In a rapidly advancing biopharmaceutical industry increasingly characterized by rising molecular complexity and diversity, a growing focus on rare diseases and personalized medicines, and relentless pressure to reduce costs on complex molecules and individualized therapies, traditional outsourcing models are becoming obsolete. A new breed of CDMO partnership models is emerging, driven by the imperative for greater efficiency and cost-effectiveness, to address the unique demands of modern drug development. These evolved partnerships are crucial for delivering timely, accessible, and affordable medicines; navigating the intricacies of local manufacturing; and supporting the journey from laboratory to patient with innovative, scalable solutions.
Is the Outsourcing Model Outdated?
The pharmaceutical industry’s embrace of outsourcing several decades ago was a strategic pivot aimed at harnessing cost and time efficiencies. Large drug makers initially turned to third-party service providers to streamline the production of generics, especially those off-patent and with narrower margins. This trend initially led to a surge in outsourcing to the Asia Pacific region, leveraging the significantly lower labor and operational costs available there.
Innovation across biopharmaceutical R&D continues to drive the complexity of the molecules and substances involved in drug development. Contract development and manufacturing organizations (CDMOs) became integral players, facilitating access to sophisticated technologies and specialized capabilities without the burden of exorbitant investments. The focus broadened to a comprehensive suite of services encompassing process, formulation, and analytical development for intricate drug candidates — services increasingly provided by CDMOs situated within the regulatory rigors of Europe and the U.S. markets.
The expansion of molecular targets for both rare and prevalent diseases has driven a surge in demand for large molecule biologic drugs, with the biologics market poised to nearly reach $846 billion by 2033. Innovations in the ability to interrogate both disease etiologies and the manifestations and profiles of individual patients have driven a shift away from the pursuit of blockbuster drugs and toward greater focus on rare diseases and even personalized medicine. Unsurprisingly, drug development programs aimed at smaller patient populations have been particularly embraced by emerging and virtual biopharma companies. However, given that such companies typically lack the resources and depth of development knowledge that their larger biopharma counterparts possess, there has been a corresponding shift in the needs for outsourced development support to advance these programs.
The legacy CDMO model has shown signs of strain against this backdrop of diversification and specialization. Where large-volume bioreactors (i.e., the popular “six pack” of six 2,000-L single-use bioreactors operating separately or in combination) had seemed like the definitive biomanufacturing configuration of the future and were installed in many Asia-Pacific CDMOs in anticipation of blockbuster needs, the post-pandemic period has led companies, particularly in North America, to reconsider their approach to capacity design, instead embracing more flexible manufacturing setups that can efficiently shift between small and large volumes to address early-phase clinical and commercial requirements.
A host of other factors are converging to transform CDMO operations, including global supply chain uncertainties, the embrace of artificial intelligence, and growing focus on advanced modalities like cell and gene therapies. In response, CDMOs are investing in flexible manufacturing capabilities, embracing digital automation, and shifting further toward longer-term, strategic engagements with pharmaceutical clients. Mergers and acquisitions activities are shaping the CDMO landscape as well, driving consolidation of capabilities and expansion of services.
New Pressures Facing Innovators
Even as the range of druggable targets is broadening and hence pipelines are becoming increasingly complex and diverse, drug developers are facing heightened expectations, not only in terms of improvements in therapeutic efficacy but in reductions in development timelines and R&D costs. At the same time, they must navigate intricate supply chains and evolving manufacturing technologies within a competitive landscape that includes biosimilars and the demands of diverse regulatory environments. Being first to market with cost-effective, highly differentiated medicines has become imperative, as has the ability to present critical milestone data to unlock additional funding to advance programs.
Translating drug candidates from discovery into first-in-human (FIH) clinical studies involves considerable risk. Developers typically spend $3–8 million of seed money at the discovery stage, $15–40 million of Series A funding for FIH studies, and $60–100 million of Series B funding for later-stage clinical trials. Spending on outsourcing is minimal during discovery but swells once candidates enter FIH studies.
Fortunately, the downturn in investor interest in the biopharmaceutical industry following the COVID-19 pandemic is turning around, with renewed interest from venture capital and private equity firms. Legislative incentives like the Inflation Reduction Act are driving new investments, particularly for biologics, which benefit from longer pricing protection compared with small molecule drugs.
Establishing the manufacturability of candidates at early development stages can significantly increase the likelihood of success. CDMOs with deep and agile development capabilities will be best positioned to rapidly and cost-effectively complete comprehensive manufacturability assessments and adapt molecules to existing platforms and varying production volumes, all while minimizing cost.
