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By Doug Bartholomew
It’s 2013. Do you know where your drugs are on that other guy’s plant floor? You should. Unfortunately, pharmaceutical companies often lack the visibility they need to carefully manage their contract manufacturers and contract development organizations’ performance.
That’s surprising, considering the benefits pharma manufacturers can reap by connecting key IT systems enabling the sharing of critical information about product quality and manufacturing efficiency. First and foremost, meshing quality, manufacturing, laboratory, and other business information systems can help accelerate understanding of potential quality problems and support a faster resolution of plant floor issues. In other words, by expanding the flow of information between pharmaceutical companies and their contract drug manufacturers, both entities stand to gain. The payoff is greater visibility into operations, better information on which to make business decisions and easier tracking of manufacturing exceptions.
As pharmaceutical firms’ dependence on contract manufacturers has increased, the need to expand and speed up connections with suppliers has intensified. While many of the most prominent pharmaceutical companies have connected business systems such as enterprise resource planning systems (ERP) with those of their outsourcing partners for supply-chain purposes, those that have connected other pharma-related IT systems — CAPA, LIMS, QMS, MES and enotebook systems — tend to be far fewer.
Of the 173 pharma industry professionals who responded to a Pharmaceutical Manufacturing magazine survey last year, only a minority reported that their firms had connected their various internal quality systems with those of their outsourced manufacturers.
For example, about one-fourth (24%) said they had integrated their corrective and preventive action (CAPA) systems with those of their suppliers. Only a limited number of respondents (13%) said they were using technology to connect their quality management systems (QMS) or similar IT platforms with those of their contract suppliers. Finally, one-fifth indicated that they had set up dashboards to electronically monitor key performance indicators (KPIs) for their contract partners.
Clearly, by strengthening connections with their contract suppliers through better, more extensive integration and application of various IT systems, pharmaceutical manufacturers stand to reap a host of benefits. One of the most obvious places to start is automating the workflows supporting various processes.
“The more you use technology, the better off you are in terms of efficiencies,” says Tee Noland, chairman of Pharma-Tech Industries, a pharmaceutical contract manufacturer in Royston, Ga. “Connecting our ERP system with our customer Johnson & Johnson saves a lot of time for them, because we do a lot of the supply planning for them. For instance, with Johnson & Johnson, we manage our inventory in their distribution centers,” Noland says. “It saves a lot of time for them, because we do a lot of the planning. And of course, if they have a promotion, we have to boost our inventory to meet the increased demand.”
Pharma-Tech, which uses an ERP system from Syspro, depends on it for a variety of information essential to the company’s successful providing of services to its customers. “Our ERP system gives us information on inventory, scheduling, production, production efficiencies, and materials ordering, as well as financial information,” Noland explains. “We also have our own homegrown databases to track quality issues and any non-conformances.”
Each shipment from Pharma-Tech to Johnson & Johnson is accompanied by an electronic notification that the shipment is en route. In a similar fashion, once each week, Johnson & Johnson sends Pharma-Tech an XML-formatted file containing a forecast for the products the contract firm needs to provide. “I take their forecast and import it into our system, and we use that to schedule our production,” says Kristin Brown, customer service and planning manager at Pharma-Tech. In the next step, Brown uses the electronic forecast to do the materials planning for the customer. “We receive the forecast file and then go in and do the planning for them,” she says. She connects with the Johnson & Johnson SAP system through the pharmaceutical company’s SAP portal. “We see their inventory and sales, and then we do the planning and supply chain work for them,” Brown adds.
Still, many of Pharma-Tech’s customers are smaller drug makers that continue to use purchase orders, sales forecasts, and other non-electronic means of communicating with the contract firm. For quality-related issues, Pharma-Tech’s quality department sends the appropriate forms to the customer’s website or portal.
“For the most part, with our smaller customers,” Brown says, “they email us their purchase orders, and we manually type them into our system. For a broad supply chain view, it’s better to have all the information imported directly into our system.
“Overall,” she adds, “If we had more electronic connections with our customers, it would bring improvements, including better planning, better decision making— for our own company and for the customers as well — greater visibility, and the ability to order in bigger chunks. And it gives us better flexibility in scheduling the workload.”
Pharma-Tech also is able to share certain financial information with customers. For instance, the company shares pricing data for raw materials used to manufacture their products. If the cost of raw materials goes up during the year, Pharma-Tech is able to recover the variance in the purchase price by pulling the purchase information out of its database into a spreadsheet that displays the variances. “If there are price changes during the year, we want to get the money back if the cost of goods went up, or we may have to reimburse them if the costs were lower,” Brown explains.
