Contract manufacturing organization

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A contract manufacturing organization (CMO), sometimes called a contract development and manufacturing organization (CDMO), is a company that serves other companies in the pharmaceutical industry on a contract basis to provide comprehensive services from drug development through drug manufacturing.[1] This allows major pharmaceutical companies to outsource those aspects of the business, which can help with scalability or can allow the major company to focus on drug discovery and drug marketing instead.

Services offered by CMOs include, but are not limited to: pre-formulation, formulation development, stability studies, method development, pre-clinical and Phase I clinical trial materials, late-stage clinical trial materials, formal stability, scale-up, registration batches and commercial production. CMOs are contract manufacturers, but they can also be more than that because of the development aspect.


The pharmaceutical market uses outsourcing services from providers in the form of contract research organizations (CROs) and contract manufacturing organizations. In recent years, the concept of a comprehensive single-source provider from drug development through commercial manufacture has emerged. This concept has been implemented by providers known today as contract development and manufacturing organizations (CDMOs).

CMOs are a response to the competitive international nature of the pharmaceutical market as well as the increasing demand for outsourced services.[2] The best-positioned service providers focus on a specific technology or dosage form and promote end-to-end continuity and efficiency for their outsourcing clients. With lower-cost international manufacturers capturing an increasing percentage of the contract manufacturing market, specialization may be an effective hedge against loss of market share.[3]


Outsourcing to a CMO allows the pharmaceutical client to expand its technical resources without increased overhead. The client can then manage its internal resources and costs by focusing on core competencies and high-value projects while reducing or not adding infrastructure or technical staff. Virtual and specialty pharmaceutical companies are particularly well-suited to CDMO partnerships, and big pharmaceutical companies are beginning to view relationships with CDMOs as strategic rather than tactical. With two-thirds of pharmaceutical manufacturing being outsourced, and preferred providers receiving the lion's share, additional demand is being placed on specialty areas, i.e. specialty dosage forms.[4]

Working with a CMO also limits a client’s upfront investment of capital for drug development, thus minimizing a project’s cost. By concentrating resources with a single-source provider, the outsourcing client can minimize technical transfer of projects or products, thereby reducing unforeseen costs and potentially speeding new products to market.

Disadvantages of CMOs[edit]

The pharmaceutical client using the services of a CMO does not have direct control of the project in regard to scheduling, cost, quality, or accountability. Data security is an issue to be considered when selecting a CMO, as intellectual property and other data are exchanged between client and service provider.


  1. ^ Contract Pharma. Contract Pharma. Retrieved on 2013-09-18.
  2. ^ Taylor, Phil. “Outsourcing of production gaining pace in big pharma” ([1]), Outsourcing, May 27, 2008. Retrieved 7-3-08.
  3. ^ Spurgeon, Tom. “Continuity and Connectivity: We Can Do That, Too” “(subtitle) Are CDMOs the Next Big Thing?” ([2]), Contract Pharma, March 2008:70–74. Retrieved 7-3-08.
  4. ^ "Two-thirds of pharmaceutical manufacturing is outsourced; preferred providers pick up largest share". Pharmaceutical Processing. Retrieved November 16, 2016.