junij 2009

VOLUME 8, ISSUE 6

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Departments7. FROM THE EDITOR

H1N1, Shamanism and ShameWhen theres so little that we can control, are todays flu solutions mere amulets?By AgnEs sHAnlEy, EDITOR In CHIEF

9. DIgITAl InsIgHTsOnline Video, Nalts and Bikini Girl InspirationsMerck by day, YouTube by night.By MICHElE V. WAgnER, sEnIOR EDITOR, DIgITAl MEDIA

10. UpFROnTPfizers green gaba; stem cells; the inspection burden; bio QbD

15. COnTRACTOR CORnERSymyx blends IT and QbD; contracting news and notes

37. pHARMAVIEWThe Few, the Proud, the CertifiedThe first CPIP grads share experiences.By pAUl THOMAs, sEnIOR EDITOR

41. MARkETplACE

41. ClAssIFIEDs

42. THERApEUTIC DOsEBeam Me Some Data, Scotty!The satellites are there, lets use them.By EMIl CIURCzAk, COnTRIBUTIng EDITOR

Features17. CHARTIng THE COURsE OF

QBD IMplEMEnTATIOn While everyone agrees that QbD makes sense, Europeans and Americans appear to be taking dif-ferent approaches. By AlCIA TBAR pREz AnD AnTOnI RUIz pUIgDOMnECH,

DEVElOpMEnT TEAM COnsUlTIng, s.l.

25. The Impact of Inventory Turns on Speed, Quality, and CostsBy creating low-inventory environments, pharma can establish the Leanness that it needs.By ROBERT E. spECTOR, pRInCIpAl, TUnnEll COnsUlTIng

30. QUAlITy CIRClE: pROCEss VAlIDATIOn gUID-AnCE

Two experts, two fresh looks at the draft guidance.By JUsTIn O. nEWAy, pHD, AEgIs AnAlyTICAl CORp.;

BIkAsH CHATTERJEE, pHARMATECH AssOCIATEs

32. EnsURE ROI FROM yOUR RMM If youre adopting rapid microbial methods, youll need to be able to make a clear business case for the technologies. Heres how.By MICHAEl J. MIllER, pH.D., MICROBIOlOgy COnsUlTIng, llC

38. ACETOnITRIlEs sIlVER lInIngA crisis can be a good thing, if it leads to positive change. Responses to last years acetonitrile short-age offer a case study.By pAUl THOMAs, sEnIOR EDITOR

Cover Feature20. THE OpEx BlACk HOlE: ARE yOU

pART OF THE sOlUTIOn, OR THE pROBlEM?When it comes to operational excellence, middle manag-ers can be seen as the problem though theyre more often the solution. Experts weigh in on how to fill your OpEx voids, and results of our annual readers survey.By pAUl THOMAs, sEnIOR EDITOR

Pharmaceutical Manufacturing (USPS number 023-188) is published monthy except bi-monthly in July/Aug and Nov/Dec, by Putman Media Inc. (also publishers of Food Processing, Chemical Processing, Control, Control Design, and Plant Services), 555 W. Pierce Road, Suite 301, Itasca, IL 60143 (Phone: 630-467-1300 Fax: 630-467-1179). Periodicals postage paid in Itasca, IL and at additional mailing offices. POSTMASTER: send change of address to Pharmaceutical Manufacturing, Post Office Box 3431, Northbrook, IL 60065-3431. SUBSCRIPTIONS: To receive a complimentary subscription go to www.pharmamanufacturing.com. Subscription rate for non-qualified U.S. subscribers is $68/yr. Single copy rate is $15.00. Foreign rate is $115/yr. (surface mail) and $200/yr. (airmail). Copyright 2009 by Putman Media Inc. All rights reserved. The contents of this publication JUNE not be reproduced in whole or in part without consent of the copyright owner. Reprints are available on a custom basis. For a price quotation contact [email protected]. Subscriptions/Customer Service: (888) 644-1803

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from the editor


H1N1, Shamanism and Shame33 years after the last Swine flu scare, we still cannot seem to make flu vaccine and antiviral manufacturing any more predictable. are todays solutions like amulets whose power cannot last?

have a fever? grab a mask from the stack.

the threat of danger always brings out the worst in people. Consider the hysteria wrought by the H1N1 flu outbreak this Spring. China detained and evicted over 80 healthy Mexican citizens, neighbors of recovered flu pa-tients welcomed them home by shunning them, and coun-terfeiters sprang into action with fake Tamiflu capsules and Relenza inhalers, at five times the market price.

This was a time for conspiracy theoriesH1N1 was cooked up to kill Mexican tourism and awaken overzealous border patrolling, said one theorist. Reporters ran with a casual statement by an Australian researcher, Adrian Gibbs, who speculated that the virus might have been accidentally leaked from a government lab. (Accidentally or intentionally? asked the lunatic fringe.)

As the media fanned the flames, its coverage of the flu outbreak also triggered the nocebo effect in many otherwise rational people, who began to feel as if they were coming down with something. While greatly saddened by news of the deaths from the flu, I wondered why the media felt compelled to focus on each and every fatality.

Then came an unexpected jolt with reality, as I found myself bundling my son into a taxi at 4 a.m. to go to the E.R. He had developed a fever and flu-like symptoms for the second time last month, only now his fever was raging and had seriously weakened him.

A surreal scene awaited us: 2,000 miles from Mexico City, the lobby of this huge hospital had been transformed into a flu triage center. Have a fever? Grab a mask from the stack and prepare to wait (that part hadnt changed).

Fortunately, my sons is now well and has taken his prophylactic Tamiflu dose. But, for me, our brush with H1N1 raised many questions about how mankind is approaching the flu in the twenty-first century: its still two parts science, three parts shamanism.

First, theres the inaccuracy of flu tests. Then, there is the tenuous supply of antivirals. We havent heard too much about GSKs Relenza so far, as the media seems focused on Tamiflu. At least Tamiflus supplier, Roche, and inventor, Gilead, have patched up licensing differences. But is there any wonder that the drug has been in short supply? Its derived from Chinese star anise, relies on potentially hazardous azide chemistry and, according to some sources, can take up to a year to synthesize.

Roche and Michigan State University researchers have

reportedly developed routes based on different chemistries. Will these be up and running once the dominant flu strain actively resists the drug?

I clutched our $100 box from the pharmacists gratefully, as we couldnt even get it two weeks before. But, arent todays antivirals like amulets whose power cannot last? Last year, the CDC had already discovered a Tamiflu-resistant flu strain.

H1N1 awakened long-buried memories of the last swine

flu outbreak, and a dreary school volunteer service project manning a Red Cross hotline. Spurring peoples calls was a $137-million public outreach program, which funded advertisements urging vaccination, even though the vaccines health risks were not fully known.

Of the 200 people who developed swine flu that year, one person died, while over 500 people developed neurological problems that may have been connected to vaccines released before their time. Twenty-five people died from these problems, and the director of what would later become the CDC was forced to resign.

Did the government act too soon? Maybe, yet officials took exactly the kind of decisive approach that would be needed in the case of a pandemic. Thirteen years later, at a time when we stress science and risk management, we still cannot seem to make vaccine or antiviral development and manufacturing any more predictable.

What is needed are universal flu vaccines. Fortunately, these are inching closer, but, clearly, they wont be available for a while.

We have every reason to fear a f lu pandemic. But as concerns over H1N1 mount, let us hope that we control the only thing we can: our reactions to that fear.

agnes shanley, editor in [email protected]

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Online Video & Bikini Girl Inspirations

its something we have all imagined. Quit our 9 to 5 and fulfill a lifelong dream, whatever that may be. For me, it was (and sometimes still is) joining the Ice Capades or convincing TLC to give me my very own reality television show. For Mercks Marketing Director, Kevin Nalty, its viral online video. And American Idols infamous contestant, Bikini Girl, helped these dreams come true.

Well known in the online video community as Nalts, and known to some as a viral video genius, Nalty led two separate lives: Consumer Product Director at a Fortune 100 company by day and YouTube comedian and viral video creator by night.