Traditional CDMO Models are Mismatched to Modern Biotech Needs
The journey from concept to clinic is traditionally a marathon, beginning with clone development and progressing through quality and manufacturability assessments, cell banking, tox supply, and finally, the production of clinical trial materials — a process that can span 18 months. The road to FIH studies typically extends even further, to around three years.
Developers may spend six months or more narrowing down an extensive list of potential candidates to the most promising few. This early phase requires a significant upfront commitment, often locking in a partnership with a single CDMO for the full development cycle. Compounding this issue, the prevailing fee-for-service model is prone to scope and budget creep, leading to unforeseen expenditures and delays. This model, where the CDMO holds ownership of the process, forces developers to invest heavily in the early stages, such as clone development, with limited preliminary data on the viability of leads.
Long-established CDMOs face challenges in scaling up or down in response to demand, maintaining regulatory compliance, and managing costs effectively. The inefficiencies inherent in traditional models frequently result in project postponements, budgetary overruns, and misalignment with the sponsor’s objectives. Timely access to CDMO services can be another hurdle, given the necessity to schedule slots well in advance.
Smaller biotech firms often encounter a precarious period between the discovery and FIH study stages of development, where initial funding has dwindled, and the next round has yet to materialize, all while monthly expenditures (burn rates typically around $150,000/month) persist. Traditional CDMOs rarely share the financial risks inherent in bridging the gap from discovery to CMC development, nor do they typically acknowledge the strategic importance of early CMC data in securing funding.
The scarcity of transitional services and financial backing when transitioning from a CRO to a CDMO — the dangerous “CRO–CDMO trench” — poses significant obstacles, particularly for these small or emerging biopharma companies that need end-to-end support from discovery through commercialization. These challenges can slow down or even halt the progression of projects. As long as funding cycles remain constrained and brief, the financial pressures on the innovators of new drugs will remain intense.
Redefining Partnership: A Paradigm Shift
The biopharmaceutical industry's push toward advanced therapy modalities like antibody derivatives and cell and gene therapies demands a paradigm shift in the development and manufacturing processes. The reliance on traditional clonal cell lines is giving way to more innovative methods that aim to capture CMC data early and circumvent the development bottlenecks, which include challenges like aligning with varying product and regional market demands and the complexities of new product modalities that do not fit existing platform processes.
New technologies and/or approaches must be developed and implemented to overcome the bottlenecks associated with current biologic product development with a reliance on clonal cell lines. Such solutions must accelerate development efforts without compromising quality by eliminating time-consuming and expensive activities from the critical development path. They must also be sufficiently flexible to allow developers to effectively navigate the translational space, efficiently achieve CMC milestones, and successfully raise funding in a timely manner.
To achieve these objectives, a renewed approach to CDMO partnerships — grounded in flexibility, efficiency, and alignment of goals — is essential. Such partnerships need to leverage integrated services from discovery through clinical manufacturing, enabling developers to navigate the translational space more effectively. This will involve shared goals and financial incentives, supporting various long-term sponsor goals, and providing options for licensing and commercialization that reflect this new flexibility.
Additionally, solutions to minimize the translation gap from lab to clinic/market are critical, with a focus on moving drug candidates swiftly into FIH studies while mitigating risks for investors. The approach must ensure the production of drug candidates that meet high standards of safety, identity, strength, purity, and quality (SISPQ), facilitating the likelihood of success in later-stage clinical trials. Reducing the overall cost and time for drug development is also a fundamental objective, which can be supported by adopting more continuous and connected bioprocessing approaches and leveraging multi-column chromatography and other advanced downstream processing technologies.
CDMOs Pioneering Change
To streamline the development of new biologic drugs and ensure timely market entry without compromising drug candidate quality, a paradigm shift is underway spearheaded by agile CDMOs like Wheeler Bio, who aim to bridge the translational gap through its Portable CMC® platform. This platform embodies a new model that integrates digital solutions to enhance process economics and accelerate development timelines, propelling drug developers across the CRO–CDMO trench.
The Portable CMC platform supports innovators from discovery to GMP manufacture (CMC) with an open-source playbook that is technology-stacked. Three core modules — Lead to Manufacturability, Lead to Toxicology, and Lead to Clinic— are designed to add value through funding alignment, accessibility, affordability, process freedom, and speed to clinic. Comprehensive CMC development and manufacturing services are well integrated with digital solutions and include the generation of stable pools and clones; cell substrate testing; process development, optimization, intensification, and characterization; analytical method development, optimization, and qualification; formulation development; preclinical material supply from pools or clones; and cGMP cell banking and production of clinical trial materials.
