From the advent of the industry in the mid-1990s through the COVID-19 pandemic and beyond, the CDMO realm has evolved rapidly over the past three decades.
Now, facing a unique set of challenges and staring down multiple new technologies and modalities, those contract manufacturers must work to recalibrate their leadership requirements if they hope to stay on the cutting edge.
That’s the message from executive search and leadership advisory firm WittKieffer, which recently published a report on the shifting CDMO executive landscape after reviewing C-suites and boards at 18 top production experts as of spring 2024.
The overall message is clear: CDMOs need to work on leadership retention, integrate leaders with broad sets of skills into their organizations and foster more diverse C-suites that promote gender parity and incorporate a wide range of backgrounds and perspectives.
The lay of the land
As it stands, WittKieffer’s research revealed a “predominantly traditional, business-focused leadership composition” among CDMOs, largely structured around general managers.
Though this approach has worked historically, it may ultimately expose “competency gaps among leadership” as the contract manufacturing market evolves rapidly, WittKieffer said.
The CDMO industry took off around 1996 with Patheon’s facility acquisitions and Lonza’s buyout of Celltech, WittKieffer pointed out. During the 2007 financial crisis, some CDMOs were forced to close, while others evolved and grew in size, structure and scale—often with the help of private equity investment.
More recently, COVID-19 and the post-pandemic landscape have had an outsized effect on the contract manufacturing scene. Aside from rapid CDMO growth due to COVID contracts, the post-pandemic world has forced production specialists to “quest for viable business strategies that go beyond conventional technologies and client base,” WittKieffer said.
Further, present CDMO business models are shifting away from contracts toward more end-to-end partnerships, the executive search agency added.
WittKieffer credited this shift toward partnerships on rising manufacturing standards, the advent of “groundbreaking therapies” and a move toward personalized medicine.
What’s more, in today’s manufacturing world, the CDMO market is becoming increasingly stratified, WittKieffer argued. Larger CDMOs are expanding in size and diversifying their offerings while smaller contractors are leaning into specialization, leveraging advantages in areas like complex technologies and new modalities.
WittKieffer cited multiple examples of these types of moves, from Sanofi spinoff EUROAPI’s recent collaboration with contract research organization SpiroChem and Samsung Biologics’ antibody-drug conjugate manufacturing and development deal with LegoChem Biosciences, to Recipharm’s team-up with GeneVentiv to help develop an AAV-based gene therapy for hemophilia and Lonza’s agreement to acquire a massive biologics manufacturing facility from Genentech in Vacaville, California.
To respond to the shifting contractors’ market, WittKieffer figures CDMOs should strengthen their leadership teams with skills in areas like digital transformation, artificial intelligence, ESG and sustainability efforts, and cutting-edge modalities such as cell and gene therapy and mRNA.
Anatomy of a CDMO C-suite
On average, CDMO executive teams have about nine members, according to WittKieffer’s research. Beyond managerial roles, these teams now incorporate leaders overseeing new lines and specialized functions like R&D, manufacturing, operations and corporate development and strategy.
“The emergence of new specialist positions within the C-suite is expected to bring fresh perspectives and expertise to the strategic decision-making process within leadership teams,” WittKieffer said.
In looking at CDMOs’ leadership teams, WittKieffer broke down roles into four categories: CEOs, commercial leaders, innovation-enabling leaders and enterprise services leaders.
The CEO and commercial leader categories continue to be largely male-dominated. WittKieffer’s research sample contained zero female chief executives at CDMOs, with just 13% of commercial leaders being women.
Those numbers start to fare better in the other categories, though.
Among innovation-enabling leaders—which encompasses R&D, manufacturing and corporate development and strategy—44% of executives in WittKieffer’s sample were women.
As for enterprise leaders, which include executives responsible for finance, human resources, legal affairs and information technology, 44% of executives in the sample were also women.
Meanwhile, CDMO C-suites are rife with turnover, WittKieffer pointed out.
“This constant flux not only underscores the competitive nature of the industry but also necessitates adaptability and agility from executives at all levels,” the leadership firm said.
CEOs stand out as a prime example of this trend, with helmsman at CDMOs enjoying “notably shorter tenures” than their counterparts at leading pharmaceutical outfits, WittKieffer said. And other executive roles within CDMOs face a similar predicament.
Five companies in WittKieffer’s sample saw CEO changes in the past 12 months, with three—Lonza, EuroAPI and Recipharm—appointing new chief executives since the start of 2024.
The constant flux of the leadership pool within CDMOs offers both opportunities and challenges for the industry, WittKieffer said. While the game of musical chairs can bring on fresh perspectives, innovative thinking and new skills, frequent leadership changes also have the potential to disrupt organizational momentum, harm employee morale and challenge strategic consistency and long-term vision.
In response, WittKieffer figures contractors ought to prioritize succession planning, leadership development, mentorship programs and strategies to retain top talent.
The big picture
Given the unique challenges CDMOs face, WittKieffer figures contractors’ leadership teams need to include a range of specialized skills, such as adaptability and flexibility, strong customer service and interpersonal skills, the ability to work effectively under pressure and meet deadlines, strong networking skills and a collaborative mindset to form partnerships.
“Building diverse executive teams that promote gender parity and incorporate a wide range of backgrounds and perspectives is critical for driving innovation and success in the CDMO space,” the headhunter firm said.
WittKieffer also stressed that the CDMOs’ boards of directors must bring in subject matter experts who can guide companies through these ongoing transformations.
Furthermore, in times of change, contract manufacturers ought to leverage flexible access to interim and on-demand leaders that can provide expertise, speed, agility and objectivity to help CDMOs navigate periods of turbulence and transition.
“By proactively addressing these key areas and investing in their people, culture, processes, and technologies, CDMOs can enhance their competitive edge, position themselves for longterm success, and consistently deliver exceptional value to their clients while serving as catalysts for industry innovation and efficiency,” WittKieffer said.