A Strategic Approach to CMO Serialization Compliance

Transcription

1 COGNIZANT INSIGHTS A Strategic Approach to CMO Serialization Compliance Pharmaceuticals companies must address the risk of supply chain disruptions related to products requiring serialization to meet impending regulatory mandates. This means closely collaborating with contract manufacturing organization partners and jointly implementing compliance solutions. Executive Summary Serialization compliance timelines across the globe are fast approaching, pushing pharmaceuticals companies to quickly meet compliance requirements. Contract manufacturing organizations (CMOs) have, over time, become an important component in the pharma manufacturing ecosystem. In fact, CMOs are expected to generate $79.24 billion in revenue by Given this codependency, pharmaceuticals companies need to collaborate closely with their CMO partners on serialization to avoid compliance-related supply chain disruptions. Since pharma companies generally deal with multiple CMOs across different markets and products, CMO serialization is much more complex than internal enterprise serialization. Implementation of a CMO serialization solution is also more challenging given that teams from two different organizations need to align and collaborate within an established framework and the processes of their respective organizations to ensure that the integrated solution works seamlessly across organizational boundaries. Cognizant Insights January 2018

2 A strategic approach to CMO serialization covering all phases of program implementation is needed to ensure that the solution landscape is comprehensive, effective and efficient. This white paper describes a strategic approach for CMO serialization, covering all the aspects a pharma company needs to consider when undertaking CMO serialization programs. The framework describes an execution approach (in various phases) to structure CMO serialization activities and addresses in detail the factors to be considered in each phase. This paper also identifies key outputs in each phase and provides recommendations for each phase to guarantee successful CMO serialization, thereby ensuring regulatory compliance and product supply. THE SERIALIZATION CHALLENGE By 2020, approximately 90% of prescribed medications worldwide are expected to be serialized. 2 Pharma companies are in various stages of implementing serialization across their supply chain to meet emerging regulatory mandates. As regulations across the globe are still evolving, a standard approach to serialization with well-established ways of working is still in progress. Beyond packaging, serialization also impacts business processes in supply chains, manufacturing operations, quality, inventory management and regulatory reporting. Integrating all these organizational components is an arduous undertaking for most companies. Serialization implementation is further complicated when a company engages or outsources manufacturing and packaging to CMOs. A global pharma company will typically engage with multiple CMOs across geographies; each CMO is likely to have different approaches and strategies to comply with serialization regulations. This puts the pharma s whole serialization initiative at significant risk, a risk that rises with the volume of products outsourced to CMOs. Based on our experience with CMO serialization, pharma organizations need a structured, proactive and strategic approach that ensures successful CMO collaboration. Our CMO serialization framework (explained in the following section) provides the required structure and covers the dimensions that pharma companies must consider when undertaking CMO serialization. A CMO SERIALIZATION FRAMEWORK Our framework provides a structured approach to ensure successful CMO serialization collaboration, and enables a pharma company to approach CMO serialization in a logical sequence. Pharma companies also need to implement serialization across their manufacturing units. So our framework considers the existing serialization stack as an important input to all CMO serialization activities and recommends alignment with internal serialization initiatives. The framework s execution approach has four distinct phases covering the CMO serialization journey (see Figure 1, next page). It addresses the different factors/dimensions that need to be considered during the different phases. All phases in our execution approach, as well as input factors/dimensions, are geared toward two primary objectives: ensuring product supply (no supply disruptions) and regulatory compliance. 2

3 Cognizant s Framework for CMO Serialization Serialization Regulations CMO Serialization Strategy CMO Landscape Supply Chain Strategy Execution Approach CMO Engagement and Implementation Planning Serialization Solution Stack CMO Supply Team CMO Solution Design Data Exchange Standards Enterprise Program Execution Methodology CMO Program Execution Enterprise Data Security and Governance Product Supply Regulatory Compliance CMO Serialization Framework Figure 1 1 We now will take a deep dive into the four phases of our execution approach, including relevant considerations and key outputs and recommendations. PHASE 1: CMO SERIALIZATION STRATEGY The first and arguably most important phase is understanding the overall impact of CMO serialization and devising a strategy that enables a pharma company to successfully collaborate with CMOs. And a first step in grasping the effect of CMO serialization is to know how many products and CMOs are impacted. Most pharma companies have relationships with numerous sizeable CMOs. One director of external supply at a major pharma company, for example, said his company has hundreds of CMOs globally. 3 Understanding which CMOs will be impacted by serialization will help to determine the overall scope of the CMO serialization initiative. The company also needs to align its long-term product supply strategy in various serialization markets. This will enable the pharma to assess whether an investment in a CMO serialization solution may or may not be warranted particularly if some products do not figure into the business strategy for a specific market. Because regulations can vary greatly market to market (i.e., labeling requirements, country-specific reporting, etc.), it is important to know if the CMO partner is capable of navigating the regulatory landscape. Strategic evaluation of the CMO and its capabilities is also required to make a decision on long-term relationship potential and continuing investment on a joint serialization solution. Parallel to understanding the scope of CMO serialization, the pharma company at this stage should also be thinking about broad CMO serialization solution options. Alignment with the existing or planned enterprise serialization solution stack is a must; beyond this, the company should identify broad solution options and business processes for exchanging serialization data with CMOs. Options to consider include automated business-to-business exchange mechanisms, network integration solutions and semiautomated data exchange mechanisms to integrate with less sophisticated CMOs. 3

