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.
Another factor driving the increased use of technology for information sharing between pharma companies and contract manufacturers is the need to provide serialization of products to facilitate tracking and tracing. For instance, some larger pharma companies are using their ERP systems to provide the serial numbers to be used by CMOs, which in turn, communicate back to the pharma OEM a status report.
- Demand signs to the contract partner
- A view of current production status at key points
- Quality data
- Data for measuring supplier performance
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.
“There is a great deal of interest in expanding connections between pharma companies and their contract manufacturers,” Schroeder adds. “But the contract manufacturers look at it as a way to get a competitive advantage by having a QMS in place.”
Still another stumbling block preventing the industry from fully embracing more IT systems for collaborative purposes is a widespread concern among pharma companies over exposing their proprietary information to others. “The pharma industry still has a real fear of exposing their quality systems to suppliers,” says KR Karu, pharmaceutical industry solution director at Sparta Systems, a provider of quality management systems.
“When it comes to the business systems, there is a back-and-forth of data sharing between systems,” he says. He cites just-in-time ordering data utilizing shared inventory information, shared purchasing information and other supply-chain data that is routinely provided by pharma companies to their outsourcers, and vice-versa. Not so, however, with product quality data, which often is kept within the manufacturer’s systems.
By contrast, Karu points out, “In the high-tech world, the electronics firms’ partners are in their systems as if they work there.” Although most pharma companies adopted quality management systems years ago for use inside their own firms, few were willing to share that data with their contract suppliers. The result has been that many drug companies now find themselves handling quality issues the old-fashioned way. “Now that the industry is moving to more of a real supplier base, pharma companies are dealing with quality problems through phone calls, faxes and emails,” he says. “There are quality issues falling between the cracks, I am sure, as a result.”
The gains to be had by sharing quality data, however, far outweigh any concerns over data security, asserts Sparta’s Karu. “For example, when you have a manufacturing deviation, you are not sure what the cause is, and having all hands on deck throughout the supply chain is important,” he says. “You need visibility and transparency across the organization. If you have a supplier that fails, you need to know right away, so you can find another supplier somewhere in the world who can provide this service.”
Standardization of data is another key area for collaboration between the pharma firm and the contract provider. “One of the top life sciences companies is working with us to take standard procedures and standardized data so that everyone is doing things the same way,” explains Ken Rapp, managing director and senior vice president at Accelrys, a provider of lab execution and management systems. “As a result, we are now getting real transfer of process data between systems.”
This kind of connectivity between systems at different partner companies has been extremely difficult up until now, Rapp asserts. “It’s been nearly impossible to get the job done in the past, but I think there is change afoot,” he says. “Today we have tremendous pull between the supply side and the partner side to get this done.”
As an example, Rapp cites a pharmaceutical client that depends on Accelrys to keep close tabs on what’s happening at its suppliers’ labs. “We have a customer with three contract suppliers that they monitor closely. They run a dashboard every day to see what’s going on with the manufacturing process at their three partners,” he says.
“It’s become a critical need for our customers to know what’s going on,” Rapp adds. “They want systems that include process informatics, and they want them faster, easier to deploy, and with shorter times to get to the benefit. We need to broaden the number of companies that can take advantage of these systems.”
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.