All these services are provided from closely linked, state-of-the-art development and manufacturing centers. The ability to move rapidly from development to production with the support of collaborative teams comprising all aspects of both development and operations is a game-changer. Extensive digitalization and automation further reduce risk while boosting productivity and efficiency across all activities.
Through deeper partnerships with discovery CROs, Wheeler Bio is helping small and emerging developers go beyond drug candidate lead selection to further refine their candidates considering manufacturing needs. By accessing manufacturing earlier and at lower cost, they can more quickly evaluate the developability and manufacturability of candidates and thereby fail faster with unlikely candidates and bring forward those with the greatest chance for success. Providing a more predictable path between drug discovery and investigational new drug (IND) filing can also reduce clinical timelines by up to nine months.
One of those partnerships is with the Waltham, Massachusetts–based CRO Alloy Therapeutics, which offers monoclonal antibody (mAb) discovery services using proprietary ATX-Gx™ (humanized) mice. The PHASE™ partnership offers a streamlined and cost-effective pathway from discovery to cGMP clinical manufacturing. Partners of both Alloy and Wheeler benefit from reduced costs, free CMC consulting services, and the ability to reserve manufacturing slots without a fee.
Wheeler Bio also has a strategic agreement with Charles River Laboratories (CRL) to offer the Portable CMC platform to CRL clients, with the goal of enabling a swift transition from preclinical stages directly to human clinical trials. This alliance leverages CRL’s industry-leading experience in antibody discovery services with the Portable CMC® platform to efficiently connect preclinical, clinical manufacturing, and release testing programs and significantly reduce the complexity of managing multiple vendor relationships.
Transforming Drug Development: The Perks of Progress
The time and cost of drug development are intricately interconnected. Reducing development timelines translates directly into cost savings over the course of development programs. Faster evaluation of drug candidates also allows companies to reach the “failure point” — or the value inflection point — sooner. New drugs bear not only the costs of their development but the costs of failed candidates. Getting to the value inflection point sooner lowers the costs of failed candidates, thereby leading to lower overall costs for successful drugs.
Increased speed to FIH clinical studies can help not only mitigate risks for investors but also minimize potential impacts to patient access by providing faster generation of initial results. It is essential, of course, that any faster path to FIH does not compromise the SISPQ of investigational drug candidates.
Wheeler Bio’s Portable CMC platform highlights all the benefits of shifting the biopharmaceutical outsourcing paradigm. This novel approach provides ease of access with low-cost entry and simple service terms for lead selection combined with predictability of cash burn due to the all-in-one pricing approach. Direct assessment of product quality attributes and manufacturability in stable expression system early in the development program reduces the risk associated with lead candidate selection, while platform processes, the use of stable bulk pools, and rapid tox material supply reduce the time to IND.
Once a process is established, developers can choose where to produce their material — with Wheeler, at another CDMO, or in-house. Overall, the Portable CMC platform enables seamless translation from discovery to scalable manufacturing (gene-to-GMP) with greater speed, reduced risk, flexibility, predictability, and affordability. Furthermore, each set of services is thoughtfully aligned to match typical funding sources, timing, and milestones.
Ultimately, due to their inherent nature, new CDMO models like Portable CMC can better support the development of novel therapeutics and personalized medicines. Faster and more cost-effective development and manufacturing will, in turn, lead to increased patient access to advanced, life-changing, and lifesaving therapeutics.
Embracing Change Moving Forward
In the swiftly changing realm of biopharmaceuticals, the current outsourcing models are increasingly seen as outdated, given their inefficiencies in both time and cost. The complex nature of today’s drug molecules and the focus on niche markets like rare diseases and personalized medicines call for a more dynamic CDMO partnership approach. These partnerships need to be agile enough to handle the demand for local manufacturing and the pressures to cut costs while ensuring the delivery of safe and affordable medicines.
Recognizing these changing needs, Wheeler Bio has adopted a novel CDMO model to help drug companies get into the clinic faster with reduced risk and cost. This hub-and-spoke concept leverages advanced digital and automation technologies implemented in collaboration with leading technology companies and platforms that integrate with discovery services provided by CRO partners. Through manufacturing democratization, a partnership culture, transparency, pricing, and digitalization, customers benefit from strategic rather than transactional relationships, cutting-edge technologies, efficient project management, and access to real-time insights that facilitate rapid and informed decision making.
The biopharmaceutical industry is encouraged to adopt these new CDMO models, which are designed to be flexible enough to adapt to ongoing changes within the sector. Such models aim to better align outsourcing services with the evolving needs of drug developers and to ensure that the end patients receive the effective, safe, and reasonably priced medicines they need.
