If you’re looking for a contract manufacturer to bring your therapy to market, you’re far from alone. Demand for manufacturing services is shaping the pharma Contract Manufacturing Industry, with analysts predicting a growth rate of nearly 7% per year until 2028. 

In such a competitive market, how should a project sponsor navigate the choice between one CMO and another? To find the answer, many sponsors begin by distinguishing between typical stand-alone CMOs and an embedded CMO that operates under a parent company—AbbVie, in the case of AbbVie Contract Manufacturing (AbbVie).

Attached to this distinction are several negative perspectives and assumptions about the embedded CMO model. These can sometimes prevent project sponsors from seeing the disadvantages of stand-alone CMOs and from realizing the benefits of the embedded model.

For some CMO clients, these assumptions prevail due to past experiences; others are based on suspicion rather than fact. Whatever their source, these perceptions should be challenged with a proper due diligence exercise to develop an accurate and holistic view of every potential CMO partner on your radar, including an assessment of their corporate culture, the integrity of their business practices, their quality and regulatory track record, and the satisfaction of their client base. Only then should you make a decision as important as this one. 

To help you with that process of fact-based assessment, allow us to examine four of the most common myths circulating about embedded CMOs. These are based on real conversations we’ve had with prospects and existing pharma/biotech customers.

When it comes to evaluating CMOs who manage both internal and third-party projects, this is one of the most-asked questions: what happens to my project when demand exceeds capacity? 

Some project sponsors worry that an embedded CMO may follow the same “airline model” that some stand-alone CMOs use: When you’ve oversold seats, simply bump a few passengers to the next flight. That’s annoying enough when you’re traveling, but when you’re bringing a life-enhancing drug to market, it’s simply unacceptable. That’s why responsible, patient-driven embedded CMOs have robust strategies in place to avoid overcommitment, including: 

Front-end contingency planning and conservative capacity estimates 

Many stand-alone CMOs aim for 100% capacity utilization. This can create an aggressive sales approach to onboard multiple programs quickly, which may lead to conflict and capacity challenges in the future. 

An embedded CMO sees capacity utilization much differently. At AbbVie, for example, we reserve and hold back 10-20% capacity for flexibility when needed. This conservative approach is much easier when the CMO business is not your only source of revenue, thus leaving a comfortable margin of stand-by capacity, used to absorb occasional shifts in operational demand without impacting our customers. Embedded CMOs understand this conservative and efficient business model because it’s key to delivering their internal programs on schedule; customers of embedded CMOs can benefit from this knowledge by trusting their programs to a company that prioritizes service and operational excellence over revenue growth. 

It’s also important to remember that stand-alone CMOs are not immune to conflicting priorities and production bottlenecks. They may not have internal programs of their own, but they do have priority clients whose larger, more profitable commercial projects could take your place in line when demand exceeds capacity. To avoid that fate, ask yourself if your CMO is equipped to properly plan for contingencies, and has a record of managing the projects and customers they serve.  Do they have a conservative approach which prioritizes their customers, and are they proficient at utilizing their network to meet capacity demands?

Realistic production forecasts with built-in flexibility. 

Stand-alone CMOs sometimes overbook their capacity, gambling that a certain proportion of clinical projects won’t progress to commercial launch. An embedded CMO typically takes the opposite approach. 

AbbVie doesn’t bet against customers, for example. Instead, we selectively evaluate partners and projects, and we maintain a critical mass of late-phase projects in our third-party pipeline. This allows us to better predict future demand, which in turns helps us to plan more effectively, operate more efficiently, and invest in capacity that will directly benefit our customers in the future. 

An accurate forecast of future demand also translates to greater flexibility, because it means we can confidently reserve some capacity to handle the unexpected—a prospect who brings us an exceptionally promising early-phase project, say, or an existing customer who faces a sudden shift in demand and needs to run additional batches right away. When that happens, we have the ability, experience, and capacity to respond with speed and flexibility. 

A robust multi-sourcing strategy for internal projects. 

As a final and definitive protection against over-selling capacity (aka the “airline model”), customers of an embedded CMO get the experience of an established pharmaceutical leader on their side—experience which includes the complex work of managing in-house production planning across a global network. The right embedded CMO will target projects that align well with their experience and expertise, and build adequate redundancy into their own commercial programs, ensuring fluctuations on in-house projects don’t impact third-party customers. 

At AbbVie, we achieve this by applying a complex multi-sourcing strategy as part of our contingency planning. With a network of more than 25 sites around the world, we have the scope to distribute each of our internal programs across more than one location; this gives us the ability to absorb and accommodate internal shifts in demand without putting constraints on our customers’ programs.

With these three strategies in place, leading embedded CMOs like AbbVie can in fact outperform stand-alone CMOs in terms of offering customers the capacity they need, when they need it, without the risk of getting bumped for another, higher-priority project. This is how AbbVie maintains a record of meeting delivery commitments consistently for over four decades, with one of the highest client satisfaction rates in the industry as measured by ISR Data as part of the annual CMO Leadership Award.

