There’s no question that pharmaceutical and medical device production has become more complex, especially with the growing number of biologics and combination products. These products come with their own set of complicated production challenges and supply chain risks. As life sciences companies outsource to better scale and contain costs, complexity only increases. With more manufacturing functions externalized — and outside of direct oversight — ensuring continuity of processes, regulatory compliance, and accurate, high-quality data from start to finish is difficult.
“It used to be that if a company did any outsourcing, it was primarily limited to sourcing raw materials,” said Daniel Matlis, founder and president of Axendia, a life sciences industry analyst firm. “But as a compounding number of companies began to go outside their four walls, they discovered opportunities to reduce cost and shed non-core competencies. Now, many aspects of manufacturing are handled by contract organizations.”
As the supply chain expands, it’s absolutely essential for companies to maintain complete visibility with contract manufacturing organizations (CMOs) on good manufacturing practices (GMP), quality processes and data. Further, life sciences companies should make it standard operating procedure to carefully review GMP data generated by CMOs so they have the insights they need before approving batch lots for release. All too often, companies don’t have easy (or any) direct access to CMOs’ systems and so often skip this important step.
Demand for manufacturing outsourcing has grown steadily, from $800 million in 1998, to $2.5 billion in 2014 and is expected to reach $4.1 billion by 2019, according to a recent survey on contract manufacturing from High Tech Business Decisions. Today, the U.S. is the largest market for contract manufacturing worldwide. In total, 80 percent of the active pharmaceutical ingredients consumed in the U.S. originate in India and China, and about 40 percent of the finished products come from outside the U.S. Europe lags slightly behind, but growth is expected from developing regions such as Asia Pacific, with the Japanese market projected to register a compounded annual growth rate of 13 percent.1
That’s the good news, but increased outsourcing also adds several degrees of complexity to an already complicated process. As life sciences companies relinquish a level of control over the manufacturing process in return for lower costs, they open the door to diminished transparency. Without worldwide supply chain visibility, quality can suffer. In fact, a number of popular prescription drug products manufactured in India were recently banned from U.S. importation due to quality concerns — these include acne treatment Accutane and the antibiotic Cipro. These issues continue to grow, driving the U.S. Food and Drug Administration to increase its local presence throughout the world.
“We now have offices and inspectors in New Delhi and Mumbai, India, as well as China, Latin America, South Africa and a growing cadre of international inspectors elsewhere,” said Dr. Margaret Hamburg, former commissioner of the FDA, during a 2014 interview. “We’re trying to achieve the same levels of inspection, enforcement and compliance that we would expect of any company manufacturing drugs for consumption by the American public,” Hamburg said.2
“Unfortunately for the life sciences industry, there have been a number of challenges associated with contract organizations, which has put a finer focus on the need for control and visibility into what happens at suppliers,” said Matlis. “Regulators are well aware of this situation.” In fact, of the 20 warning letters issued by the FDA Center for Drug Evaluation and Research Office (CDER) of Manufacturing Quality in 2015 — more than half were related to cGMP.
Despite the government effort, manufacturers are still dealing with tragic manufacturing errors that are not always discovered until it’s too late. For example, Heparin, a popular blood thinner manufactured in China, was contaminated by someone upstream in the supply chain. A cheaper, incorrect active ingredient that tested just like the right active ingredient was substituted in the manufacturing process. The drug made it into the U.S. supply chain, causing a large number of patients to become ill.4
Vigilant supply chain visibility is the key. It provides the crucial system of checks and balances that often go missing when a company moves critical stages of its manufacturing process to outside vendors. As the supply chain becomes more complex and thus more risky, companies are finding that they need to adapt their quality systems to address these risks.
TROUBLE WITHOUT TRANSPARENCY
For life sciences companies, transparency means visibility into the manufacturing process, timely access to data and content, and an accurate audit trail of all activities. Often, companies do not learn about issues that can hinder the delivery of a finished product until it is too late either because the supplier is trying to resolve the problem on its own or the manufacturer is never made aware. Life sciences companies try to prevent problems by maintaining frequent communications with contracted organizations, often via phone or email, but this is not practical, sustainable or secure.3 When exchanges of vital information between companies and CMOs rely on paper-based and manual processes that involve many people reading and transcribing emails and faxes — errors are bound to occur. As problematic, there is no consolidated audit trial of these exchanges, making it nearly impossible to confirm and manage.