© 2008 Stephen M Pondell Innovative Strategies for Effectively Working with a CMO When Cost is Not...

© 2008 Stephen M Pondell

Innovative Strategies for Effectively Working

with a CMO When Cost is Not a Motivator

A Virtual Company Perspective

Steve Pondell

24 Sep, 2008

S. Pondell24 Sep 2008


Overview

• Unique aspects of small companies

• Types of contract manufacturers

• CMO operating strategies

• Interaction tactics



Unique Aspects of Small Companies

• Limited resources– Few people, each wearing many hats

• Financial– Cash flow critical

• Priorities– Focus on milestones

• Technical expertise– Limited in breadth



Types of Contract Manufacturers

• Specialists– Exclusively third party manufacturer

• Small• Large

• Legacy– Big Pharma with capacity to spare

• Multi-focused manufacturers– Proprietary, generics, custom

manufacturing



CMO Operating Strategies

• Technical competence

• Customer service

• Business-systems driven




Technical Competence

• Hire and staff highly-qualified personnel– PhD chemists, chemical engineers, PharmD

• Procure top-of-the-line equipment with enhanced capabilities

• Set premium pricing

• Deliver top quality solutions




Customer Service

• Good client contact personnel– Business development– Project management

• Understand customer needs

• Deliver expected results on time with few surprises




Business-Systems Driven

• Business processes dominate work activities– Costing/pricing– How things are done

• Stay within the process

• Few feedback mechanisms



Resulting impact of strategies

Technical CompetencePricing/costing Fixed premium price

Systems Fairly rigid

Client contact personnel

Focused on scientific knowledge

Organizational structure

Centered on technical competencies

HeritageEx-Big Pharma, start-ups by technical experts




Customer ServicePricing/costing Market-based

SystemsFlexible to customer needs


Focused on customer needs


Project-based, flexible

HeritageSmall, independent company or conglomerate




Business-Systems DrivenPricing/costing Cost-plus

Systems Numerous, rigid


Focused on fitting customer to system


Functionally centered, divisional interface

HeritageIntegrated, large company



Interaction Tactics• Visits• Schedules• Money• Mutual success• Project manager relationship• Leverage points

– Contracts– Quality/Technical Agreements

• Hammer



Interaction Tactics

Visits

• Regular team conference calls

• Periodic face-to-face meetings with team members from both sides

• Strategize, plan, commit

• Technical observation

• Team building

• Personal interaction



Interaction Tactics

Schedules

• Project schedule

• Key milestones– Ideally developed by supplier– If not, you develop

• Joint buy-in

• Review progress regularly



Interaction Tactics

Money

• Sometimes it DOES work

• Premiums

• Depends on business model

• Be creative– Change orders– Credits in your favor



Interaction Tactics

Mutual Success

• Future business potential

• Offer joint press releases or articles

• Equity position or royalties



Interaction Tactics

Project Manager Relationship

• Key point person – customer and supplier– Involved in every interaction

• Change of personnel can be disruptive

• YOU may be continuity



Interaction Tactics

Project Manager Relationship

• Project manager takes many roles– Facilitator

• Schedule• Scope

– Enforcer• Contract negotiations• Schedule slippage

– Communicator



Interaction Tactics

Leverage Points - Contracts

• Leverage is high when contract is being negotiated

• Establish desired processes in contract– Milestones– Reporting mechanisms

• After signing, use as fallback when issues arise



Interaction Tactics

Leverage Points – Quality/Technical Agreements

• Has greater leverage if structured as legal document

• Up-front audit makes for less surprises– Reputable suppliers are a key

• Checklist or contract format

• Useful in reaching agreement before issues arise



Interaction Tactics

Hammer

• Elevate in supplier’s organization– Head of Site– Head of Business Development– CEO

• Elevate in your organization

• Personal visit from your top management



Summary

• Identify the business model

• Understand impact to your organization

• Different situations will require different tactics

• Use tactics that best fit the CMO model, your model, and the situation


Questions or Comments?

Contact Information:Steve Pondell

[email protected]

© 2008 Stephen M Pondell Innovative Strategies for Effectively Working with a CMO When Cost is Not...

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