1. © 2008 Stephen M Pondell Innovative Strategies for Effectively Working with a CMO When Cost is Not a Motivator A Virtual Company Perspective Steve Pondell 24 Sep, 2008

2. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Overview Unique aspects of small companies Types of contract manufacturers CMO operating strategies Interaction tactics

3. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Unique Aspects of Small Companies Limited resources –Few people, each wearing many hats Financial –Cash flow critical Priorities –Focus on milestones Technical expertise –Limited in breadth

4. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Types of Contract Manufacturers Specialists –Exclusively third party manufacturer Small Large Legacy –Big Pharma with capacity to spare Multi-focused manufacturers –Proprietary, generics, custom manufacturing

5. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell CMO Operating Strategies Technical competence Customer service Business-systems driven

6. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell CMO Operating Strategies Technical Competence Hire and staff highly-qualified personnel –PhD chemists, chemical engineers, PharmD Procure top-of-the-line equipment with enhanced capabilities Set premium pricing Deliver top quality solutions

7. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell CMO Operating Strategies Customer Service Good client contact personnel –Business development –Project management Understand customer needs Deliver expected results on time with few surprises

8. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell CMO Operating Strategies Business-Systems Driven Business processes dominate work activities –Costing/pricing –How things are done Stay within the process Few feedback mechanisms

9. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Resulting impact of strategies Technical Competence Pricing/costingFixed premium price SystemsFairly rigid Client contact personnel Focused on scientific knowledge Organizational structure Centered on technical competencies Heritage Ex-Big Pharma, start- ups by technical experts

10. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Resulting impact of strategies Customer Service Pricing/costingMarket-based Systems Flexible to customer needs Client contact personnel Focused on customer needs Organizational structure Project-based, flexible Heritage Small, independent company or conglomerate

11. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Resulting impact of strategies Business-Systems Driven Pricing/costingCost-plus SystemsNumerous, rigid Client contact personnel Focused on fitting customer to system Organizational structure Functionally centered, divisional interface Heritage Integrated, large company

12. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Visits Schedules Money Mutual success Project manager relationship Leverage points –Contracts –Quality/Technical Agreements Hammer

13. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Visits Regular team conference calls Periodic face-to-face meetings with team members from both sides Strategize, plan, commit Technical observation Team building Personal interaction

14. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Schedules Project schedule Key milestones –Ideally developed by supplier –If not, you develop Joint buy-in Review progress regularly

15. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Money Sometimes it DOES work Premiums Depends on business model Be creative –Change orders –Credits in your favor

16. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Mutual Success Future business potential Offer joint press releases or articles Equity position or royalties

17. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Project Manager Relationship Key point person – customer and supplier –Involved in every interaction Change of personnel can be disruptive YOU may be continuity

18. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Project Manager Relationship Project manager takes many roles –Facilitator Schedule Scope –Enforcer Contract negotiations Schedule slippage –Communicator

19. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Leverage Points - Contracts Leverage is high when contract is being negotiated Establish desired processes in contract –Milestones –Reporting mechanisms After signing, use as fallback when issues arise

20. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Leverage Points – Quality/Technical Agreements Has greater leverage if structured as legal document Up-front audit makes for less surprises –Reputable suppliers are a key Checklist or contract format Useful in reaching agreement before issues arise

21. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Interaction Tactics Hammer Elevate in supplier’s organization –Head of Site –Head of Business Development –CEO Elevate in your organization Personal visit from your top management

22. S. Pondell 24 Sep 2008 © 2008 Stephen M Pondell Summary Identify the business model Understand impact to your organization Different situations will require different tactics Use tactics that best fit the CMO model, your model, and the situation

23. © 2008 Stephen M Pondell Questions or Comments? Contact Information: Steve Pondell spondell@ibtsolutions.us 281-253-7088