Nalty claims Merck knew about his alter-online ego when he was hired to market the hair-growth treatment, Propecia. However, it was only recently when his true identity was outed in the online community and Merck felt tarnished by his self-proclaimed goofball antics that Nalty decided to make a decision in his career.

Nalty recently wrote on his blog, Last night Katrina Darrell (Bikini Girl) sang Mariah Careys Treated Me Kind on American Idol 2009. Her song inspired me to quit the full-time job as a Product Director at Merck. . . . Now its full-time to follow my passion: making videos, working with Hitviews, and starting my own consulting practice that will help brands engage in social media, especially the most visceral kind: online video.

To watch, visit YouTube and search Bikini Girl Inspired Me. You might think Kevin Nalty is completely crazy. But as online video continues to reach new viewing records every month, his decision may simply be genius.

According to web tracker, comScore Video Metrix, the U.S. internet audience watched almost 16.8 billion videos on the web in April, with the average user viewing 6.4 hours of online video during the month, up 16 percent from March. Online video communities are sprouting in every industry. SciVee.com aims to educate scientists in a virtual studio through pubcasts (linking video with published text), postercasts, and video findings and commentary. PharmaTelevision, an online TV channel for the biopharma industry, offers insights and weekly interviews with industry leaders.

As the demand for industry-relevant online video continues to grow, PharmaManufacturing.com is ramping up our video efforts as well. Our editors are equipped with video cameras at major events, and our new Veeple video player offers interactive features like the ability to click on the video to find out more information about a person or company..

Stay tuned later this summer for PharmaManufacturings own YouTube channel, which will house all of our video coverage, backpack video, aggregated video content and perhaps some offbeat video from my new own personal hero, Kevin Nalts Nalty.

PM0906_09_DIGEDS.indd 9 6/11/09 1:06 PM

Upfront

10 JUNE 2009 Pharmaceuticalmanufacturingwww.Pharmamanufacturing.com

pfizers process Development Centre has be-come a focal point of the companys ongoing efforts to green its processes. We spoke with Singapore PDC site leader Stella Eccles about revamping the process of making gabap-entin (Neurontin). Editors Note: An extended version of this interview is available on PharmaManufacturing.com.

PhM: What are the essential elements of the gabapentin production process?

S.E.: A commercial raw material is purchased, and the active ingredient is prepared through the three steps of hydrolysis, reduction, and purification, and is then trans-ferred as a solid powder to the formulation plants.

PhM: How does the second-generation process differ from the first?

S.E.: The major difference is that chemical steps have been combined, allowing the removal of an isolation from the process. The entity undergoing the reduction was changed and this facilitated multiple chemical transfor-mations in water. The green process is primarily water-based. Some solvents are required but they were selected to be easily recovered or biodegradable. This is in stark contrast to the first-generation process which was solvent-based and the mixture of solvents made recovery difficult.

PhM: What were the key challenges you faced?

S.E.: Two serious attempts were made to replace the first-generation process in 2001 and 2002 and both were unsuccessful. One, while very attractive financially, produced a large quantity of an insoluble waste inorganic salt that would require incineration. The process was not progressed on environmental grounds.

The now successful green gabapentin process took earnings from earlier efforts and coupled these with new purification breakthroughs developed in the PDC. Because gabapentin has high water solubility, the main challenge was to ensure maximum product recovery from an aqueous crystallization matrix. Other challenges included meeting the high quality specification. . . .

From a plant operations perspective, technical transfer

and implementation of the new process brought the customary challenges relating to achieving full regulatory approval in all markets with consequent need for multiple changeovers and proactive supply chain management.

PhM: The new process involves the use of water in place of methanol in two key steps. What is the significance of this in terms of environmental benefits?

S.E.: The green process not only replaces methanol but other solvents and reagents. There is obviously an environmental benefit from the reduction in the volume of methanol . . . In the first-generation process, the steps which use methanol as the reaction solvent also involve its removal by distillation. Distillation consumes energy, so this is an additional environmental benefit.

PhM: What can you share in terms of cost benefits?

S.E.: Because of the high tonnage of gabapentin produced per annum, the most significant savings were in solvent costs, and other savings were realized by the elimination of other reagents. This represented a 60% financial saving.

The process throughput was doubled. This had significant energy savings, water usage savings and waste savings. Ultimately the improved process efficiency and cost savings allow Pfizer to remain competitive in the manufacture of gabapentin.

Pfizers Gabapentin Goes GreenByswitchingtoawater-basedsystem,Pfizerprolongsproductionofakeymolecule.

Inside the Singapore plant.

PM0906_10_14_UPF.indd 10 6/11/09 1:07 PM

Upfront


One in a Million: Directing the Adult Stem Cell

Stem cellS really do hang in the balance waiting to change.

laSt qUarter, NanoInks Nano Stem Cell division entered into joint research and licensing agreements with the University of Liverpools Center for Tissue Engineer-ing and the Glasgow-based Center for Molecular Nano-metrology at the University of Strathclyde. We spoke briefly with Liverpool principal investigator Professor John Hunt at the Center for Tissue Engineering, to discuss the ongoing research. (For the entire interview, please visit PharmaQbD.com.)

PhM: When did you start to look specifically at stem cell applications, and what role can nanolithography play in improving their development?

J.H.: Weve been involved in stem cells for about eight years now. Were using nanolithography to present functional chemical groups, these chemical groups that are naturally found in the extra-cellular matrix within the body, and provide those on surfaces to stimulate stem cells down different lineages.

Its almost infinitely variable what you could present to stem cells to trigger their differentiation because they really are cells waiting to be triggered. Any mechano-transduction or physical effect, any environmental change will trigger a change in stem cells. They really do hang in the balance waiting to change.

PhM: What are the biggest breakthroughs youve seen in your research so far?

J.H.: Weve learned that, by defining the substrate, you will be able to direct stem cells. Were working with hu-man adult stem cells. There are fewer of these cells [than embryonic stem cells in embryonic tissue] but if you can provide the right substrate you can get them up in num-ber without having them differentiate or degrade in terms of genetic profiles, so you can deliver a therapeutic dose of the right kind of cell.

PhM: Working with adult cells would eliminate the ethi-cal issues posed by working with embryonic stem cells. But how do you harvest the adult cells, and derive an adequate supply?

J.H.: Weve been taking a minimally invasive approach. We know we can get these cells from bone marrow. But once you have the tools to provide the substrate for a smaller number of cells you can work with other types. Weve been deriving pre-endothelial cells, so lets change the term from stem cells to progenitor cells.

We can take from adult whole blood those cells that want to become blood vessels.these cells are as rare as one in a million.we can take them out, purify them

and take them forward as a homogeneous population to produce the endothelium blood vessel lining. . . .

PhM: How do you capture one in a million?

J.H.: Weve used some commercially available techniques, such as magnetic bead and flow cytometry isolation tech-niques. Both work, but have limitations. With magnetic beads, you end up with a ferromagnetic particle with your cells, which is challenging, particularly if you work with stem cells because theyre affected by that. Theyre af-fected by everything, remember. You need to get that out sooner rather than later.

PhM: How do you do that?

J.H.: You enzyme digest the surface of the cell to let go of all its receptors and the particle at the same time. Stem cells equally respond to that, and they change.

PhM: How much time do these techniques require?

J.H.: With high-speed flow cytometry it takes three hours to stabilize the fluidics, and then, it may take up to anoth-er six hours to get your population of cells. So its a long and, often, a high-risk day. If you get two or three of these done in a week people start to look quite stressed out.

Its quite challenging technically and you really do test

PM0906_10_14_UPF.indd 11 6/11/09 1:07 PM

the commitment of your team with that approach. When you take on these projects you naturally subconsciously start to come up with better techniques, you realize that there are better ways.

PhM: How would you, generically, describe your purifi-cation techniques?