4 Alignment with the existing or planned enterprise serialization solution stack is a must; beyond this, the company should identify broad solution options and business processes for exchanging serialization data with CMOs. We also urge companies to undertake a risk assessment exercise at this stage. Serialization by itself introduces significant risks concerning good manufacturing practice and good distribution practice (GxP) related to IT solutions and business processes. According to U.S. Federal Drug Administration (FDA) guidance, 4 each party performing manufacturing tasks is responsible for ensuring compliance with current good manufacturing practice (CGMP) related to those activities. Enabling serialization with a CMO introduces additional risks, and companies should understand these additional risks and document potential mitigations. According to one study, 5 enterprises should apply standard GxP quality management principles and requirements immediately after identifying the serialization approach. Finally, it is important to understand the commercial aspects of enabling CMO serialization. According to a recent study, 6 a primary and critical question concerning CMO serialization is who pays for enabling serialization on the packaging lines? Serialization is quickly becoming the cost of doing business for both the CMO and brand owners, depending on how the costs are shared contractually. Upgrading a packing line to enable serialization with aggregation capabilities ranges between $250,000 and $1 million, depending on the level of sophistication required. Packaging lines that utilize manual packing are at the low end of the price range but have a greater probability of error. Cost factors to take into account include software licensing fees, monthly/annual subscription fees, serial number/transaction-based fees, storage costs, internal systems integration and the cost of validating these systems. It is important to evaluate the differences in functionality and cost between a single-tenant architecture and a network-tenant architecture to address specific business needs. Companies must study the pricing and profitability implications in each market in order to effectively negotiate with CMOs. Key outputs of this phase: Understanding of overall CMO scope. Supply strategy for serialized products manufactured by CMOs. Broad CMO serialization solution options and business processes. GxP risks and mitigations related to CMO serialization. Commercial considerations and negotiation strategy. Recommendations for this phase: Create a multidisciplinary team to draw up a CMO serialization strategy. Include business, quality, supply chain, manufacturing operations and solution architects. Involve and educate supply chain/manufacturing operations teams responsible for CMO relationships about serialization. Evaluate product portfolios in every market 4 1

5 2 and look at supply option strategy afresh in light of serialization. GxP risk assessment is critical. Conduct a workshop to tease out the risks associated with CMO serialization; construct a mitigation plan with the internal quality assurance team. To engage CMOs and provide guidance, it is helpful to define the commercial constructs related to serialization and finalize a negotiating strategy. PHASE 2: CMO ENGAGEMENT AND IMPLEMENTATION PLANNING Once an organization has readied its CMO strategy, the next phase is to engage CMOs and jointly prepare individual implementation plans. In order to select key focus areas, it is helpful to construct a three-dimensional matrix covering timelines for regulatory mandates, product portfolios in particular markets and contributed revenues. To greatly facilitate such activities in this phase, we recommend using the existing organizational channels (teams) that manage and monitor CMO relationships. It might be necessary to prioritize CMOs, depending on how many CMOs the pharma company engages. A leading CMO typically manufactures products for 48 of the top 50 pharmaceuticals companies. 7,8 This means the CMO must work with numerous pharmas to comply with the serialization regulations during roughly the same timeframe. Depending on the influence the pharma company has on the CMO (based on volume and revenue), it might be a challenge to align on timelines and solutions. Another aspect to consider is documenting CMO requirements. Detailed IT requirements should be documented, based on the broad IT solution options identified in the previous phase. Consider documenting the required artwork requirements for each logistical level in all the markets. This document will form the baseline for discussions with CMOs and help to define implementation timelines more realistically. Finally, a pharma company must think through and finalize all serialization enablement elements such as timelines, the serialization solution stack, quality requirements and costs. Current commercial and supply agreements should be leveraged to include all the necessary serialization elements. Key outputs of this phase: A well-defined CMO engagement approach. Documented IT and artwork requirements. Jointly-agreed-upon implementation plan. A draft of commercial and supply agreements covering serialization activities. 5

