Project Management and CMO–Sponsor Relations

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-08-01-2007, Volume 2007 Supplement, Issue 3

Using basic project management tools and ideas in the transfer process saves time and money and ensures high success rates.

Pharmaceutical outsourcing is increasing. As companies turn more frequently to contract manufacturing organizations (CMOs) to achieve short and long-term production goals, there is an increased need for understanding project-management tools and how to apply them to the entire production-transfer process. There are three natural divisions to consider in this process: business development (project evaluation and setup), project planning and execution (day-to-day operations), and the quality component (quality assurance, quality control, and regulatory functions). Each of these areas requires thorough attention and proper perspective. Furthermore, transferring the production of pharmaceutics is a complex process, fraught with a myriad of details. Success occurs when considerable organization, preparation, communication, and compromise are used throughout the project.

Business development

Project management actually begins before outsourcing. Before a project is accepted by a CMO, the sponsor company must understand every aspect of the project. Knowing what services are required to compound, fill, test, package, and release the product within timeline requirements enables the sponsor to find a CMO who is well-matched to meet its needs.

From the outset, both the sponsor company and the CMO must know their associated risk tolerances and communicate them, although their definitions of risk tolerance may differ. A CMO typically defines risk tolerance as an evaluation of how something or someone will affect its facility, staff, or its regulatory status and the effect this impact has on its current and future clients. A careful and complete review of the project and sponsor-company needs by both parties allows for risk assessment and effective scheduling.

To ensure that sponsor company and CMO goals are in sync, all business pieces must be in place. It is essential to understand the business project life cycle or the business process flow of the sponsor company and CMO. The business project life cycle includes technical evaluation, agreement to do business, and formal agreements.

Most companies require a confidentiality agreement (CDA) be in place before information is exchanged. Each company's acceptable boundaries can be determined by asking questions such as, What state or states will the company accept for governing law? and Will the CDA apply to an individual product or will it be an open CDA? A three-way CDA is valuable when including an active pharmaceutical ingredient (API) manufacturer or third-party laboratory. Consider, also, the acceptable term or length of the CDA. This information speeds up the process and reduces the number of times documents are sent to legal departments.

Technical evaluation

Once a CDA is in place, a sponsor company usually submits a request for proposal, a request for information, or completes a project questionnaire. This process is referred to as the data-acquisition phase. These data enable a CMO to evaluate the projectscope. CMOs will have different requirements at this phase. They may request a teleconference, additional documents for evaluation, or a technical visit by the sponsor company to explain complex processes. The purpose is all the same—data evaluation. The goal is to gather as much information as possible to provide an accurate quotation to the sponsor company. Preparedness up front will save time and money because incomplete data or unknowns could lead to project-scope changes, adjustments to timelines, and increases in the cost and risk of the project.

Agreement to do business

Should the sponsor company and CMO come to an agreement on the project's scope, price, and timeline, they must also agree on the system that will be used to move them to the next step. Approaches to consider include verbal agreements (although not recommended), signed quotations, letters of intent, contracts, and quality-systems agreements. Knowing the options that are available up front allows the sponsor company and CMO to work together in a timely manner to set the appropriate document in place.

Formal agreements

Effective formal agreements take time and encompass the entire scope of the project. Project leaders must ensure they have a clear understanding of the formal agreements to avoid problems. Cancellation fees, payment terms, forecasts, and failed batch provisions are some examples of items that should be covered in the contract. Having a solid understanding of the signed formal documents allows project teams to focus on the technical day-to-day activities of project management.

Project planning and execution

Day-to-day operations drive the transfer process. The basics include project leaders, team design and support, and project-scope control. When any one of these areas is not supported properly, projects are often inefficiently handled or mismanaged. Success depends on good leadership and team support at the sponsor company's and CMO's facilities.

Project leaders. A dedicated project leader is critical to the success of the transfer process. This is the one person at each site who will see the project through to completion. Project leaders have the responsibility of making sure timelines are met and project scope is maintained. They are the primary contact point within the respective organizations and follow up with team members to ensure the project moves forward. Moreover, they communicate key information with the other parties involved (e.g., team members and management).