J.H.: They are passive, specific techniques. There are a number of levels that have to be understood and con-trolled with stem cells: their source, their isolation, their use or handling in vitro, i.e. the kind of substrate and the kind of environment you present to them, their prolif-eration and their delivery, which could be an in vitro diagnostic tool or test or an in vivo cell therapy. Either of those is wonderful outcome, but you need a defined

population of stem cells, and in the required number, to take your application forward.

PhM: How do you increase the yield?

J.H.: Very interestingly, weve learned that you can increase the number of stem cells in a body using growth factor treatments . . . for cancer therapies, for example, certainly hematopoetic stem cells number can be in-creased with colony stimulating factor. Thats a regular pretreatment for chemotherapy patients, to get their sys-tems already defending and on a high state of alert before the therapy even starts.

You can take a much more practical, less invasive approach. Just getting your blood donors to use the stairs instead of the elevator will improve the population.

UPfront


BecaUse of the size and complexity of bio mol-ecules, biopharmaceutical implementations of QbD have lagged behind those of small molecules. But, says Lynne Krummen, Genentechs senior director of regu-latory affairs, this is finally changing. The bio-QbD conversation is now moving from one of concept to one of implementation, she says. Krummen was one of many speakers who addressed the topic of QbD in biopharma at Mays BIO conference in Atlanta. Some talks are summarized here.

Genentechs Pilot with fDaKrummen shared information from Genentechs par-ticipation in FDAs pilot program for biologics QbD. The company has gotten two proposalsone for a new product, one for an expanded change protocol on an approved drugaccepted into the program, though it will be some time before it files for approval with the Agency, she says.

Regarding the drug for the new biologics license application (BLA), Krummen did not share proprietary details but did say that it is MAb-based and that Genentech is leveraging its history and development of MAbs. It is also in the process of applying risk assessment tools to identify Critical Quality Attributes (CQAs), identify process parameters, Critical Process

Parameters (CPPs) and Design Space, and leveraging the above to develop an appropriate process control strategy.

For the change protocol, Genentech is proposing an expanded comparability protocol, a mechanism that FDA has established (and is under consideration in the E.U.). It involves working closely with regulators in the U.S. and E.U. on Design Space issues.

the a-MaB case stUDyNext, Krummen discussed the efforts of the CMC Work-ing Group, comprising representatives from her company, as well as Pfizer, GlaxoSmithKline, Eli Lilly, MedIm-mune, Amgen, and Abbott.

The groups current case study is based on a fictitious antibody drug substance and drug product call A-MAb, Krummen noted. The case study is being designed to illustrate key principles of QbD beyond those presented in last years ACE study, and will be available as a teaching tool for industry and agencieshopefully by the end of summer, Krummen says.

Bio QBD: Better late than neverAlso at BIO, senior BioProcess Consultant Patricia Sey-mour shared her views on the forces driving biotech. (For full interview, visit PharmaManufacturing.com)

Notes from BIO 2009: Bio QbD Rises, as Does Regulatory Burden

PM0906_10_14_UPF.indd 12 6/11/09 2:41 PM

PhM: Broadly speaking, what are the greatest challenges you see facing biopharma this year?

P.S.: First and foremost, theres the economy. Were seeing a lot of companies in wait and see mode, where their development efforts are being put on hold. Exciting drugs just arent moving forward as quickly as one would have hoped,

Theres also pressure from healthcare reform. It could take many different shapes depending on how it all gets negotiated and agreed upon. A big component of that willbe biosimilars. This topic has been a big issue in Europe for a couple of years, ever since they enacted regulations allowing for a separate pathway to biosimilars approval.

PhM: Are you seeing the concept of QbD taking root in biopharma?

P.S.: The challenge is that if you do [QbD] too late in development, youve lost an opportunity to leverage the most return . . . but better late than never.

We are seeing companies involved in QbD push it further down in the development cycle. They understand that it they can do these things sooner they will have better quality product, tighter parameters for manufacturing, and will have a system in place that will make it easier to make changes to a process.

Uptake of QbD has not been nearly as widespread as early advocates had hoped. . . . But big biotech companies are using its principles.

PhM: Do you see FDAs draft valida-tion guidance having any impact on the way people approach validation?

P.S.: Yes, the industrys approach will change for the better. QbD and

validation work well together.Youre not going to get away from the three conformance lots, thats still go-ing to happen for first approval . . . but if youve implemented based on the QbD philosophy, youll have all your data and will continuously add to that data set so if you do make changes to processes post approval, the SNDA will be much simpler because youll already have data to prove that changes wont impact the manufacturability of your product.

Like most guidance docs, it is sufficiently vague so that first adopters will set the bar on expectations, but were optimistic.

$400K Per Day to SuPPort an InSPectIon?We are seeing an increasing fre-quency of inspections from FDA

and the rest of the world, said John OConnor, PhD, senior director of Corporate Inspection Management for Genentech. The question is, whats the value of a duplicate inspec-tion? We dont believe it adds value to the product. But it costs us.

OConnor told a crowd at BIO that, by company estimates, it costs $130,000 to $400,000 per day to support an inspection, and 1,000 to 2,500 person hours.

Sure, inspectorates need guarantees that regulations are met, and are there to ensure safe medicine for the patient, says OConnor. But inspections carry not only significant costs to the manufacturer, but to the agencies who perform them as well. The concern that I have is that these resources arent being directed toward other quality efforts, he says.

uPfront


PM0906_10_14_UPF.indd 13 6/11/09 2:41 PM

OConnor also shared data on the habits of regulators during their visits. The most intriguing nugget: While FDA spends approximately 75% of its time on site reviewing documentation (and thus 25% touring the facility), EMEA is just the opposite, spending three-quarters of its time touring. Other major global regulatory agenciesJapan, Brazil, Korea, Mexicospend more time on documentation than touring, OConnor notes.

RegulatoRy BaBel: anotheRCase foR haRmonizationThere are several key challenges to regulatory harmoni-zation around the globe, says Birgitte Holst, Manager of Manufacturing Science & Quality at Novo Nordisk. Until they can be resolved, harmonization will be just a dream, she told an audience May 19 at the BIO conference. And without harmonization, the regulatory burden on individ-ual companies will be unreasonable. Regional differences cost money, she says.

Editors Note: A summary of Holsts talk and a podcast interview are available on PharmaManufacturing.com.

One of the primary challenges Holst outlined involves different regulatory terminology used around the world. These differences result in confusion, double workload, and misinterpretations, Holst says. The table above is a summary of validation terminology differences, courtesy of Holst.

uPfRont


Disharmony: Differences in ValiDation terminology

term eU gmP (ich Q7a) fDa Draft (2008) iso 9000 ich Q8

Validation X X

Quality Characteristic X

Critical Quality Attribute X

Process Validation X X

Process Design X

Design and Development X

Process Performance Qualification*

Qualification Process X

Process Qualification X

Product Performance Qualification*

Qualification X

Verification X

Continued Process Verification X X

In-process Control X

Design Qualification X

Review X

Installation Qualification X

Operational Qualification X

Performance Qualification X X

* Terminology from old FDA guidelines; Information courtesy of Birgitte Holst, Novo Nordisk

PM0906_10_14_UPF.indd 14 6/11/09 2:48 PM

CONTRACTOR CORNER


By Agnes shAnley, editor in Chief

Speeding Time to Clinic With GMP Knowhow and High Throughput Screening

IN ApRIl, Symyx Technologies launched a Con-tract Development and Manufacturing Organization (CDMO) with the goal of helping biopharma com-panies move new drug candidates from discovery to clinical trials faster and more reliably.

At BIO 2009, we spoke with Eric Carlson, Symyxs vice president of life sciences, and Matthew Pino, the companys director of business operations, for their views on why the discovery-to-clinical space is becoming more important in the evolution of pharma outsourcing, and how high-throughput screening must evolve to meet the needs of biopharma.

PhM: Why did you decide on launching a CDMO, rather than a contract R&D company?

E.C.: If you look at how most contract organizations are set up today, theyre typically either contract research or contract manufacturing firms. In the first case, theyre primarily focused on managing clinical trials and doing some development and research work to support that effort, or theyre mainly interested in the manufacturing side, and commercialization or commercial product.

