Challenges to Building Quality End to End
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1 Challenges to Building Quality End to End FDA/PQRI Conference- OCTOBER 2015 Michael Thien, Sc. D. SVP, Global Science, Technology & Commercialization Merck Manufacturing Division
2 Two key dimensions of Product Quality SUPPLY QUALITY SUPPLY RELIABILITY! Lack of drug safety is a Quality issue! Lack of supply is a Quality issue Adverse Events trend * ANY shortage is not good for patients * Source: FDA Website 2 Source: PhRMA Website
3 Solutions Can Be Life Cycle LOE Product Specific 1. General Not specific to a modality or product Peak Focused on Systems & Business Processes Launch Volume/ Value Small Molecules Therapeutic Protein Vaccines Oth Complexity 2. Product Specific Processes, modality, platforms specific to product Focused on Operational & Technical/Analytical aspects 3
4 Quality does not happen in pockets, but is built End-to-End and is continually challenged PLAN SOURCE MAKE DELIVER - Complex chains - Poor visibility - Visibility to supplier activity - Analytics to make sense of supplier networks - Specification Alignment - Complexity of mix - Systematic management of Quality risk - Regulations and approval times; local testing - Maintenance of product integrity conditions - Security of supply chains - Quality of supplier processes - Process/method robustness - Mechanism for creating quality 4
5 PLAN 1) REALITY OF SUPPLY CHAINS: Complexity of Supply Chains increasing Implications: reliability is challenged by complex and poorly visible supply chains 2) REALITY OF PLANNING SYSTEMS & PROCESSES: We can t see what we already have Have E2E visibility & capability for impact analysis Have E2E visibility but not full capability for impact analysis Source: PWC, Global Supply Chain Survey 2013 Leading Others Don t yet fully have E2E visibility or capability for impact analysis, but part of strategic approach Have NO E2E visibility or capability for impact analysis 3) REALITY OF ONE PRODUCT : Local regulations drive multiple flavors Source: Logipharma 2013 Benchmarking Report, WBR Digital 5
6 PLAN Comparing Pharma with other industries**: 1) REALITY OF SUPPLY CHAINS: Improve Supply Chain Visibility Improve real-time on-demand data visibility Extend this to external suppliers 2) REALITY OF PLANNING SYSTEMS & PROCESSES: Foster Collaborative Forecasting Develop processes to collaboratively predict demand Move to a model to facilitate replenishment based on true demand (vs forecast) 3) REALITY OF ONE PRODUCT : Meet local patient needs & be willing to segment supply chains It is critical that we meet the local needs of local patient population (literature, packaging etc) We may need to segment, one size fits all model may increase risks of supply ** Source: 2014 Supply Chain Planning, Benchmark Study, Supply Chain Digest
7 SOURCE 1) VISIBILITY TO SUPPLIER ACTIVITY : Least visibility to suppliers in supply chain Snapshot of pharma responses to supplier visibility * Implications: we fail to incorporate critical aspects of our suppliers into our internal networks 3) SPECIFICATION ALIGNMENT 4) QUALITY OF SUPPLIER PROCESSES * Source: Pharmaceutical Technology, Improving Visibility of the Pharma Supply Chain: Best Practices & Technologies, Volume 35 2) ANALYTICS FOR SUPPLIER ACTIVITIES Practices with Suppliers not sophisticated <50% track critical information for key components transaction history chain of custody, record of ownership Critical environmental storage conditions epedigree * ~3% of the industry have access to suppliers data real time 25% share common practices & information with suppliers* 1. Inadequate process at suppliers 2. Specification issues alignment of specifications 3. Product not available due to a variety of issues impacting delivery, may lead to drug shortages Source: MERCK & Co 7
8 Source 1) VISIBILITY TO SUPPLIER ACTIVITY 2) ANALYTICS FOR SUPPLIER ACTIVITIES Improve real-time on-demand data visibility (use to address planning events ) Better understanding of supplier quality processes Supplier Development & Performance Management + partnerships to improve processes - Focus efforts on critical suppliers The ratio of the number of suppliers managed per FTE in Pharma is higher vs Automotive 3) SPECIFICATION ALIGNMENT Improve processes for specification alignment Invest in systems to make this fully electronic 4) QUALITY OF SUPPLIER PROCESSES 1. Engagement in capability development & mutually beneficial Quality Systems 2. Improved Risk Management
