Foundations for an Effective Quality Relationship with Contract Manufacturers
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1 Foundations for an Effective Quality Relationship with Contract Manufacturers Fionnuala Walsh Senior Vice President Global Quality Eli Lilly and Company PQRI/FDA Conference September 2014
2 Eli Lilly and Company Founded by Colonel Eli Lilly in Indianapolis, Indiana in 1876 with a staff of three employees. The Chairman of the Board position was filled by a Lilly family member until Lilly became a public company and joined the NYSE in Employees 38,000 Lilly Corporate Center Indianapolis, Indiana Revenue $23.1 b Income $4.7 b 20% of revenue R&D Expense $5.5 b 24% of revenue Capital Investment $1.0 b 4% of revenue source: 2013 Annual report 9/19/2014 Company Confidential 2014 Eli Lilly and Company 2
3 Agenda Contract manufacturing whys Building effective contract manufacturer relationships Foundational steps Implementing the relationship Maintaining the relationship Lessons learned 9/19/2014 Company Confidential 2014 Eli Lilly and Company 3
4 Contract Manufacturing Whys Flexibility for changes in demand Support local access initiatives and/or presence Capital deferment Flexibility clinical material, commercial product, and fill/finish/packaging CMOs Considerations Must have reliable supply of high quality products (Acceptable CpK for all specifications (>1.3)) Maintain the company brand our name is on the product An excellent contract manufacturer is an excellent quality partner. 9/19/2014 Company Confidential 2014 Eli Lilly and Company 4
5 Lilly s Comprehensive Framework for our Quality Management System for CMOs Framework for contract manufacturing relationships Well defined standards, specific to CMO relationships that cover the entire business process Standards are integrated with other relevant company standards (e.g. Quality, Manufacturing Operational Excellence, Supply Chain, as well as Health, Safety, and Environmental) All Lilly employees that are responsible for decisions to outsource, select, validate, operate and terminate contract manufacturers are required to follow these standards. 9/19/2014 Company Confidential 2014 Eli Lilly and Company 5
6 Foundational Steps The strategy for identification, evaluation, and selection of contract manufacturer is prepared by the business area. The strategy should be commensurate with the criticality of the product or material to be produced. Defines the necessary initial product quality requirements for a potential contract manufacturing opportunity. This is done in partnership with quality, manufacturing, and technical organizations. Considerations may include: regulatory history of company, experience with supply market, type of material to be manufactured, capabilities of the company. 9/19/2014 Company Confidential 2014 Eli Lilly and Company 6
7 Foundational Steps Gather additional data on leading candidates for contract manufacturer selection. Due diligence activities that are commensurate with the complexity and criticality of the product to be manufactured, including: compliance status, business evaluations, and technical evaluations, such as sterility assurance, scientific background and capability of staff. Approval is made by the responsible quality leaders and production leader. A quality unit s decision to reject the use of a contract manufacturer cannot be overruled. The technology transfer plan is approved by both internal parties and the contract manufacturer. 9/19/2014 Company Confidential 2014 Eli Lilly and Company 7
8 Implementing the Relationship The responsible internal parties must ensure the contract manufacturer has the information required to carry out contract operations correctly, including: product history, process flow document, safety data, analytical methods, etc. Both business agreement and quality agreement are approved prior to process validation. Quality approves the authorization of the contract manufacturer based on the quality agreement (defines metrics and escalation expectations, including AEs), audits, due diligence assessments, state of compliance, successful process validation, and regulatory agency authorization to manufacture. 9/19/2014 Company Confidential 2014 Eli Lilly and Company 8
9 Maintaining the Relationship Appropriate oversight processes must be established Dedicated personnel/organization for relationship (e.g. joint committees, person in plant, audits) Governance (routine metrics, site compliance reports, joint quality and manufacturing oversight from process level to executive level) Clear expectations for escalation of issues Effective communication Managed to a defined change management system Evaluate quality, supply, and regulatory impact 9/19/2014 Company Confidential 2014 Eli Lilly and Company 9
10 Lessons Learned Establishing a Quality culture with a strong foundation and maintaining appropriate oversight and communication is critical to success in an effective Quality relationship with CMOs, as the business is dynamic. The quality culture of the CMO is the most important factor in the success of the relationship. Metrics need to not only include operational performance, but also financial health of the company and management turnover. CMOs play an important role in pharma supply chains. Establishing preferred CMOs makes managing relationships easier. Lower CMO margins and pricing pressure may lead to over-emphasis on cost control, just meeting regulations, and excessive levels of capacity utilization. The objective is the same, whether in-house or at a CMO: Safely and reliably manufacture high quality medicines for patients. We must maintain our company brand our name is ultimately on the product. 9/19/2014 Company Confidential 2014 Eli Lilly and Company 10
11 Thank You 9/19/2014 Company Confidential 2014 Eli Lilly and Company 11
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