What were trying to do is to focus on how to best take a product out of discovery, and provide all the services needed to develop it get it into the clinic efficiently, to provide data to customers that will enable them to make the right decision. With demand to get product through the clinic and expedite the process, we want to focus on providing all the services needed. Recently, big pharma companies have begun to change their outsourcing model to allow them to focus on discovery and to outsource more of their development business so they can get product to clinic as soon as possible and make better, faster decisions.

Our services are set up around this newer outsourcing model. We do preliminary formulation screening, formulation development and optimization, and also we have GMP experts on staff who understand what is needed to put a product into a commercially viable format and meet all the regulatory requirements.

So our processes, quality systems, tech transfer

and project management goals are to make the move from discovery to clinic as seamless as possible for customers. As we leverage Symyx technology and automation, thats where we see benefit. Our end game is not commercial manufacturing but the clinic.

PhM: Is the concept of Quality by Design something that you incorporate into your work?

E.C.: QbD is really just a catch phrase for standard-ized methodologies, a process through which you do things right based on science and regulatory require-ments, and then statistical models to show that data have validity.

M.P.: We feel that our software enables an integrated approach, because you can get data from a very early point in development all the way through to manu-facturing, and be sure where those data are coming from. We aim to be more of an integrated partner with customers, and transparent data transfer is critical to eliminating the black box approach to contract research, and establishing a partnership.

PhM: Are pharma companies becoming better at le-veraging IT to facilitate this degree of connection?

M.P.: Absolutely. We can point to several different examples where our technology allows us to run small-scale high-throughput experiments, each generating lots of data. Using our software, were then pushing our experimental data out to the IT structure of clients labs, so that we become a virtual extension of their labs and their scientists access and use the design data as it comes out.

PhM: How has high-throughput screening changed in the last few years, and how is it being made more relevant to biopharma R&D?

E.C.: If you look at its history, it is mostly thought of as a discovery tool, mainly for small molecule type re-search. The approach there, generally speaking, is that youre doing very high throughput experiments. Each

PM0906_15_16_CC.indd 15 6/11/09 1:10 PM

experiment is rather simple, with low information content, mainly yes/no screens, but youre doing lots and lots of them.

With biologics, you need much more of a focus on what youd

need with materials science and development, where you cant just do yes/no screens. In biopharma, you need much more information, and may need multiple types of tests to make multiple decisions

to automate more complex sample preparation and track samples throughout process.

PhM: What ROI do you find?

E.C.: We generally look at produc-tivity enhancement. Weve seen 5- and 10-fold increases in produc-tivity, because each individual sci-entist can run many more experi-ments. Depending on where you are and what your goal is, you may do more and more studies of the same scope or you may decide instead to broaden the scope.

CONTRACTOR CORNER


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CONTRACTiNg NEws ANd NOTEsGlaxoSmithKline and Concert Pharma-

ceuticals will develop and commercialize

deuterium-containing medicines togeth-

er. Deuterium, a hydrogen isotope, can re-

place hydrogen molecules in therapeutics.

GSK also contracted with Unicep

Packaging, Inc. (UPI) to provide turnkey

packaging for personal care products.

SAFC and Cherokee Pharmaceuticals

will co-market and co-sell raw materi-

als for pharmaceutical customers. SAFC

will be responsible for all sourcing, while

Cherokee will conduct analytical testing,

storage, packaging and distribution.

Lonza Group has chosen Emerson Pro-

cess Management to provide engineering,

design, automation, and control services

for a biopharma plant in Singapore.

The U.S. government awarded a $90

million flu vaccine contract to MedIm-

mune. The deal will help MedImmune

develop a vaccine targeted specifically at

the A/H1N1 virus.

Integrated Sensing Systems (ISSYS) and

Endress + Hauser announced a strategic

partnership to take E+H flow control tech-

nology to the micro scale, using MEMS

(micro electrical mechanical systems)

technology.

PM0906_15_16_CC.indd 16 6/11/09 1:11 PM


By AlciA TBAr Prez And AnToni ruiz Puigdomnech, develoPmenT TeAm consulTing, s.l. dTc

Charting the Course of QbD Implementationwhile everyone agrees that QbD makes sense, europeans and americans appear to be taking different approaches.

Quality by Design

the concept of total quality, promoted by the In-ternational Council on Harmonization and encompassed in the idea of Quality by Design, is changing the pharma-ceutical sector. Such change is visible in the way in which companies are planning and carrying out the develop-ment and commercialization of their products.

The shift from a quality by inspection paradigm to one based upon Quality by Design may be thought to have started in America in 2002, when the FDA issued its Pharmaceutical GMPs for the 21st Century [1]. This document was followed by ICH Guidelines Q8, Q9, and Q10 [2-4] which constituted what may be considered a new regulatory framework for companies around the world that wish to work under QbD.

By definition, the ICH setting is a global one, but it is the duty of the regional regulatory authorities to include these guidelines in their standards. These guidelines have already been adopted, and consequently all three ICH regionsthe U.S., E.U., and Japanare in agreement about what it means, on paper, to develop and manufacture drugs with QbD. Concepts such as Design Space, Critical Quality Attribute (CQA), and real-time release have become a part of the lingo of pharmaceutical industry professionals everywhere.

The ICH regulatory framework is designed so that manufacturers who wish to submit variations on the Design Space of an existing process, or their registration of a new product, are able to do so. In June 2008, the European Commission issued new regulations on variations of the Commercialization Authorization, which considers the presentation of a Design Space as a Type II variation.

However, by most accounts, implementation in the U.S. is occurring faster than in Europe. For example,

according to the FDAs Office of Generics Drugs, by July 2007 approximately 90% of abbreviated new drug applications (ANDAs) submitted for generics participated in the offices Question-based Review (QbR) process based upon 21st Century GMP and QbD principles [5].

One of the basic differences between the American and European frameworks is that the FDA is being more proactive in encouraging the industry to adopt QbD practices and in training inspectors on all QbD-related scientific subjects. The EMEA has also started similar programs and is encouraging all manufacturers who are thinking of filing QbD dossiers to notify the Agency accordingly in order to establish the suitable support and follow-up mechanisms. However, and despite all those efforts, we in Europe are still quite far from reaching that objective, and some manufacturers continue to report problems when submitting variationsfor example, when simply substituting NIR-based controls for traditional HPLC-based methods.

However, the EMEA has quite readily included ICH Q9 and ICH Q10 in its GMP standards. Risk management is now a must within quality management systems [6], and an impending modification has been announced with the purpose of also including the quality system defined in ICH Q10. ICH Q8, the most exacting guideline from a technical viewpoint, is, for the moment, a recommendation for product development.

implementation of ich Q8, Q9, anD Q10To get a better sense of how QbD is being implemented in different countries, we conducted a survey of profes-sionals involved in QbD at their companies (Box, p. 19). To evaluate ICH Q8 Implementation, participants were asked about the use of Design of Experiments (DoE), risk

Degree of Implementation Level/Weighing Factor

No, not at the moment. 1

No, but weve started educating ourselves and testing small projects. 2

Yes, but in an informal way, or through individual initiatives within the company. 3

Yes, there is a formal project in place. 4

Yes, it is already introduced at the corporate level. 5

PM0906_17_19_QBD.indd 17 6/11/09 1:11 PM

Quality by Design


analysis, Design Space, and PAT within their companies. Results are shown in Table 1. The highest implementa-tion indicator is the one for risk analysis, 61%, followed by DoE with 42%. Design Space and PAT are clearly below those figures, mainly because their implementation appears to be quite recent: either Degree 1 (not done) or Degree 2 (training).

Regarding Q9, the following questions were asked: Is risk analysis being used to prioritize critical-to-

quality activities? Is risk analysis being used to continuously improve

manufacturing processes? Is there a risk management process in place integrated

into the quality system?All indicators exceeded the percentage ranking of 50,

and process risk analysis is least implemented, by a slight degree. This result is reasonable if we consider that ICH Q9 has been a GMP requirement since it was included as Annex 20 to the European GMPs. From this point of view, results may even be lower than expected.