Project team design. Cross-functional project teams are best suited for success. The scope of the project defines specific team-member needs and requirements, which may change over the life of the project. For example, engineering support may be required early in the project if facility modifications are required. Team members must be accountable and prepared to make decisions for their areas of responsibility in a timely manner. If decision-makers are not on the project team, then task execution is slower and lead times are longer. This may not be a problem, as long as both sides recognize the need to factor adequate contingency into the timeline.


Educate team members about the entire project. This is self-evident but critical to a clear understanding of all requirements. Ensure team members understand the project goal, the terms of the project agreements, and the timeline for completion. Also, discuss the team members' roles and specific areas of responsibility. Address the obvious. For example, is this the first time someone has participated in a project team? Is a team member new to your organization and not familiar with the proper channels of company operations? Are they comfortable reading or editing a timeline? When team members are knowledgeable, experienced, and prepared and have worked through the technical aspects and process flow, informed decisions can be made and tasks completed on track and on time.

Schedule a formal project kick-off meeting. Face-to-face meetings are best because they give project team members an opportunity to get to know each other. Be prepared—a thorough kick-off meeting takes time. Plan at least one full day or more depending on the scope of the project. During the kick-off meeting, teams can work together to finalize the project scope and develop a project timeline based on their detailed discussions. Determine the tasks that are needed and whether the beginning of one task is dependent on the successful completion of another. Define facility, staffing, equipment, and supplies required. Who is responsible for providing the resources? Who is responsible for performing the various tasks or stages of the project? Will the resources be available when they are required? A well-defined project timeline is an essential tool in supporting and controlling the project.

Project control. As part of routine meetings, team members review progress and delays and discuss future steps. They update the project timeline to reflect the current status of the project and flag critical-path items. Frequency of meetings should be based upon current project activities. Meetings may be scheduled biweekly, weekly, or even twice per week if necessary. Before routine meetings, both teams should meet separately to discuss progress and identify challenges. The routine meeting should not be the first time individual team members have spoken to each other about the project since the previous meeting. Following each routine meeting, team members should take care of the next task item, alerting management if a date will be missed.

Communication is essential to the execution of a successful project; however, this is often the most challenging part of any project. Both sides must communicate company needs early in the game. Team members must be willing and able to share information relevant to the project at hand.

Whether it is the kick-off meeting or a routine meeting, take time to develop and distribute an agenda. This single basic tool will maximize the effectiveness of your meeting. Send the agenda out at least one full day in advance to allow all team members to be as prepared as possible for a productive meeting. As important as agendas, meeting minutes are critical to the documentation trail of the project. Use them to document decisions, discussions, and potential issues. Distribute the meeting minutes to those who are not part of the actual team (affected departments and management). This allows everyone to have the opportunity to keep in touch with the project's progress from their own desk.

Key points to remember

Define your corporation's terminology. Not all companies define a demonstration lot, a development lot, and a commissioning lot in the same way. Do not assume that these definitions are industry standards.

Do not wait for the routine meetings to communicate with your peers on the other side. Email allows small details to be addressed quickly. Establishing the parameters for an emergency or rush situation up front prevents false alarms throughout the process, resulting in a relationship with a high level of trust. Crying wolf erodes trust. Both sides must be courteous in setting realistic timelines for responses to questions, document reviews, approvals to procedures, and so forth. Moreover, communicate when replies are required because it helps set priorities, and remember to set realistic goals.

Project leaders and team members must work together to maintain and control the project scope. With the project scope finalized at the kick-off meeting and communicated in the project schedule, routine updates become critical in project management. The timeline shouldn't be static—it is a living document that must be updated and published with meeting minutes. If a new task is needed and inserted in the schedule, determine whether it is a clarification of a previous task or a new activity. If the task alters the scope, let the business development department know.

Avoid unnecessary mid-course changes during the project. Surprises are inevitable, but consider carefully whether a significant change mid-project is needed or whether other options exist. Change orders can be costly and threaten not only the project schedule, but also your budget. Moreover, keep an eye on "walk-up" business. A simple request for another document or another study may seem inconsequential, but over the course of the project, the extras actually take time away from the critical tasks. Sometimes there is a business need for the add-ons, but there may be other options.

