The pharmaceutical market is changing rapidly, and the firms that serve the pharma market, including contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs) must constantly adapt to the needs of the marketplace. 

While several shifts are important, perhaps the most important shift between pharmaceutical companies and their CDMO and CRO partners is the nature of the relationship.  In years past, CDMOs and CROs have had an important role to play, but often as a vendor of services or capabilities.  Over the last decade, pharmaceutical companies and their partners have been developing deeper and more strategic relationships.  These strategic connections continue to evolve as pharmaceutical companies and their partners define the optimal ways of working. 

The continual evolution in the relationship between the pharmaceutical companies and these critical service partners has important implications.  When the relationship was based on a “vendor” mentality, key considerations were often factors such as quality, cost, and turnaround times.   Then, the relationships were transactional, focused on immediate benefit versus on a more collaborative relationship. As CDMOs and CROs increasingly become strategic partners across the product development continuum, factors such as quality and cost are still important, but new considerations, such as industry knowledge, capacity, customer service and other characteristics become more important in the selection process.

Further, the shift in relationship comes at a time when the capabilities of most CDMOs and CROs are expanding, giving these firms an opportunity to address needs across the value chain and to become a strategic partner to pharmaceutical firms throughout the lifecycle of a new drug.  As CDMOs and CROs gain more capability, there is a simultaneous need to expand and modernize technology and infrastructure to meet both the growing internal capability and demands from customers, while building deep relationships with pharmaceutical customers and providing excellent customer service.

The leadership teams of CDMOs and CROs must address these changes in an environment with rapidly changing regulatory and economic conditions and constant innovation.  The rapidly changing nature of the industry and the relationships adds to the need for improved strategic planning while remaining nimble and agile. 

How do CROs and CDMOs win?

The opportunity to become a more strategic partner to the pharmaceutical industry is enticing and industry demands are increasing.  How do CROs and CDMOs move quickly to fill the roles that are emerging while maintaining or growing revenue and EBITDA, retaining staff to build these relationships and deliver the services, and sustaining quality and performance?  These demands call for an exceptionally capable and aligned leadership team focused on a clearly articulated strategy.

Building an effective strategy – one that clearly articulates the positioning of the company, anticipates market shifts and economic and regulatory changes, and reflects the potential strategic direction of competitors – is critical.  With this context in mind, leaders in CDMOs and CROs can build strategies that determine how to address their clients’ needs while building the capacity to serve those needs profitably. 

Developing a strategy that directs action throughout the business requires a fully aligned management team that understands the opportunity, harmonizes on the goals, executes clear tactics, and avoids the inevitable distractions of extraneous or unaligned opportunities.  Moreover, alignment is important but constant review of the goals and tactics that help accomplish the strategy is critical.  Assigning important tactics, reviewing them regularly, and holding individuals and teams accountable ensures progress and positions the company for success.

In CREO’s experience, an aligned leadership team with a good strategy is the starting point.  Two other factors are also critical for success: communication and culture.  Too often, strategy is built by a small leadership team but is not carefully communicated to the larger organization.  Unless the strategy and its implications are carefully communicated beyond the leadership team, people who are responsible for key components of the strategy may be left wondering how their actions support corporate goals.  Leaders must develop the strategy and ensure the facts and implications of the strategy are well-understood in their respective teams and sites.

Just as the leadership team must be aligned, the same alignment also applies to the rest of the organization.  This alignment comes as the result of clear communications about the strategy throughout the organization, defining roles and responsibilities and ensuring accountability, reinforced by a corporate culture that is supported by management’s actions and communications. A good strategy, well communicated and well-understood, can drive alignment and produce results.  Strategies that are developed by a small leadership team that aren’t communicated or explained to the organization lead to confusion and conflict. 

How CREO can help

CREO specializes in helping rapidly growing companies in the life sciences industry define their strategy, document goals and tactics, and create alignment and ensure accountability for the leadership teams.  As one client has said: “A committed and aligned management team, with a good strategy, can accomplish anything”.  The opposing view is also true – good management without a strategy cannot accomplish much, and having a good strategy but a poorly aligned or unaccountable team will also result in disappointment. Executives in the life sciences industry, confronted so much opportunity and so much change, should take the steps to control what they can control – the capability of the business, an aligned leadership team with the right people in the right roles, and a coherent and well-communicated strategy.  If you need to improve your strategy, document goals and tactics to achieve those goals, align your management team and ensure accountability, CREO’s Strategy and Organization Effectiveness team can help.