For ICH Q10, questions asked were the following: Is the company monitoring manufacturing processes

(Six Sigma, SPC, CPKs)? Is the company monitoring quality management

processes (indicators, KPIs, etc.)? Is there an ICH Q10-type Quality Manual in place?All three factors were quite even. It should be noted

that approximately 20% of the participants do not use process monitoring, have no Quality Manual, and have no project in store. Therefore, it appears that participants are polarized at the extremes for Q10 implementation.

Regional DiffeRencesTables 2-4 also illustrate differences in Percentage Rank-ings between EU and non-EU manufacturers. We must caution that this sample is hardly representativethe EU contribution is concentrated in companies based in Spain, for example. Had manufacturers from Germany, France, and the U.K. been represented, QbD adoption (and thus Percentage Rankings) would likely have been higher.

In general, Q8, Q9, and Q10 have higher ranking for non-EU countries (which may be considered to be an area of FDA influence). Differences are more evident in the following practices: DoE, Design Space, and monitoring (both manufacturing process and quality systems). While risk management is also something that is not practiced as frequently in the EU, it is implemented elsewhere.

Table 1. ICH Q8 PHaRMaCeUTICal DeVelOPMeNT

DegRee Of IMPleMeNTaTION leVel 1 leVel 2 leVel 3 leVel 4 leVel 5 SCORePeRCeNTageRaNkINg (%)

Design of Experiments (DoE) 7 9 7 8 2 88 42

Risk Analysis in Development 3 5 7 10 8 114 61

Design Space 9 11 5 4 4 82 37

Process Analytical Technologies (PAT)

11 12 4 2 4 75 32

Table 2. ICH Q8: PHaRMaCeUTICal DeVelOPMeNT (RegIONal DIffeReNCeS)

DegRee Of IMPleMeNTaTIONPeRCeNTage

RaNkINg (glObal)PeRCeNTage

RaNkINg (eU)PeRCeNTage

RaNkINg (Non-eU)

Design of Experiments (DoE) 42 34 54

Risk Analysis in Development 61 55 71

Design Space 37 29 50

Process Analytical Technologies (PAT) 32 26 40

Table 3. ICH Q9 RISk MaNageMeNT (RegIONal DIffeReNCeS)

DegRee Of IMPleMeNTaTIONPeRCeNTage

RaNkINg (glObal)PeRCeNTage

RaNkINg (eU)PeRCeNTage

RaNkINg (Non-eU)

Critical to Quality Prioritization 65 64 67

Manufacturing Process Risk Analysis 59 49 63

QRM Integration in QS 63 56 73

PM0906_17_19_QBD.indd 18 6/11/09 1:11 PM

Quality by Design


looking aheaDFrom written responses to our survey, we learned that one of participants greatest worries is understanding the criteria for evaluation and inspection of QbD activities. How is a Design Space evaluated? The answer to this question is by no means straightforward. Establishing a multi-dimensional space of input material and process parameter attributes, frequently interrelated, that defines the secure working area is considerably complex and demands specific knowledge of multivariate statistics and chemometrics.

Both FDA and EMEA have set up working groups that include evaluators, inspectors, and industry representatives in order to make joint progress towards the scientific understanding of such methods, and the development of criteria for their evaluation. However, it would indeed be good for the European national authorities to also participate in the opening

of indispensable communication pathways with those companies that have prepared QbD projects and need further clarification on which is the scenario for evaluation and inspection of these products.

The comments received by this survey point to great expectations regarding ICH Q8, Q9 and Q10 guidelines implementation in the sector. Professionals view the guidelines as extremely useful for process improvement and for decision making on quality-critical issues. The degree of implementation of Q9 and Q10 is clearly higher than that of Q8, probably due to the greater technical complexity of the latter.

Interestingly, the guideline that will likely yield the greatest financial return is ICH Q8, as it establishes the foundations of development based on process knowledge, which paves the way for a robust and flawless commercial manufacturing process. One factor delaying the adoption

of ICH Q8 is uncertainty about how QbD processes will be evaluated and inspected by regulators.

The purpose of QbD projects is twofold: to launch safer products into the market, thus showing that process and product risks are under control, and to reduce the product development costs. This is a scenario in which everybody gains something: the regulatory authorities and public gain peace of mind, and manufacturers gain competitiveness. In every part of the world, therefore, the implementation of QbD is worth the effort.

About the AuthorsAlcia Tbar Prez and Antoni Ruiz Puigdomnech are senior consul-tants with Development Team Consulting (dTC), based in Barcelona.

References1. Pharmaceutical cGMPs for the 21st Century - A Risk-Based

Approach http://www.fda.gov/cder/gmp/gmp2004/GMP_finalre-port2004.htm

2. ICH Q8 (R1): Pharmaceutical Development. Step 5, November 2008.

3. ICH Q9: Quality Risk Management. Step 5, November 2005. 4. ICH Q10: Pharmaceutical Quality Systems Step 5 June 2008.5. OGD Update on Question-based Review Submissions http://www.

fda.gov/cder/ogd/QbR/QBR_submissions_upd.htm6. EudraLex Volume 4 EU Guidelines to GMP s Part 1.Chapter 1:

Quality Management.

about the survey

Our survey was answered by representatives of 33 companies in

9 different countries (Graphic at left). Participation was indeed

limited, but the diversity of the participants, and their objective

comments, lend significance to the results.

It should be emphasized that participants were from companies

with QbD projects underway. Companies without QbD projects in

progress did not take part, so the results should not be used as a

measure of the degree of QbD implementation within the sector.

The survey asked participants to rank implementation on the

basis of five levels of implementation (Box, p. 17). The score is

obtained by multiplying the frequency of each degree by the

weighing factor. This final score is transferred to a 0100 scale to

establish a Percentage Ranking.

Table 4. ICH Q10 PHaRMaCeUTICal QUalITY SYSTeM (ReGIONal DIFFeReNCeS)

DeGRee OF IMPleMeNTaTIONPeRCeNTaGe

RaNKING (GlObal)PeRCeNTaGe

RaNKING (eU)PeRCeNTaGe

RaNKING (Non-eU)

Manufacturing Process Monitoring (Cpks, SPC) 56 46 71

Quality Monitoring (indicators, KPIs) 57 46 73

Quality Manual (ICH Q10) 55 50 62

Spain 58%

South America 15%USA 15%

Other 12%

PM0906_17_19_QBD.indd 19 6/11/09 1:11 PM

OPERATIONAL EXCELLENCE

20 JUNE 2009 PHARMACEUTICAL MANUFACTURING WWW.PHARMAMANUFACTURING.COM20 JUNE 2009 PHARMACEUTICAL MANUFACTURING WWW.PHARMAMANUFACTURING.COM

When it comes to operational excellence initiatives, middle managers are often seen as the problema black hole, if you willbut can be the solution.

BLACK HOLEELUDING

OpExBY PAUL THOMAS, SENIOR EDITORTHE

PM0906_20_24_CVRSTY.indd 20 6/11/09 1:13 PM

OPERATIONAL EXCELLENCE

PHARMACEUTICAL MANUFACTURING WWW.PHARMAMANUFACTURING.COM JUNE 2009 21

MANUFACTURER X wants to increase production capacity. Senior management gets on board and hires a Lean Six Sigma expert to conduct a Value Stream Analysis to identify areas where there is production waste. Shop- oor personnel are trained in fundamental tools of Lean production and begin the task of rooting out waste and increasing e ciency.

Its a typical scenario, says Tim Whitmore, Vice President of Simpler Consulting. And yet absent from the process are middle managers, who play the role of casual bystanders. Whitmore refers to these people as the frozen middle.

Consultant Bryan Winship of Tunnell Consulting refers to this as the black hole e ect. Top leaders sponsor the initiative, but its implemented at the grass-roots level. Middle management is le in the void (Box, below). eres a need to more fully engage all stakeholders, says Winship.