Minimizing scope creep is essential in project management. These changes drive up costs and lengthen the project schedule. Although most scope-creep changes are small, added together they can endanger a project. A method to minimize or compensate for scope creep is factoring contingency into the project schedule. Both the sponsor company and CMO have limited resources, so the earlier something is known and communicated, the better. Modifications to the project schedule or a delay on an important decision can't always be handled without adverse impact. Consider what happens if the project leader is out for a period of time. What is the effect on the overall project timing? Who on the project team will step in and chair routine meetings? Who will follow up on key decisions that must be made? Where are the data held, and can others access electronic files? Is there a system in place to provide "human contingency planning"? Taking the time to plan for knowledge management is better than insurance and costs less, too.

Finally, hold a wrap-up meeting to celebrate and review the project. Take time to learn from each project. Have both sides evaluate not only their contributions but the other side's as well; communicate in an honest and direct manner. The goal is to improve the system. Determine what was done well and what could have been done better. Don't let this become only a notetaking session. Rather, use it as an opportunity to strengthen your project-management system.

Managing quality in contract manufacturing

Often the most challenging aspects of managing projects within the contract-manufacturing arena are those activities that fall under the realm of the quality unit. These include quality assurance, quality control, and regulatory functions.

The quality component. Managing quality properly can make or break a project. It can mean the difference between success and failure. Interestingly enough, quality is frequently treated as an afterthought in contract manufacturing until it becomes critical for a manufacturing date or for regulatory filing. Detail management becomes of key importance when supporting quality and regulatory components for both sponsor companies and CMOs.

So what is the best way to manage the quality side of your project? Take a perspective approach considering the requirements of both sponsor company and CMO (see sidebar, "Managing the quality component").

Managing the quality component

From the sponsor company's perspective, start with understanding the quality systems at the CMO. Ask the question, "How do they manage their quality systems?" Accept that there is always more than one correct approach to fulfilling CGMP requirements. Content and execution are much more important than style. The question to ask is, "Can we live with the CMO's quality system and does it fit with our regulatory strategy?" Given this information, it is helpful to remember that if the CMO has a solid regulatory inspection history, then reasonable assurance exists that their quality systems are robust. Understanding what type and how much regulatory experience the CMO has also gives a sense of security going forward. Consider how many preapproval inspections the CMO has managed, the extent of their US and EU inspection history, the number of approved products the CMO has on the market, and so forth. Once this background is established, allow the quality-system agreement to govern future activities.

CMOs must ensure their quality systems are robust and that they cover all aspects of CGMP requirements.They must support training of their staff and keep abreast of new industry standards, compendial changes, and new guidance as it becomes available. CMOs should be a resource for their clients, and provide the customer service they would want and expect if they were the sponsor companies.

Sponsor companies can help their CMOs by establishing expectations at the outset of the project and then allowing the CMO to do their job. Listen to and consider CMO experience when making quality decisions. After all, the sponsor company is paying for their expertise, so use it. Conversely, as the CMO, listen and consider the sponsor company's experiences. They have come to you for a reason. Don't make them go it alone or relive negative experiences of the past.

A sponsor company should learn how the documentation system works at the CMO and familiarize itself with the CMO's batch-production records and specification system. This preparation will ease document review throughout the project and may alleviate unwanted surprises. Another critical point to consider is the need to understand how data will be managed and how the corrective and preventive action system operates. Knowing the expectations of a sponsor company and the system of a CMO will ensure smooth decision making if a deviation occurs.

Ultimately, it is the CMO's responsibility to train and guide its clients in the appropriate aspects of its quality systems. Include customized requirements in the quality-system agreement. A word of caution, however, to both sides:out-of-the-ordinary requirements may slow the project and increase costs. Flexibility and compromise, while maintaining the regulatory strategy, should rule quality decisions, thereby saving time and money throughout the life of the project.

Regulatory functions

Many sponsor companies that are new to contract manufacturing frequently ask about how and when regulatory functions fit into the project, and they want to know what is important to the CMO and when is it required. As early in the project as possible, provide the CMO with your product-development report. The information contained in this report will be worth its weight in gold to the project and those supporting the cause.

Regulatory functions

Allow time for thorough upfront product and project evaluation. Regulatory departments from the sponsor company and the CMO must know how the product fits into the CMO's facility—that is, ask whether the product is a cell-line or animal derivative and how it affects the other sponsor-company products produced at the facility. Also, ask how the CMO communicates change control, whether the CMO has an online notification system, and how involved the CMO regulatory department will be. A good CMO can provide a piece of or the entire CMC section.