6 Pharma companies should work with the CMO to build the framework for the aggregation of serialized data into their strategies to ensure a fully-functioning traceability architecture for upcoming regulations. 3 Recommendations for this phase: Educate CMO supply teams on serialization and ensure they are aligned with the overall strategy, timelines and requirements. Engage early with CMOs. It took approximately a year for one of our pharma clients to agree on the requirements and develop a solution with a CMO. Since the company engaged with that CMO far ahead of the compliance timeline, it had enough time to manage requirements, undergo negotiations and prepare for impending regulatory shifts. Document CMO requirements. Review existing commercial agreements with CMOs, and modify as necessary to include serialization. This generally takes much longer than expected as many rounds of negotiations may be required. PHASE 3: SOLUTION DESIGN This phase establishes common understanding and leads to finalization of both technical aspects and business process aspects of the CMO serialization solution. As a first step, pharma companies and their CMO partners need to clearly scope out serialization activities and each entity s associated responsibilities. This sets the requirements for technical and procedural elements of the solution required and agreed to by both entities. To illustrate the above point, a recent study reveals that the question of which party generates serial numbers is among the top concerns for CMOs and pharma companies. 6 A serial number can be generated by the authorization holder and supplied to the CMO, or the CMO can generate the serial numbers on behalf of the authorization holder. Either way, the two entities should exchange the serial number and serialization batch data for reporting purposes. The two should agree in advance on the data exchange format, including serial number format requirements and the corresponding master data requirements. Companies should give due consideration to the aggregation requirements and the capabilities of the CMO to provide aggregation data. Pharma companies should work with the CMO to build the framework for the aggregation of serialized data into their strategies to ensure a fully-functioning traceability architecture for upcoming regulations. Although aggregation may not be required to comply with the regulations in markets such as the EU, Korea and Saudi Arabia, a pharma company may decide to implement aggregation as a standard and may expect CMOs to follow suit. Another key aspect requiring agreement between the CMO and pharma company concerns data standards, security and governance. While it may appear to be an additional requirement to share serialization-related information over and above the commercial information (which may already be shared electronically), the downstream implications of how and where the product and 6

7 Conceiving and Building a Serialization Solution Regulatory Needs Organizational Capabilities Data Exchange Mechanisms Scope Definition Serial Number Generation Serial Number Application Serial Number Reconciliation Serial Number Sharing with Supply Chain Partners Regulatory Reporting Exception Handling Solution Design Business Process Order Processing Serial Number Reconciliation, Exception Handling and Sharing with Supply Chain Partners Regulatory Reporting Technical (Software) Solution Data Exchange Exception Handling Figure 2 Serialization Strategy CMO Capabilities CMO Serialization Solution Landscape Data Standards, Security & Governance serialization information is used in the CMO and pharma company make things quite complex. We strongly recommend that mechanisms to ensure alignment on data standards, security and governance between CMO and pharma company be established early to address design and operational issues on an ongoing basis. As part of the solution design exercise, companies also need to evaluate or design current/ future mechanisms of sharing information/data in a scalable manner to meet requirements in a serialized environment. We have seen solutions ranging in sophistication from s to electronic data exchanges to cloud-hosted solutions used by CMOs and pharma companies. Various options need to be evaluated, depending upon a number of factors such as existing data-sharing mechanisms, data volume, long-term supply chain strategy, the number of CMOs for integration, etc. Key outputs of this phase: Design of CMO serialization solution. Clearly identified roles and responsibilities of the pharma company and CMO. Evaluation of network integration solutions and a mechanism to securely exchange serialization data. Recommendations for this phase: Finalize the serialization activities scope first with the CMO. Reach agreement/alignment on data standards, security and governance with CMOs. Investing in a network integration solution may make sense given serialization data exchange requirements. A cost-benefit analysis may be required. One design may not fit all. Two or three variations of the solution may be needed to address all CMOs, given the expected variability in their capabilities and integration requirements. 7

8 4 PHASE 4: PROGRAM EXECUTION Integration projects across organizations are among the most intricate software missions. This is because they involve agreement and alignment between organizations that often have their own methodologies, applications landscape, data standards and governance practices, as well as IT or business constraints. We have worked on many projects that require two or more organizations to join hands and move successfully toward the goal. All the tenets of strong program/project management are applicable to serialization, with the following being especially critical. Key outputs of this phase: Overall execution/project plan to enable CMO serialization. Established governance structure and escalation mechanism. Change management process to cope with the dynamic nature of serialization. Recommendations for this phase: Consider establishing a program office to undertake CMO integrations if the number of CMOs is large. Develop a couple of standard execution approaches and supporting templates that can be replicated across CMOs based on various solution designs. This can increase efficiencies in delivering projects as it avoids rework and provides clarity to execution teams. Project/program governance should ensure that knowledge is shared or carried across projects, and that project execution metrics are established and tracked to ensure improvement with each integration in an agile fashion. Consider running a pilot CMO implementation project to understand which areas of the business and IT capabilities require additional work. We also recommend that pharmas develop a business-as-usual process as part of the pilot project that maps all activities (engagement, documentation, IT connection, business change) required to enable CMO serialization. 8