Chalk it up to immaturity. Operational excellence as a formal process is still in its nascent period within the pharmaceutical industry. Pharmaceutical Manufacturings 2009 Operational Excellence survey, a sampling of approximately 60 of your peers, reveals a gradual increase in implementation of key tools and methodologies of Lean Six Sigma (and regulation-driven practices such as Quality

by Design) over previous years (Figures 1 and 2), but most experts agree there is room for more growth.

As the era of high margins and low competition has disappeared, theres been a heightened awareness of the importance of operational excellence in pharma says Pascal Dennis of Lean Partnerships, Inc., and author of Getting the Right Things Done: A Leaders Guide to Planning and Executiion (available at www.lean.org). Still, says Dennis, its early in the game for pharma companies and as a result, operational excellence programs are bound to experience growing pains.

A HOLE IN THE MIDDLE?No matter how well-conceived operational excellence programs may be, some will struggle. As Figures 3 and 4 indicate, many companies pay lip service to operational excellence and can be preoccupied with re ghting or the bottom line. As Figure 7 suggests, upper management as well as regulators (and to a lesser degree line operators) can hinder success. But right up there as well is middle management.

Middle managers are not the problem, Dennis says. eyre o en accused of dragging their feet and causing bureaucracy, but this is more o en a failure of top management to clearly articulate

BLACK HOLE

THE BLACK HOLE EFFECT

The term black hole has been used by change management professionals for

many years to describe the change resistance that occurs when there are proj-

ect sponsorship gaps, notes Bryan Winship of Tunnell Consulting. In astronomy,

a black hole refers to a vast region of space whose pull is so strong it sucks the

energy from everything around it. Black holes in an organization may be invisibly

sucking the energy from operational excellence efforts, reducing their impact and

lengthening their timeline.

The black hole effect is created when the operational excellence project spon-

sor is organizationally far removed from the person leading the project, Winship

adds. This creates commitments gaps that foster resistance and create a commit-

ment black hole in the organization.

The black hole effect occurs even with small divisional or departmental proj-

ects. For example, if the project was being sponsored by the Quality Director as an

improvement to the quality operation, a black hole may be created at the quality

manager/supervisor level. If the project team comprised people from other parts of

the organization, then a black hole may be created at the manager/supervisor level of

their respective organizations, creating resistance to team participation.

PM0906_20_24_CVRSTY.indd 21 6/11/09 1:15 PM

OperatiOnal excellence


objectives related to operational excellence. What is required is communication rather than scapegoating, he says.

Figure 1 illustrates some of the key organizational objectives at your companies. Theyre admirable goals, but will work only if they have C-level support. If something is not a companywide initiative with strong executive sponsorship, its like a car with little gas, says Arvindh Balakrishnan, Oracles VP of its life sciences business unit. It takes a level of executive sponsorship that middle management cannot provide.

Management by Objectives (a Peter Drucker term) is one way to avoid this pitfall, Balakrishnan says. MBO is a process whereby management and employees agree upon corporate objectives. Invariably, middle management will have significant operational issues ongoing, says Balakrishnan. Unless theres a mechanism in place such as an MBO, then middle management will not be fully on board. If theyre judged only by their own operational metrics, thats what theyll focus on.

As Figure 8 attests, a majority of pharma companies may still be considered fair or poor when it comes to cross-functionality. Project metrics can also help by making sure that there is some way to define progress and success. This doesnt have to mean investing in some sophisticated software program, Balakrishnan says. It could just be one admin that is keeping track of things.

And make sure that middle managers are measured cross-functionally, says Whitmore. Companies must measure the performance of the Value Stream as its being improved, he says, in terms of growth, costs, safety, on-time delivery, etc. The middle manager now has a set of metrics that are independent of his function, he says.

Biogen Idecs senior manager for Operational Excellence, Rui Coelho, agrees that top management must drive operational excellence. But that doesnt mean Lean thinking cant start lower in the organization, and have a positive impact. Middle managers with Lean or Six Sigma experience are a must, he says. The more theyve lived it, the more they understand and can further it.

Aside from that, Coelho sees success in those individuals who have project management and analytical skills, scientific and subject matter expertise. And project leaders need to be given assignments commensurate to their abilities. These arent usually high-level, Six Sigma statistical needs, he says. Biogen has gotten good traction with projects such as error-proofing, DMAIC, and methodologies that are coachable and easily learned.

Training, or rather cross-training, is critical to middle managements success. Coelho refers to Figure 1 in our survey, which shows Improve manufacturing agility

Figure 1. What are the top three goals within your organization this year? (Click all that apply.)

Improve manufacturing agility 58%

Improve capacity utilization 53%

Improve internal quality management 44%

Improve alignment of internal goals with those of business partners

42%

Improve on-time delivery 42%

Reduce inventory 42%

Improve cross-functional training 30%

Reduce changeovers 21%

Figure 2. Please rank the following methodologies (if they apply) in order of importance within your organization, with 5 indicating most relevant and 1, least relevant.

Methodology Average

Quality by Design 3.5

Design of Experiments 3.3

Error Proofing 3.3

Six Sigma 3.2

Value Stream Mapping 3.2

Process Capability Analysis 3.1

Lean/Kanban 3.1

FMEA 3.0

Process Analytical Technologies 3.0

DMAIC 2.9

5-S or 6-S 2.9

OEE 2.4

Other 2.2

SMED 2.1

Figure 3. Is Quality by Design supported by top management at your organization?

Yes, to some extent. 38%

Yes. It has full support and funding. 31%

Its not on the priority list. 17%

No. They pay lip service but we focus on fire fighting.

12%

Other 2%

Figure 4. Are Lean, Six Sigma and other OpEx programs fully supported by top management at your organization?

To some extent 38%

Yes, completely 36%

Not really 16%

No. They pay lip service but dont support financially

5%

Not at all 5%

PM0906_20_24_CVRSTY.indd 22 6/11/09 1:15 PM



as the top goal among respondents. Agility, if its going to happen, must be reflected in the workforce. For this reason, Biogen Idec has a program of rotating employees across positions and departments.

Dennis is a believer in the Japanese concept of yokoten, roughly translated as lateral learning or the lateral transmission of knowhow, as a means of leveling the responsibility of operational excellence throughout the organization. Thus, the role of the middle becomes just as critical as the top or the bottom.

Finally, if they are to be heard, middle managers must be aggressive. Middle managers need to study and absorb the basics of Lean, says Dennis. That takes humility and tenacity.

pass it alOng: VendOrs and suppliersAs OpEx matures, vendors and partners are expected to understand and participate in critical programs. In some cases, theyre expected to have their own programs. Figures 11 through 13 illustrate the degree to which drug manufacturers are including vendors and suppliers in their operational excellence thinking.

But as Figure 10 indicates, roughly three-quarters of our survey respondents see vendor variability as a major or at least significant problem. (This is up roughly 10 percent from last year.)

Could partners be performing better than we give them credit for? Vendors and suppliers need to be true partners, extensions of an organization. They can be included in engineering and design, process development, or tech transfer, and collaborate on process improvement in whatever area they are involved. Put mechanisms in place so that they are incented as you are, says Balakrishnan. Its a mindshift.

Dennis agrees. The Lean business system is a way of thinking, he says. To internalize ideas about waste, flow, and pull, suppliers must learn by experiencing so that they learn in a visceral way.

Coelho sees extending OpEx programs to outsourcing and supplier relationships as the next big step at Biogen Idec. It is not something that has been a primary focus as of yet, but will be more and more, he says.

pass it alOng: the WhOle OrganizatiOnOperational excellence programs have established trac-tion in commercial manufacturing. Theyre also broaden-ing to include all tentacles of the organization, as Figures 5 and 6 attest. R&D is one area. Research and develop-ment has always been a creativity-driven organization, says Balakrishnan. They value independent thinking, so getting them to follow certain processes has always been

Figure 5. Are Lean-Six Sigma techniques being applied outside of the production area, to R&D, Quality and other operations?

