CDMOs are a critical enabler of pharmaceutical innovation that can provide capacity, expertise, and execution when internal resources fall short. However, the traditional model is being stretched to its limits. Geopolitical volatility, shifting regulatory expectations, constrained funding environments, and increasingly complex molecules are forcing drug developers to rethink not just where they outsource, but how – and with whom.
Across the board, development timelines are compressing, tolerance for inefficiency is shrinking, and scientific specialization is becoming non-negotiable. These forces raise an important question for the outsourcing ecosystem: are traditional CDMO operating models still fit for purpose?
To explore this, we spoke with Mat Minardi, Chief Scientific Officer at Sterling Pharma Solutions. He explains why CDMOs may need to fundamentally rethink how they deploy talent, structure partnerships, and support drug development programs.
What are the biggest shifts, trends and challenges affecting the outsourcing market today?
As we add the ‘Made in America’ dynamic to the onshoring trends that we have witnessed in the industry over the last four years, we are seeing a variety of dynamics play out depending on where our customers’ patients and/or licensing aspirations lie. Obviously, Western-based CDMOs are at an advantage in this situation to provide various options to their customers, depending on their sourcing and supply chain strategies.
We are also still seeing challenges with biotech funding, particularly at the early phases where the risk profile of projects is higher. More advanced assets are being prioritized to mitigate against risk because of the continued political and economic pressures around the world.
This then makes the earlier phases for all players in the market more competitive, with companies racing to get their products to market as fast and efficiently as they can. As such, organizations need Western CDMOs and CROs to deliver cost-effective, timely scientific resources – despite this traditionally being more expensive in the west than the east. This downward pressure on full-time equivalent (FTE) pricing brings a new challenge to CDMOs.
What is the traditional full-time equivalent model offered by CDMOs, and what are its limitations?
The traditional FTE model provides a scientist to work exclusively on a customer’s project over an allocated period of time on predefined tasks. The limitations of this are that if the project shifts and evolves, a customer may not have the most experienced expert for a particular new discipline requirement. FTE is also a very linear model, so processes are undertaken one at a time as the project requires it.
When it comes to outsourcing, how do the requirements and needs of big pharma players differ to smaller players?
At the early phase of defining processes for a lead candidate, requirements do not differ hugely; the processes all need refinement, but the priorities will differ. For example, large pharma companies tend to want a developed, locked-in route for further development, whereas biotech and smaller organizations typically need GMP clinical material fast to meet funding milestones. For medium-sized companies, the priority often depends on its own in-house resource – and gaps within that – and the priority of the molecule itself.
When it comes to clinical and launch manufacturing, all customers want guaranteed manufacturing capacity with a stable supply chain, based on the geographic strategies being employed.
How is the relationship between CDMOs and big pharma changing? Why do CDMOs need to evolve further?
There has been a general shift in large pharma/CDMO relationships, particularly over the last 12 months, as large pharma companies recognize that they need both the capacity and technical expertise in western markets.
As the geopolitical and macroeconomic dynamics shift continuously, both parties need stability, favourable geographic options, problem solving experience and a collective power to influence a medicine’s lifecycle. This balance and shared success can only be achieved through strategic partnerships, which are established for the long term and are mutually beneficial for both customer and service provider.
We have witnessed a decrease (for now) of contractual outsourcing based solely on price and which party can negotiate hardest. History shows that this results in a scenario where nobody wins. Instead, large pharma and CDMOs have become more focused on a true partnership, where transparency has become a key part of the relationship.
CDMOs must evolve their business models alongside these new dynamics, and become more responsive as the race to bring drugs to market becomes more aggressive. This means having flexible resources. They need the right people and assets available at the right time, and in the right place, to serve the priorities of customers.
What alternatives to FTE-based models could be beneficial for large companies?
Many pharmaceutical organizations will continue to use Eastern markets for very early discovery projects – purely because of the amount of work that is necessary to find a lead candidate to advance. The change is then when Western CDMOs become involved in projects. They are increasingly being asked to work alongside these CROs to ensure rapid tech transfer of lead candidates, and provide forward-looking, GMP-compliant analysis and manufacture for future phases, at the same time.
For those customers looking to move all work to the west, the demands on CDMOs are competitive pricing, parallel development and geographic options to meet strategic decisions. This is why Sterling developed and trademarked the Extended Benchmodel to cater for changing requirements and expectations.
With this model, customers have access to all of our scientists, leveraging the advantages of a global network, and being able to use and benefit from all our scientific and manufacturing disciplines when and where they need to, as a project evolves.
Can you give some examples of different scenarios where projects might benefit from these models?
Traditionally, process development is carried out at the site where it is manufactured, but our Extended Bench model means that a team at another site can carry out this work, if it better utilizes resources, and accelerates the timeline for the customer’s API to the manufacturing plant.
True integration across our network means that teams can leverage the same governance process and eliminate the need for a tech transfer between development and manufacture. We then undertake demonstration batches at both the development site and the manufacturing site with our internal teams able to move between facilities to support and train those not familiar with the process.
We have also seen a number of smaller companies come to us at the very early stages of a molecule’s journey, who have benefitted from being able to accelerate the time between development and manufacture by utilizing several different scientific disciplines at the same time. This means that the project does not need to be linear; for example, we can undertake solid state and chemistry work at the same time on different sites, whilst our hazard evaluation team assess early scale up.
What we have seen with large pharma customers that use this model, is their aim is to have our resources work on a greater number of molecules at any one time, which allows them to evaluate the results and make fast decisions on next steps, and divert resource to where it is needed most, without the need for new proposals or change orders.
What is needed to make such models feasible?
At the core of this type of model is a foundation of truly global processes and systems, and a genuinely collaborative culture. Seamless integration is required across sites, teams and individuals, so that anyone, anywhere in the CDMO’s network can pick up work and know the capabilities, capacities and intricacies of each development and manufacturing resource. To have parallel paths within a project, employees and teams must trust each other implicitly and all be working towards the same goal, with no agendas or conflicting competition.
Genuine partnership between the sponsor and CDMO is also required. There are many companies that talk about partnership, but it is not evidenced, even during proposal negotiation. You cannot expect a CDMO to offer commitment, trust and transparency if the customer is not prepared to do the same. Everyone is human, and the employees working on projects without this partnership can see and feel the difference.
With this, we have seen a resurgence in the importance of patient-centred training and information. If all parties understand we work on more than molecules; it’s about having a positive impact on the patients we are serving, it makes the project team, whether they work for the sponsor or CDMO, far more focused on project outcomes and deliverables, wherever they are based.
As we enter 2026, what further shifts do you expect in the market and what further evolution might we see from CDMOs?
We will continue to see Western CDMOs invest in infrastructure and additional modalities, including peptides and oligonucleotides. As patient populations for new drugs become smaller, CDMOs become closer to the patient as they are a truly unmet need in the market, rather than a broad-spectrum molecule. This requires faster paths to market and more specialized science.
With this more specialized science, and the continued move towards Western suppliers, this also means that CDMOs and pharma companies are competing for the same talent, resulting in a very competitive recruitment market. This further accentuates the need for flexible resourcing and truly integrated CDMOs.
True innovation will continue to come from disciplines working together, the interfaces of chemistry and biology will continue to be where the power lies for scientific impact and the development of the next generation of drugs.
Newsletters
Receive the latest pharmaceutical news, personalities, education, and career development – weekly to your inbox.
