Outsourcing Excellence in China and India

India has excellent technology, R&D, production facilities and clinical research centers. Conducting clinical trials represents a significant portion of drug development costs and is time consuming. The availability of a large number of potential study subjects has attracted pharmaceutical companies such as GlaxoSmithKline and Eli-Lilly to conduct clinical trials in India.3 Typically, it is 40-50% less expensive to conduct clinical trials in India compared to western countries. Patients also can be recruited in less than one-third the time than in the United States during similar patient recruitment activities.1

Optimizing Quality in China
The FDA requires regular audits for all off-shore suppliers of drugs and drug products. However, outside the United States, few audits are completed due to a lack of FDA resources. While this situation is improving (evidenced by the recent hiring of locally staffed FDA personnel), the problem still exists. Critics point out ethical issues citing instances of locally hired staff remaining loyal to their former local employers. In China, nutritional and pharmaceutical products are regulated by the State Food and Drug Administration (SFDA), the Chinese equivalent of the FDA. Chinese GMPs are issued and are similar to those in the United States and in the EU. In China, a manufacturer must obtain a GMP certificate in order to operate4, granted after completing a time-consuming series of inspections when the plant is initially built. However, after certification, routine follow-up inspections and “recertification” are rarely accomplished. Unlike the United States, in China it is the responsibility of management to monitor quality and validate the manufacturing procedures after certification. As a consequence, it is likely a majority of Chinese manufacturers would probably fail an FDA audit. After conducting numerous FDA-style audits in China, we have yet to find a supplier free from issues.5 Of these issues, some can be easily corrected while others may require rebuilding the facility.

Based on personal experience working with a variety of Chinese factories, APIs and bulk materials that meet the high quality standards needed for sales in the United States can be found in China. However, finding reliable sources is difficult and requires considerable effort. Most APIs and bulk products are purchased through import/export agents and brokers who invariably have a vested interest in selling these materials regardless of where they have been produced.

Sometimes more than one supplier is used to produce the same product clandestinely.

Quality is not always consistent and a given supplier may use unacceptable GMPs. A U.S. firm must continually check the suppliers to ensure that QA standards are being met and that changes have not been implemented in the manufacturing process that may jeopardize the quality and safety of the product. Auditing and unannounced inspections are necessary and must be viewed as a critical component of a company’s policy. We recommend using auditors that are native speakers of the local language; such a person can more easily communicate directly to the production and laboratory personnel staff to ensure that all procedures are carefully followed. Buying products without first auditing and inspecting them is likely to result in problems. In China, the perception is that it is the responsibility of the buyer rather than the seller to ensure quality.

Some of the quality issues that Sancilio and Company encountered using U.S. independent auditors include:

• While appropriately trained employees were involved in the initial audits for plant certification, they were often replaced with new employees that were not well trained.
• Batch records were lacking/couldn’t confirm procedures used were identical to those specified in the contract.
• Laboratory testing was inappropriate or inadequate to ensure product quality.
• While new machines and procedures were initially validated, changes made after certification were not properly documented or validated.
• Cleaning records and validations were absent.
• Water systems did not meet U.S. purity standards. Rust, inappropriate welds, valves and filters were often used.

In Asia, it is critical to monitor carefully all aspects of product manufacturing to ensure that regulatory requirements are met and that safe and efficacious products are produced. To accomplish this, it is necessary to have a team of locally fluent, but U.S. trained, auditors and conduct unannounced visits at supplier facilities. Since most products imported from Asia are purchased through an import/export trading company, it is strongly suggested one hire a multi-lingual purchasing agent who can complete the required paperwork to facilitate import transactions. Working with a local English-speaking law firm is also highly recommended.

Interestingly, the Chinese government issues a “seal,” to use as a signature for legal documents. While signatures are legally binding in the United States, this seal is the legally binding mark in China. Thus, seals are extremely valuable and should be controlled by an independent, third-party attorney employed by the parent company in the United States. To monitor daily activities, weekly conference calls/meetings are a necessity, as are quarterly visits to corporate facilities.

Looking ahead, U.S. investment in China and India will continue to grow. With continued investment, there will be a gradual shift toward high-end drug discovery in Asia. Strategic partnerships and collaboration with companies in this region will be commonplace. The most successful companies will be those that successfully manage partnerships across a number of overseas locations while maintaining QA at the expected highest levels.

References
1. PricewaterhouseCoopers. The changing dynamics of pharma outsourcing in Asia. PricewaterhouseCoopers, 2008. http://www.pwc.com/gx/en/pharma-life-sciences/outsourcing/index.jhtml. Accessed January 2013.
2. Jia H. Chinese manufacturers vie for piece of outsourcing pie. Nature Biotechnology 2007;25:1337-1338.
3. Shukla A. Rationale behind biopharmaceutical outsourcing in India. Bio Outsourcing 2007;2:3-6.
4. Drug Administration Law of the People’s Republic of China, Chapter II, Article 9. http:/www.sfda.gov.cn. Acc. January 2013.
5. Sancilio FD, Spencer JJ, Newberger NC. Doing pharmaceutical, nutritional outsourcing in China and India: what problems may be encountered. Bio Outsourcing 2007; 2:30-32.

About the Authors
Dr. Ryan is vice president of clinical research for Sancilio and Company. He is involved with directing clinical research to evaluate the benefits of omega-3 fatty acids for a variety of medical conditions. Before joining Sancilio and Company, Dr. Ryan was employed at Martek Biosciences and at Abbott Laboratories. Email: alryan@sancilio.com

Dr. Sancilio is the founder, CEO, and chairman of Sancilio and Company. He has more than 40 years of experience in the pharmaceutical research, development, manufacturing and distribution industries. Prior to founding SCI, Dr. Sancilio founded three pharmaceutical companies, including aaiPharma Inc. He has contributed to the development of over 1,000 drugs marketed in the United States, Europe and Asia.

Published in the February 2013 issue of Pharmaceutical Manufacturing magazine.