The primary goal of those in charge of procurement and the selection of a CMO is to limit costs. They’re likely to go for the proposal that has the lowest bottom line. Once they’ve chosen the CMO and accomplished their goal of limiting costs for that fiscal year, the project is passed onto an account manager. The account manager is surprised when hidden costs that were not in the proposal pile up as the project progresses. By the end of the relationship the company has paid the CMO an amount that is close to higher proposals it had received. Not only is the account manager frustrated they had to pay more, they’re saddled with the additional work and stress of explaining to management the need for an increase in the project’s budget. Beyond this being time-consuming and annoying, it interferes with a company’s long-term, accurate budgeting.
This example shows the problem of a lack of accountability for decisions. If the procurement manager had chosen the transparent proposal at the beginning—the one with a higher bottom line but that included everything they might have to pay for—they wouldn’t have encountered this situation. They would have paid the same amount, but without any of the headaches or surprises. Remember, a board of directors will ask why project costs increased. Our list of potential hidden costs (see sidebar) can be used with your board of directors to educate them about the true costs of the project.
A company hires two CMOs—and is able to compare experiences
A company dual-sources its outsourced manufacturing needs to two CMOs to manufacture a monoclonal antibody. Both CMOs had the same scope of work, but one used the transparent pricing model, while the other CMO used a change order model for its proposal and came in with a lower upfront cost. In the end, both CMOs charged the same amount. However, the CMO with the initial low bid hit its partner with 20 change orders, driving costs up and creating excess work for the account manager and their company. This example shows that, in the end, project managers have to request several rounds of additional funding for low-bid CMO’s work, whereas the transparent pricing model deliver as expected.
Expedited orders
To be successful, a long-term partnership needs to be flexible. Take expedited orders. Say you had an order expected for October and now need it delivered in August. If we can make something work for a partner, we do. The end goal—for all of us—is to keep the patient in mind. If we have available capacity and resources to get that order out in August, we do it for the betterment of the partnership.
AbbVie CMO gets it right the first time
Beware rapid delivery of a proposal. Customers are usually in a rush and CMOs are under pressure to deliver a proposal as quickly as possible. We know that proposals can’t be treated as a one-size-fits-all exercise. For this reason, an AbbVie CMO transparent proposal may take longer to prepare but we aim to do it once and get it right.
Hidden costs to watch out for
How to know the true cost of a proposal
Here are some services that should be included in every proposal, but frequently are not. The truth is these aren’t optional—they’re likely to add to your costs, either upfront or down the road. Ensure all these services are explicitly listed in the contract and, if a cost estimate is unusually low compared to other proposals, scrutinize the details. If one or more of these is not included, ask why not and what the likely cost will be.