“The CMO will provide an overall ‘statusing’ of which codes were used, which were not used, and which were for products that were pulled for quality sampling, or where the labels did not come out right and the product was scrapped,” says John Danese, Senior Director of Life Sciences at Oracle Corp., one of the leading ERP vendors.
Despite the apparent benefits, many pharmaceutical companies have been somewhat slow on the uptake to embrace the sharing of various kinds of information with contract suppliers. “I think the bus is about half full, with some pharmaceutical companies yet to get on board,” Danese observes. “For some CMOs, their idea of advanced communications is a fax. There is a broad spectrum of maturity among companies in the way they deal with their partners.”
Looking ahead, Danese believes that in the next few years, the industry will more fully embrace the electronic sharing of product quality information between pharma companies and their outsourcing partners. “The exchanging of quality information electronically is a bit down the road,” he says. “I think we’ll see a larger uptake in the next three to five years.”
In fact, the sharing of quality data has historically been an area where pharma firms have lagged. While most pharmaceutical firms have a CAPA system in place, those systems’ lack of connectedness or integration to larger systems such as ERP has been a serious stumbling block to information-sharing between drug manufacturers and outsourcers. One reason is that CAPA systems often are not connected with other plants or with systems that can measure overall process effectiveness.
Nonetheless, connecting CAPA with ERP promises huge potential benefits. The chief goal is to ensure that everyone who needs to know about — or act upon — production miscue or quality problems, has easy and immediate access to the necessary data. The ability to both trace a batch of material to the source as well as to access all documents associated with it through the production journey can be very helpful in correcting and preventing future occurrences of similar problems.
Compared to the pharmaceutical industry, the high-tech industry is light years ahead in terms of information sharing with contract partners. Of course, outsourcing has long been a way of life for electronics firms, which often have little or no manufacturing of their own, but instead depend on an entire ecosystem of semiconductor foundries, assembly makers, and test providers to handle production. Many high-tech companies outsource logistics and warehousing as well, and some even outsource every aspect of their business.
But in a highly regulated industry like pharmaceuticals, there is an even greater need for information sharing and stronger ties between manufacturer and CMO. “We see pharmaceutical companies sharing quality data both ways, manually and electronically,” says Elaine Schroeder, vice president of sales at Pilgrim Software, a provider of quality and compliance management systems.
From a quality standpoint, OEMs must first certify the supplier through an audit to determine that the contract firm adheres to standard operating procedures and GMPs. For instance, if a packaging non-conformity has been identified at the CMO, the pharmaceutical company may require the outsourcer to report on the problem electronically. “Pharma companies that have a quality management system may require the packager to respond through their supplier portal,” Schroeder says. “But some respond through faxes or other means,” she adds.
“Usually if the pharma company issues a change in supplier materials, they will communicate this through a supplier portal,” Schroeder points out. On the sharing of CAPA data, Schroeder says, “It’s not all that complex to have one CAPA system feed another CAPA system.”
Yet another challenge facing many pharmaceutical firms is, ironically, an internal one — too many versions of the same ERP system that have yet to be consolidated into one. This lack of consistency within an organization inhibits the smooth sharing of data with outsourcers. “We have a well-known medical device company with three versions of SAP that don’t communicate with each other,” Schroeder says. “Another client has more than 60 versions of their call-center software, so they are not even treating their customer complaints in any homogenous way.”
Companies that have a manufacturing execution system (MES) in place have a leg up when it comes to collaborating with contract suppliers, Schroeder explains, because they have more detailed production data already on tap. Certainly in the high-tech industry the use of an MES with web-based access at both the electronics manufacturer and the contract outsourcer provides:
Much of the impetus to adopt these technologies in the pharmaceutical business can be attributed to action on the part of regulatory agencies. “I think the regulatory bodies are providing the push in certain sectors of the industry, such as in the medical device area,” Schroeder says. Device makers are required to do electronic submission of product deficiencies or non-conformances to a regulatory agency, she adds.
Published in the February 2013 issue of Pharmaceutical Manufacturing magazine
ABOUT THE AUTHOR
Doug Bartholomew is a journalist specializing in manufacturing, technology and finance. His articles have appeared in New York Magazine and Los Angeles Times Magazine, and he is a former senior technology editor for IndustryWeek and senior writer at InformationWeek.
PharmaManufacturing.com is the site for knowledge, news and analysis for manufacturing and other professionals working in the pharmaceutical, biopharmaceutical and biotech industries.