit for partnership (willingness to grow with Pfizer, ongoing investment, financial stability) and a fit for growth (a pipeline to feed it). Only two CMOs in Pfizer’s network hold that status. In return for committing to invest and meet pipeline needs, they receive preferential treatment, and on Pfizer’s network map they sit as though they were internal facilities.
CentreOne is the third leg of a stool, she said, alongside outsourcing where it makes sense and internal manufacturing for new launches and protected IP. It absorbs idle capacity on non-niche technologies, which keeps unused internal assets from raising cost of goods. Some companies both contract with Pfizer and supply it.
Capacity commitments: the restaurant reservation
Setting up sterile capacity takes years and substantial investment, Steele said, which is why CDMOs ask for commitments. She argued they can be structured fairly.
“I think of it almost like a restaurant reservation,” she said. “If there’s a hot restaurant in town and everybody wants to eat there, you make a reservation. You can’t just show up, find it full and walk away to scramble for somewhere else.”
Under that model, the sponsor reserves a portion of capacity, never all of it. Commitments can be delayed until closer to commercialization, and they can flex across a portfolio when products share a platform or equipment. Sponsors often tell her they have ten products and do not know which will succeed. If those products run on similar platforms, ROIS can flex with them, provided both sides share a view two to three years out.
Early phase: keep it simple
For early phase work, Graskemper wants reliability, quality and speed, with as little commitment as possible. “Who knows what the fate of a clinical program is going to be, and you don’t want to overcommit yourself.” Sponsor and CDMO business models are “vastly different,” he said, and CDMOs need commitments to manage their other clients.
He is skeptical of outcome-based contracts at this stage. “It’s almost unfair to ask a CDMO to say, ‘If this program is successful, which might have a 15% chance, you’ll get this amount.’ It’s never quite sat right with me.” He prefers fee-for-service for its clarity, and an FTE model when development scope is uncertain. For tighter partnerships, he sees two routes: access to a CDMO’s technology platform, particularly in cell and gene therapy, and co-investment with a proven partner.
Steele agreed. CDMOs sell line capacity, people and resources, and their profit models differ from the sponsor’s. FTE arrangements and suite reservations, whole or partial, suit sponsors who want control over their schedule and do not want to share a line.
The unsaid truths
Closing the session, each panelist shared what people think but rarely say aloud.
Graskemper on contracting: “Don’t just throw your contracts over to legal. The business is an equal partner to legal on MSAs. When business is strongly represented on both sides, we get a lot more done, a lot faster.”
Steele on fairness: Fairness has to run both ways. It is unreasonable to ask a sponsor to commit to commercial volumes at phase one, and equally unreasonable for a sponsor to ask a CDMO to hold 100 million units of capacity it may never buy. Pharma earns multiples of what CDMOs do, so “an empty line is much more painful” for a CDMO.
Meriwether on strategy first: Network optimization starts with the business strategy. Many companies now acquire assets in phase two or three and inherit legacy supply arrangements that must be optimized.
Peck on trade-offs: “You can’t have your cake and eat it too. You can’t have redundancy, the cost of network consolidation, and the flexibility of no commitment. It’s a give and take. You have to figure out what is fit for purpose for your strategy. You can’t have it all.”
Listen to the full discussion on the PharmaSource podcast, recorded at CDMO Live Americas in Boston. Details of upcoming CDMO Live events are at pharmaceuticals.global/events.