The quality-management process begins in earnest with the quality audit. Sponsor companies should send representatives who are familiar with the project with their auditors. Many companies have separate auditing departments, and sending someone who knows the project with the auditors enables the sponsor company to receive project-specific quality answers. CMOs should provide meaningful audit support. Audits function best when both sides are prepared with questions and the appropriate documentation to demonstrate they know and understand the project scope with all of its requirements.

As the project progresses, carefully manage the regulatory and validation strategy. This task is best handled by first understanding the phase requirements, then setting expectations based on the sponsor company's risk tolerance. For example, full process validation is not required for Phase I clinical-trial material production. Method validation, however, is required for stability-indicating assays where expiration dating depends on proof of shelf life. Knowing phase requirements gives both the CMO and the sponsor company a high degree of flexibility in scheduling validation runs, media fills, and so forth and can save time and money throughout the life of the project.

Risk tolerance will ultimately dictate the final regulatory and validation strategy. The conservative approach involves performing validation work earlier in the project and allowing for changes. Deadlines (patent dates) do not always allow for a conservative approach, thereby requiring a balance between risk and requirements.

Both the sponsor company and the CMO must go into the project knowing and sharing their risk tolerances. CMOs have a direct influence on product quality. Product responsibility belongs to the sponsor company but preapproval inspection reports belong to the CMO. Both must work together to guarantee success.

Quality control and method transfers. The main element of quality control when using a CMO is method transfer. If handled carefully and with strict attention to details and timelines, method transfer can be successfully completed and provide the support necessary to meet production and regulatory filing requirements.

Before method transfer begins, take the time to learn each quality group's language and syntax. The quality groups include the sponsor company, CMO, and third-party laboratory, when involved. Ensure there is a clear understanding of how the terms qualification, technical transfer, and validation are used at each facility involved. For example, when talking about method validation does it mean full ICH validation? A full information exchange of all available information is critical for timely method transfers. Whenever possible, always provide validation packages to the CMO.

CMOs should train sponsor companies. Fully explain the method-transfer process at the CMO facility. Don't assume everyone follows the same steps taken during the transfer process.

Method-transfer process

Method transfer is critical and solely based on method status. If methods are fully validated, robust, and well documented, a competent quality-control laboratory will have no problem with the transfer process. Problems abound, however, when method development is not complete or done at a non-GMP third-party laboratory. Know and understand where the methods are in the validation process. Does the CMO need to provide method validation or development? If so, allow enough time for contingencies.

Another issue that frequently plagues quality-control labs is the availability of reference standards. If these standards are from sources overseas, determine how shipping requirements will affect the standards. Can standards sit in customs for two or three weeks and still be viable? Is the reference standard really a primary or secondary reference standard, and not another lot of API needed for use later? Take the time to know and understand where the methods and reference standards are and provide all the information to the CMO.

CMOs must communicate issues early to their clients. If in the transfer process there are issues, do not try to solve those issues without good communication with the sponsor company or third-party laboratory. How often does a written method neglect the "art" part of the assay that can only be obtained through asking questions or trial and error?

Finally, and most importantly, ensure the timeline links method transfer with critical manufacturing dates. Demonstration runs and batches are to test quality-control processes and method usage and to validate the compounding and manufacturing processes. No one wants to be in the situation where the day before manufacturing the in-process test is not ready.

Quality is challenging. When thoughtfully considered and appropriately planned, however, it can actually be a pleasure. Many actually enjoy the laboratory. From a CMO scientist's perspective, nothing is more gratifying than valid results, successful filings, passing inspections, product release, and happy customers (CMOs, sponsor companies, and patients). These elements translate into excellent customer service.


Outsourcing with CMOs is a vital part of the pharmaceutical drug-manufacturing industry. Whether at the clinical-trial stage or the commercial production stage, sponsor company and CMO relationships are the basis for effective and timely regulatory filings and successful production.

As stated previously, it takes hard work, considerable organization, preparation, communication, and compromise to ensure the success of our projects. Companies using the principles reviewed here are those who will enjoy future success.

Sandra Lueken is a senior manager of quality control at Hollister Stier Laboratories, LLC, 3525 North Regal St., Spokane, WA 99207, tel. 509.482.0595, fax 509.484. 4320,