9 LOOKING FORWARD Complying with mandatory serialization regulations across geographies is a herculean undertaking. The complexities of serialization implementation and regulatory compliance increase when pharma companies have CMOs that supply a variety of serialization-impacted products. It is essential for pharmas to take a holistic view of the process and develop a CMO serialization strategy as a first step to ensure that the company and its CMO partners successfully scale up organizational capabilities to meet serialization challenges. Our OneSerial framework can accelerate your serialization road map. After an initial assessment of your organization s supply chain landscape, the OneSerial framework can be deployed to define and document user and architectural requirements, regulatory requirements, implementation plans, process flows, road maps, business cases and project lifecycles. In addition, the framework includes a suite of templates to streamline the serialization process in the supply chain. The OneSerial framework also provides guidance on vendor selection, program management, organizational change management, and testing and validation services. Given approaching regulatory deadlines, ensuring the success of CMO serialization initiatives requires proper planning, internal alignments across teams, early engagement with CMOs, flexible architecture, investment in integration solutions and robust program/project management. While other components of the serialization solution stack pose unique challenges, determining CMO serialization scale and scope is the most complex step in the serialization solution landscape, requiring significant efforts to overcome. It might be tempting to wait until all the uncertainties surrounding regulations, technological solutions and supply constraints are sorted out. However, pharma industry decision-makers must bear in mind that serialization is mandatory, not optional. Moreover, delaying serialization poses a real risk of product disruptions in key revenue-generating markets and potential for financial setbacks. 9

10 FOOTNOTES 1 Pharmaceutical Contract Manufacturing World Market to Reach $79.24bn In 2019, New Visiongain Study Predicts, www. visiongain.com/press_release/761/%e2%80%9cpharmaceutical-contract-manufacturing-world-market-to-reach-79-24bn-i n-2019%e2%80%9d-new-visiongain-study-predicts. 2 Dirk Hendrik Kneusels, The CMO Serialization Threat, Antares Vision Germany. 3 For big pharma, ten is the magic number of CMOs says ex-gsk Director, 4 Contract Manufacturing Arrangements for Drugs: Quality Agreements, FDA, November 2016, 5 Dana Buker and David Loy, Serialization A worldwide challenge, 6 Top answers for Strengthening Serialization Collaborations, Tracelink, 7 CMOs: Pharma s Heavy Lifters, ACKNOWLEDGMENTS The authors would like to acknowledge the support and inputs from Pari Sanghavi and Adam Barlett, a Senior Director and an Associate Director, respectively, within Cognizant s Life Sciences business unit, for helping to shape this point of view. ABOUT THE AUTHORS Madhukar Saboo Senior Manager, Cognizant Business Consulting Karthick Venkatachalam Senior Consultant, Cognizant Business Consulting Madhukar Saboo is a Senior Manager within Cognizant Business Consulting. He has nearly 17 years of experience in consulting, project management, and solution design and business development within the life sciences industry. Madhukar specializes in regulatory affairs and compliance, quality assurance, manufacturing and supply chain within the life sciences industry. He holds a bachelor s degree in chemical engineering and an M.B.A from Indian Institute of Management, Kozhikode. Madhukar can be reached at Madhukar.Saboo@cognizant.com LinkedIn: Karthick Venkatachalam is a Senior Consultant within Cognizant Business Consulting, focusing on manfacturing and supply chain challenges. He has 10-plus years of experience in business consulting and IT transformation. In his current role, Karthick works as a serialization business consultant for a global top-10 pharma company. He holds a bachelor s degree in computer science engineering and a pan-european master s degree in IT management. Karthick can be reached at Karthick.Venkatachalam@cognizant.com LinkedIn: 10

11 ABOUT COGNIZANT Cognizant (NASDAQ-100: CTSH) is one of the world s leading professional services companies, transforming clients business, operating and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innovative and efficient businesses. Headquartered in the U.S., Cognizant is ranked 205 on the Fortune 500 and is consistently listed among the most admired companies in the world. Learn how Cognizant helps clients lead with digital at or follow World Headquarters 500 Frank W. Burr Blvd. Teaneck, NJ USA Phone: Fax: Toll Free: European Headquarters 1 Kingdom Street Paddington Central London W2 6BD England Phone: +44 (0) Fax: +44 (0) India Operations Headquarters #5/535 Old Mahabalipuram Road Okkiyam Pettai, Thoraipakkam Chennai, India Phone: +91 (0) Fax: +91 (0) Copyright 2018, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means,electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners. TL Codex 3153