Better by Design

Intent on making the virtual manufacturing model work, pharma's collaborating in new ways to drive risk out and quality into extended supply chains

By Doug Bartholomew

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As the pharmaceutical business moves closer to the virtual manufacturing model, the need to manage quality and risk across the extended supply chain has emerged as a front-and-center challenge to the industry.

Today the virtual model is embraced on a grand scale by the large OEM drug firms. The giants of the industry view it as a cost-effective approach to extending their supply chain to serve emerging markets. At the same time, it enables them to quickly and cost-effectively add new manufacturing capacity worldwide. 

“Over the last three to five years, pharmaceutical companies have started moving 30% to 50% of their manufacturing to contract manufacturers,” says Hussain Mooraj, director, Life Sciences Supply Chain Practice at Accenture. “But as these strategies were adopted, the companies needed a new way of operating.”

In fact, many pharmaceutical firms are struggling to manage their suppliers. “Every company I visit is struggling with this — it’s going to be the issue du jour for the next couple of years,” says KR Karu, director Pharmaceutical Industry Solutions, Sparta Systems, a quality management systems vendor. 

He cites the experience of a drug firm that recently received an FDA warning for not properly managing its suppliers — specifically, not properly evaluating them, and failing to verify that they had a corrective and preventive action (CAPA) system in place. “All suppliers need to be following GMPs and need to provide proof of that,” Karu says.

COST REDUCTION THE CHIEF GOAL
It’s no secret that most drug manufacturers made the decision to outsource production to a CMO as a way to reduce costs. But product quality can suffer as a result, if proper safeguards — in the form of processes and technologies — aren’t put in place. The rub here is that all too often, the connections between drug manufacturers and their suppliers dealing with quality problems often consist of emails, spreadsheets, faxes and phone calls — not exactly the kind of cutting-edge technologies one would expect multi-billion-dollar companies to depend on in a real time, digital age.

“It’s so much harder to manage a business that way, because if you have a quality issue or some other supply problem, days can go by before all the relevant knowledge gets to all the people,” says Brian Daleiden, senior vice president, marketing at Tracelink Inc., a provider of supplier collaboration tools for the life sciences industry. “The result is that quality issues fall through the cracks.”

“We ask the question, ‘Shouldn’t you have the same level of data for your outsourced product as you do for data on product you produce yourself?’” Daleiden says. “But the problem is that it’s really hard to build the infrastructure to do that.”
According to some, that’s an understatement. “There can be information sharing enabling a pharma to engage a CMO as if it were its own facility and recall batch, training, maintenance and cleaning records, view analyst notebooks, and review process KPIs,” says Ramana Reddy, associate vice president and Practice Leader for Life Sciences at Cognizant Business Consulting. “This would make the client/CMO relationship almost completely transparent and enable partnerships on a much deeper level. This is easier said than done, and we are not aware of any partnerships with this level of integration.”

IDENTIFYING SUCCESS
Given that level of partnership is the goal, what are some best practices for quality monitoring and risk management across the virtual manufacturing and supply network? What does outsourcing success look like, and what technologies can help make it a reality?

One challenge the industry continues to wrestle with is the need to integrate a variety of different information formats and information systems. While the typical pharmaceutical firm has an enterprise resource planning (ERP) system in-house, it may or may not have any kind of smooth communication links with the various different ERP systems in use at the company’s suppliers. “There is an underlying technology gap out there,” Daleiden says. “For companies that may have 30 to 50 different external supply relationships, you could have the same number of unique technology environments for bi-directional information sharing.” 

On the technology side, some pharmaceutical companies have extended their ERP systems to communicate key production data with suppliers. Still others use online portals as a platform for exchanging inventory, batch and other information. “ERP is an excellent tool inside your organization, but there are tremendous challenges to extend it into a network,” says Mooraj. “That’s the hurdle these pharmaceutical companies faced.”

Cognizant’s Reddy agrees, adding, “Most ERP systems and best-of-breed MES (manufacturing execution system) tools offer the possibility of achieving a ‘virtual enterprise’. However, achieving this in practice requires more than the underlying technology, but the experience of successfully deploying these systems across a global network.” 
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  • <p>Good piece, Steve.</p>

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