Yes 49%

Not yet 27%

No 24%

Figure 6. Is manufacturing experience being captured and integrated into your organizations process de-velopment efforts and overall quality programs?

Yes 71%

Not yet 20%

No 7%

Other 2%

Figure 7. What are the biggest hindrances to improving organizational efficiencies and quality within your organization? (Check all that apply.)

Middle management 34%

Regulators expectations 34%

Top management 34%

Line operators 27%

Training for all employees 5%

Other 10%

Figure 8. Please rank your organization in terms of how it handles the following:

Item Excellent Good Fair Poor

Process management 19% 57% 17% 7%

Cross-functional product development

12% 29% 49% 10%

Customer focus 41% 41% 14% 4%

Supplier quality manage-ment

12% 42% 39% 7%

Figure 9. Which of the following would you say is play-ing a greater role in guiding your day-to-day improvement efforts?

ICH Q-8 through 10 51%

Toyota Production System 21%

Other (ISO, FDA, PAT, etc.) 28%

a challenge. One good sign: QbD ideas and efforts are moving from commercial manufacturing to development, where it rightfully should start, he says.

OpEx has taken root in many areas at Biogen Idec, says Coelho. Biogens formal, corporatewide operational excellence initiative is about two years old now, he says, and has steadily infiltrated all parts of the organization. As the companys clinical trials have increased (now to 60-80 per year), opportunities for Lean in the supply

PM0906_20_24_CVRSTY.indd 23 6/11/09 1:16 PM



following some Kaizen events, accounting books are closed much more rapidly now than they were before.

Once you create pull in one part of the organization, other people will want to come on board, Coelho says.

And many areas are ripe for change. When the pain of doing things is greater than the pain of changing, thats when groups begin looking around for solutions, he says. Some departments arent ready, Coelho cautions, and if you push OpEx upon them, it can backfire.

Biogen operational excellence projects can be driven at the department, site, or global level, Coelho says. Each levels projects are guided by steering committees, and of course global projects take priority over others.

is QbD crOwDing Out?As Figure 9 shows, Quality by Design has come to domi-nate many companies operational excellence efforts. Could it be that QbD is crowding out other initiatives?

QbD is the hottest topic right now, and thats mostly driven by FDA, says Winship of Tunnell. Nobodys treating QbD as optional, which means it gets elevated status by default. Theres less of an impetus or drive to implement [Lean, Six Sigma, and other initiatives], even though theyre complementary to QbD.

The problem, says Winship, is that manufacturers often see QbD, Lean, etc. as time-consuming preoccupations. Im happy that QbD is a regulatory requirement now, but its not something that takes extra time or extra work, he says. And thats true of other operational excellence programs. Getting it right the first time, with a structured methodology, is not any harder than not getting it right the first time.

Compliance shouldnt dictate priorities. Dont suck all the air out of your other initiatives, Balakrishnan warns. Any initiative that has the word quality in it will rise to the top of the heap in pharma . . . but you have to put other initiatives on equal footing.

Decide what your objectives are and stay the course, Pascal Dennis reminds: The main thing is to keep the main thing the main thing.

Figure 10. How much of a problem is variability in terms of quality of incoming vendors products and services?

Its occasionally a problem. 41%

Its a major problem. 29%

Its an issue but not a major one. 21%

Its currently our biggest quality challenge. 5%

Its not a problem. 5%

Figure 11. Which of the following do you currently require from your equipment vendors? Please check all that apply, but do not include them if they are optional.

ICH compliance (based on our own audit) 54%

GAMP compliance 46%

ISO certification 41%

ANSI compliance 28%

Other 10%

Figure 12. Do you have an active program with suppliers to ensure that they meet your quality stan-dards?

Yes 88%

No 12%

Figure 13. Are you actively helping your key vendor partners establish quality and efficiency goals parallel to yours?

Yes 62%

Not yet 24%

No 14%

lean OnlineOn June 4, Pharmaceutical Manufacturing aired an online webcast, Lean and Six Sigma: Sustaining Gains

Throughout the Product Lifecycle. Speakers included Jason Kamm of Tunnell Consulting, Martin Hinckley of

Assured Quality, Inc., and Thomas Gronauer,a member of the University of St. Gallen (Switzerland) team led by

Thomas Friedli that is studying how drug companies approach operational excellence. The webcast is now available

on-demand on PharmaManufacturing.com. A side note: Gronauer and Friedli are soliciting participants in their next

global OpEx survey; participants have until July 15 to register, at a cost of about $2000 per facility; the first report will

be issued to participants in September. Email [email protected] for information.

chain have proliferated. Initiatives begun in commercial manufacturing have trickled down into development, he says. (Theyre still behind similar programs in manufacturing, he says, but have matured to where theyre maybe six months behind in terms of their depth and teams abilities to implement them.) Even senior financial management has gotten on board

PM0906_20_24_CVRSTY.indd 24 6/11/09 1:16 PM


INVENTORY MANAGEMENT

LEAN MANAGEMENT repre-sents one of the most favored business improvement programs today. Pioneered by Toyota in the 1950s, Lean aims to eliminate waste in every area of the business, including customer relations, product design, supplier networks, and factory management. Its objec-tives include using less human e ort, less inventory, less space, and less time to produce high-quality products as e ciently and economically as possible while being highly responsive to customer demand [1].

Although there is no universally accepted measure of a companys Leanness, inventory turns are a reliable indicator. e trend of inventory turns over time indicates how well a company is progressing in terms of becoming more Lean and improving its processes.

How does the pharmaceutical industry rank on this measure compared to other industries? Unfortunately, at the very bottom. But by adopting Lean principles, Pharma companies can increase inventory turns and not only achieve signi cant nancial bene ts but also enhance competitiveness in speed, quality and costs.

INVENTORY TURNS AS A MEASURE OF LEANNESS Inventory turnoverdefined as the cost of sales (also known as cost of goods sold) divided by the average

inventory level over some time periodis a convenient proxy measure of Leanness.

Recall that the goal of Lean is to achieve improvements in the competitive edge elements of speed, quality and cost. Lower levels of inventory directly correlate to improvement in these competitive edge factors, as we will show. Thats why Japanese manufacturers focus intently on reducing inventory, sometimes characterizing inventory as evil. Similarly, noted Lean experts such as Richard Schonberger view inventory as a catch basin for a multitude of business ills.

Inventory turns also straightforwardly correlate with the bottom-line measure of business success: cash f lows. Reduced inventories mean more cash in the bank, freeing up cash that can be used for other purposes. However, reduced inventories are beneficial only if the reduction derives from process improvementthe core of Lean. If a company cuts inventories without improving processes, then stock-outs and lost customers will far outweigh any benefits of increased cash f lows.

In addition, inventory is a standard financial metric and is readily comparable company-to-company, as

BY CREATING LOW INVENTORY ENVIRONMENTS, PHARMA CAN ESTABLISH THE LEANNESS THAT IT SORELY LACKS.

BY ROBERT E. SPECTOR, PRINCIPAL, TUNNELL CONSULTING

IMPACT OF

INVENTORY TURNS ON SPEED, QUALITY, AND COSTS

PM0906_25_29_INVENT.indd 25 6/11/09 1:18 PM

Inventory ManageMent


well as over time within a business. It is also highly visible. Walk around a facility characterized by high levels of inventory and you can conclude that the facility is fat, not Lean.

the IMpact on SpeedThe impact of inventory on speed, quality, and costs be-comes clear when a high inventory manufacturing envi-ronment is contrasted with a low inventory environment. Although there is no absolute measure, comparisons with competitors can help determine whether a company is a high inventory or low inventory operation.

Suppose, for example, a company has an order for 1,000 units which are manufactured in a three-step production process that is run over two shifts, 16 hours a day, five days a week for a total of 80 working hours per week. In a traditional high inventory manufacturing environment (Figure 1), the material might be released from stores, processed and moved through the plant in a single batch of 1,000 units. That is, each operation completes work on the entire batch before any material is moved to the next operation. Each step processes and transforms the input materials incrementally.