Project sponsors worried about competing for CMO capacity may also have concerns about access to critical raw materials and other supplies, especially in an era of ongoing supply chain disruption. Won’t an embedded CMO meet their own supply needs first, leaving little for their customers? 

Actually, the opposite is often true: many third-party customers find that their embedded CMO is their greatest ally against supply shortages. That’s because embedded CMOs often have enough influence to successfully negotiate with suppliers around the world for assured access to even the most hard-to-get ingredients and materials. They also have the internal resources and external relationships necessary to establish robust and continuous risk mitigation strategies. These may include ensuring secondary sources for all possible starting materials, constantly monitoring lead times, and maintaining a stand-by inventory of critical materials to avoid potential supply delays. 

When many drug manufacturers saw their programs derailed or delayed by supply constraints during the COVID-19 pandemic, AbbVie Operations relied on these strategies to continue manufacturing and distributing some 30 commercial brands, including seven biologics without missing any crucial deliveries—a feat made possible by our ability to navigate supply chain turbulence with the skill and agility that only a leading biopharma company can offer.  

As hurricanes, earthquakes, and other climate-related disruptions in global distribution networks become more frequent—and as our world continues to recover from pandemic-era shortages—AbbVie’s contingency planning and ability to negotiate for robust supply networks under difficult circumstances will continue to provide an enormous benefit to all of its stakeholders, including CMO project sponsors. 

Embedded CMOs can provide unparalleled flexibility in two ways. The first relates to the conservative approach to capacity planning already described; with 10% to 20% of our capacity on reserve for customers, our operations team at AbbVie can typically accommodate sudden shifts in batch volume or throughput speed. 

Secondly, customers of an embedded CMO may benefit from the convergence of internal financial resources and multiple business opportunities for growth and expansion, which can drive significant CapEx investment. With increased capital spending comes increased flexibility because those investments enable an embedded CMO to improve and expand operations in lockstep with their customers’ shifting needs and evolving manufacturing processes. 

When our strategic facility planning team forecasted an uptick in third-party demand in 2015 and again in 2018, for example, we invested heavily in facility expansion projects at our site in Worcester, MA, knowing it would help the client and also offer AbbVie more overall capacity and broader scale options. These prompt CapEx investments demonstrate the symbiotic relationship that can make embedded CMOs a great fit for project sponsors; by drawing on the capital budgets made possible by internal programs and the pharmaceutical infrastructure, we are able to give our external customers additional options, flexibility, and the long-term security they need to continuously grow, adapt, and scale their programs. 

Large pharmaceutical companies want to know that their CMOs speak their language and bring added value to their projects. Smaller companies, with very little past experience, often want help navigating the regulatory and technical complexity of scaleup and commercialization. In all cases, they want to know that when they need expert consultation, it will be available to them. AbbVie has extensive experience with deep global expertise that is evenly distributed based on project timing, not internal vs external.

Embedded CMOs are uniquely positioned to meet these needs. At AbbVie, we have experts based in more than two dozen global facilities, doing work that ultimately serves patients in 200 countries. We don’t limit that expertise to internal projects—in fact, making it available to our third-party customers is part of our philosophy of putting patients first. Whether a drug leaving our facilities is our own or belongs to one of our partners, it bears equal weight within our operational and planning system, because our mission is to deliver high-quality products to the people who need them. Relying on a deep bench of top-tier experts helps us deliver on our commitments to meet that overall goal. 

For example, our in-house regulatory team includes a former inspector who was recruited and hand-picked to ensure AbbVie was ready for Annex 1 compliance.   Dr. Andrew Hopkins joined AbbVie given his past expertise and contributions to help draft one of the industry’s most influential guidance documents[Annex 1: Manufacture of Sterile Medicinal Products]. With access to this level of expertise and know-how, our customers gain additional insight, avoid roadblocks, and mitigate risk as they approach commercialization. 

Another reason to tap the expertise of an embedded CMO is the culture and global reputation necessary to attract and maintain high-caliber talent and expertise, with lower rates of turnover. AbbVie is routinely recognized on the Fortune 100 list of best companies to work for. This is how we retain a workforce of over 30,0000 industry-leading professionals.  

THE RIGHT CMO FOR YOU IS THE ONE THAT WILL GET YOUR PRODUCT TO MARKET SUCCESSFULLY. 

Embedded or stand-alone—it’s a big decision, but it’s just one decision. The pathway to finding a CMO that’s ideally suited to your unique situation will include many other choices, each based on different types of information. Some of that information will be cut-and-dry, such as a potential partner’s track record of on-time deliveries; some of it will be less tangible but just as critical, such as continuous quality improvement, ability to execute when faced with unforeseen challenges, and general cultural fit. 

The important thing is to deeply examine those decisions not through the lens of assumptions and myths, but instead “look behind the curtain” and gain the clarity that comes from understanding and communicating your project alignment and goals clearly. The right CMO will respond with the solutions, ideas, and forward planning that you may not have even known you were looking for.