© 2008 stephen m pondell innovative strategies for effectively working with a cmo when cost is not...
TRANSCRIPT
© 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
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Overview
• Unique aspects of small companies
• Types of contract manufacturers
• CMO operating strategies
• Interaction tactics
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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
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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
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CMO Operating Strategies
• Technical competence
• Customer service
• Business-systems driven
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CMO Operating Strategies
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
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CMO Operating Strategies
Customer Service
• Good client contact personnel– Business development– Project management
• Understand customer needs
• Deliver expected results on time with few surprises
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CMO Operating Strategies
Business-Systems Driven
• Business processes dominate work activities– Costing/pricing– How things are done
• Stay within the process
• Few feedback mechanisms
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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
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Resulting impact of strategies
Customer ServicePricing/costing Market-based
SystemsFlexible to customer needs
Client contact personnel
Focused on customer needs
Organizational structure
Project-based, flexible
HeritageSmall, independent company or conglomerate
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Resulting impact of strategies
Business-Systems DrivenPricing/costing Cost-plus
Systems Numerous, rigid
Client contact personnel
Focused on fitting customer to system
Organizational structure
Functionally centered, divisional interface
HeritageIntegrated, large company
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Interaction Tactics• Visits• Schedules• Money• Mutual success• Project manager relationship• Leverage points
– Contracts– Quality/Technical Agreements
• Hammer
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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
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Interaction Tactics
Schedules
• Project schedule
• Key milestones– Ideally developed by supplier– If not, you develop
• Joint buy-in
• Review progress regularly
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Interaction Tactics
Money
• Sometimes it DOES work
• Premiums
• Depends on business model
• Be creative– Change orders– Credits in your favor
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Interaction Tactics
Mutual Success
• Future business potential
• Offer joint press releases or articles
• Equity position or royalties
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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
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Interaction Tactics
Project Manager Relationship
• Project manager takes many roles– Facilitator
• Schedule• Scope
– Enforcer• Contract negotiations• Schedule slippage
– Communicator
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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
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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
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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
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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