In this high inventory example, almost six weeks are required to complete the order. Compare that to the results from a low inventory manufacturing example (Figure 2) in which Lean principles such as setup reduction, flow layouts and pull production have been applied in order to reduce the batch size all the way through production. There is no longer any waiting until each operation is completed for the entire order before moving it to the next operation. Material is moved between operations in batch sizes of 100 units, allowing

several operations to work on the same production order simultaneously.

In any production process the slowest operation acts as the constraint to the system and sets the throughput rate for the entire process. In this example, that constraint is the second operation, with a throughput rate of 12 minutes per unit. Releasing material at a rate faster than the slowest operation will only cause build-up of inventory in the system. So an additional change must be made: release material into the system only to keep the constraint busy versus that of the high inventory environment in which the entire order is released to the first operation.

As a result of these changes, the work-in-process inventory level is much lower and the order is completed in half the time. This phenomenon is also demonstrated by Littles Law, which shows that lead times are directly proportional to the amount of work-in-progress, i.e., inventory. Production lead times and work-in-progress inventory are mirror images of each other: reducing work-in-progress inventory proportionally reduces lead times. Therefore, if a product can be produced in less time, then capacity has, effectively, been increasedthat is, the number of units processed per unit time increases. For both generic and brand drug manufacturers, the ability to ramp up quickly to meet surges in market demand confers a significant competitive advantage.

the IMpact on the coSt of QualItyTo understand the impact of inventory on quality costs, suppose that an out-of-specification (OOS) condition occurs at the first operation in our example. Unless in-process inspection is performed, this condition will be

FONTS: Frutiger 7 pt

Body:Frutiger 57 Condensed

Headers/X&Y Axis:Frutiger 67 Bold Condensed

Figure 1. High Inventory Environment

Inventory

27,000 minutes (450 hrs) for total order

Average Inventory

Mins 10,000 20,000 30,000 Time

Order 1,000 Units

C 5 Mins/U

B 12 Mins/U

A 10 Mins/U

Figure 2. Low Inventory Environment

Inventory


Average Inventory

Mins 10,000 Time

Order 1,000 Units

C 5 Mins/U

B 12 Mins/U

A 10 Mins/U

FONTS: Frutiger 7 pt

Body:Frutiger 57 Condensed

Headers/X&Y Axis:Frutiger 67 Bold Condensed

Figure 1. High Inventory Environment

Inventory


Average Inventory

Mins 10,000 20,000 30,000 Time

Order 1,000 Units

C 5 Mins/U

B 12 Mins/U

A 10 Mins/U

Figure 2. Low Inventory Environment

Inventory


Average Inventory

Mins 10,000 Time

Order 1,000 Units

C 5 Mins/U

B 12 Mins/U

A 10 Mins/U

PM0906_25_29_INVENT.indd 26 6/11/09 1:18 PM

Inventory ManageMent


caught only after the entire lot is processed at that operation, possibly resulting in the entire order be-ing scrapped. In this high inventory environment the damage will have occurred at least two weeks (as the first operation will take 10,000 minutes to complete) before it is detected, making it very difficult to determine what caused the OOS and leading to longer investigations. Also, the plant will be forced to expedite additional units because the order will now be very late. Under this pres-sure, management would likely devote its efforts to expediting rather than finding and resolving the problem.

In the low inventory environment, even if QC is not performed until the last operation is completed, and the damage is not detected until that point, the product is still being produced at the first operation. It is therefore much easier to determine the cause of the problem without being under pressure to expedite. Because the problem has been detected before the entire order has been produced incorrectly, fewer replacement units are required and they can be produced much more quickly than in the high inventory environmentand without resorting to expediting. Management also has the time and ability to eliminate the cause of the problem, perhaps permanently.

the IMpact on costsHigher inventories result in greater material costs, operating expenses and capital expenditures. Recall that quality issues have a greater impact on a high inventory facility versus one with lower inventories. In the example here, an entire produc-tion order might have to be scrapped, increasing material costs. With shorter lead times than the competition, the lower inventory manufacturer also benefits from a more accurate forecast. For example, with seasonal drugs such as flu vaccines, the higher inventory manufacturer will have to begin production earlier than the lower inventory manufacturer. The longer the forecast horizon becomes, the more dramatically forecast accuracy decreases. Because the lower inventory manufac-turer can start later, it will have a more accurate forecast and will be less likely to build excess inventory that may not be sold.

Further, the higher inventory environment will take longer to process an order than will its competitors. Faced with increased customer demands for faster response time, the higher

Table 1. Lean/Process Improvement by Industry [2]

RankIndustries Ranked

by Industrial SectorInventory Turnover Score

1 Petroleum 0.93

2 Paper-converted products 0.89

3 Distributionwholesale 0.86

4 Semiconductors 0.79

5 Electronics 0.77

6 Telecom 0.76

7 Paper 0.72

8 Metal-working/machining 0.71

9 Plastic/rubber/glass/ceramic 0.69

10 Major appliances 0.67

11 Pump/hydraulic/pressure 0.66

12 Vehicular components 0.66

13 Sheet metal 0.66

14 Machinery 0.64

15 Electric 0.61

16 Instruments/test equipment 0.61

17 Aerospace/defense 0.59

18 Personal-care products 0.59

19 Wood (lumber)/paper 0.58

20 Apparel/sewn products 0.56

21 Liquids/gases/powders/grains 0.54

22 Medical devices 0.53

23 Retail 0.53

24 Food/beverage/tobacco 0.53

25 Furniture 0.52

26 Basic metal processing 0.52

27 Motors & engines 0.52

28 Wire & cable 0.50

29 Autos, light trucks, bikes 0.50

30 Chemicals 0.36

31 Heavy industrial vehicles 0.35

32 Textiles/sewn products 0.28

33 Pharmaceuticals 0.02

inventory facility will have no choice but to increase production, either by adding additional shifts or overtime. With lesser operating expenses, the lower inventory competitor has a lower break-even point, giving the company more flexibility in pricing.

Even increasing the number of shifts or adding overtime may be insufficient. The high inventory facility may not have enough machines or labor to accommodate the load within the available

PM0906_25_29_INVENT.indd 27 6/11/09 1:18 PM


28 JUNE 2009 PHARMACEUTICAL MANUFACTURING WWW.PHARMAMANUFACTURING.COM

enough machines or labor to accommodate the load within the available time. As a result, this company may have to invest in more equipment. With less e ective capacity than the lower inventory competitor, the higher inventory manufacturer will also have to invest in new facilities sooner.

Clearly, in the lower inventory environment the investment in equipment, facilities, and inventory is much less than that of the higher inventory environment. Consequently, the return on investment is much higher.

WHERE PHARMA RANKS IN MEASURABLE LEANNESSSince 1994, Richard Schonberger has been collecting inventory-turnover data in a long-range study of how companies are progressing with the Lean/process improvement agenda. His study groups about 1,200 companies into 33 industrial sectors. Table 1 lists the 33 industries in rank order, best to worst by long-term trend [2]. To assess a companys performance, its inventory turns were graphically plotted year by year. A scoring system reduced this visual assessment

of trends to numbers which point to long-term Lean progress.

Pharmaceutical companies rank at the very bottom. Of 66 pharmaceutical companies in the Lean database, only two merit a top grade of A, Johnson & Johnson and Japan-based Taisho. In fact, according to Schonbergers research, the average score for pharmaceuticals has been going down since 2002.

Why has Pharma ranked so poorly? When profit margins were at historic highs, little attention was paid to operational efficiency and production costs. The focus of money and resources in Pharma has traditionally been on R&D rather than operations. The little attention that operations did get was focused on compliance rather than process improvement [3]. The standard practice of ensuring that more than enough of each product was available to meet customer needs coupled with a lack of attention to operational efficiencies has led to excessive inventories. Further, the sales and market-share strategy of pushing more and more inventory into the pipelines has also driven up inventories.

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