9 Make 1) QUALITY RISK MANAGEMENT: QRM in place = QRM Maturity Implications: Complexities from within & without, complex product portfolios and lack of process robustness challenges reliability Maturity of QRM in the Industry ** Survey of External Partners*** UNDER- STANDING Overall APPLICATION Process & Product Development Technology Transfer Commercial Manf No Yes 0= Very limited, 1- limited, 2- Fair, 3- Good, 4- Very Good, 5- Excellent 0 QRM in place? Do you have actual inventory of assessments? 2) INCREASED PRODUCTION COMPLEXITY : Increased risk of errors 6% steady volume increase; SKUs are increasing at the rate of 8-10% in packaging lines * 3) LACK OF HARMONIZATION : Local reg stds & testing on import with local methods Merck deals with agencies of 100 countries >%40 require testing on importation with their own local analysis requirements. 4) PROCESS ROBUSTNESS : CpK? Most of pharma is in 1-2 Cpk range (world class standards in other industries are ) **** 5) QUALITY & PROCESS/METHOD: Quality by inspection or design? Life Cycle LOE Product Specific Peak Launch 9 * Source: McKinsey, Flawless ** Source: ICHQ10 PDA/FDA Conference November 2014 *** Merck EQA Survey 2015, 98 responses **** Benson, R.S., From Good manufacturing Practice to Good Manufacturing Performance. Pharmaceutical Engineering Volume/ Value Small Molecules Therapeutic Protein Vaccines Complexity Ot h
10 Make 1) QUALITY RISK MANAGEMENT: Life Cycle LOE Peak Product Specific Invest in E2E Quality Risk Management systems: proactive risk identification Launch Complexity Small Molecules Therapeutic Protein Vaccines Ot h Volume/ Value 4) PROCESS ROBUSTNESS : Existing Products 2) INCREASED PRODUCTION COMPLEXITY : Better business cases for simplification Standardization of processes, manufacturing & packaging components Self-impose higher bars: focus on those changes that help improve quality or add value to patients 3) LACK OF HARMONIZATION : Use lean methodologies (MPS), Standard Methods, Shop Floor Management (Tier Management), Problem Solving + Knowledge Management to improve process robustness (Cpk) to prevent passing defects to the next process 5) QUALITY BY DESIGN: Top Benefits of Quality By Design ID ed* Improved process understanding (68.4%) Improved product quality (66.7%) Reduction in product quality variability (57.9%) Work together as an industry to help regulators harmonize standards Work pro-actively with regulators to address obstacles 10 ** Source: Pharmaceutical Technology 2014 Manufacturing Trends & Outlook
11 Deliver 1) SUPPLY CHAIN SECURITY: Diversion & Counterfeiting 30%-60% of medicines sold in emerging markets are counterfeit* The value of counterfeit drug market $200BB/yr* How are pharma companies using to secure shipments**? Implications: external threats, complex regulations and product characteristics challenge the ability to deliver 2) PRODUCT INTEGRITY IN TRANSIT: Distribution challenges 66% of pharma says distribution regulatory environment a top challenge to market expansion*** Only 12% of Senior execs at UPS report satisfaction with their company s performance in pharma distribution*** 3) INFORMATION VISIBILITY: Distribution Information Pharma companies struggle to obtain critical data promptly**** 1) 27%- No anti-counterfeiting markings 2) 38% - Overt markings on packaging 3) 36% - Covert markings on packaging 4) 23%- Track & trace with unique identifiers 5) 21% - Real-time mobile device authentication systems 6) 25%- other customized solutions * Health Research funding.org, Dec 2014 **Logipharma 2013 Benchmarking Report, WBR Digital *** Pharmaceutical Technology, Volume 32, Issue 2, Reinventing Cold Chain in a High-Stakes Market **** PWC, Pharma 2020: Supplying the Future
12 Deliver 1) SUPPLY CHAIN SECURITY: Still opportunities to improve our track and trace: less than half are looking for the right way to do it * We are headed in the right direction**: Responses to : How prepared to meet requirements in EU Falsified Medicines directive? 2) PRODUCT INTEGRITY IN TRANSIT: Improve collaboration in distribution and logistics Enhance robustness of quality & risk management systems for distribution Create better technologies to better ensure robustness of product integrity Improve product thermal characteristics *Deloitte survey, Logipharma 2015 ** 2015, Inbound Logistics, The Race is On: Chain of Custody in the Pharmaceutical Supply Chain 3) INFORMATION VISIBILITY: Again, real-time information
13 Conclusions We need to internalize that holistic reliability (the ability of a supply chain to consistently deliver) is a critical part of quality - quality is not just about process and method - visibility, information and the systems to manage them are critical to quality Our ability to improve reliability comes both from systemic improvement and specific product improvement - differential investments must be made On the whole, our industry s challenges are not unique: others have solved them. We must too. Think big, start small, but start 13
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