Life Science Leader Magazine Supplements

CMO 2015

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Page 37 of 83

SUPPLY CHAIN outsourcing By E. Miseta SUPPLY CHAIN AND CONTINGENCY PLANNING BEST PRACTICES LIFESCIENCELEADER.COM THE CMO LEADERSHIP AWARDS 2015 38 EVALUATE EACH FACILITY INDIVIDUALLY If a supplier has five plants in five dif- ferent locations, there is no guarantee all five will produce product at the same quality level. A quality mindset, estab- lished by management, can go across an entire organization and affect multiple sites. So, if you have three plants, and two of them look to be in poor condition and one looks perfect, don't assume the culture of quality won't be the same at all three. Unless the plants are operating almost as independent operations, a quality issue at one location should make you skeptical of all of the locations. When visiting the different locations, ask questions about issues you perceive to determine what is being done. Then give them time to resolve them. If the issues are at a newly acquired site and the CMO plans to pump $50 million into the facility, that would be an acceptable answer. But if a plant has been in the network for 20 years, is falling apart, and the CMO is mov- ing product out of it, it may be time to keep looking. An FDA warning letter or a bad inspection could easily sink your product. As one presenter put it, "If you know that plant A and plant B were both shut down in the past, don't be surprised if plant C is soon shut down as well. You would have to be deaf, dumb, and blind to look at that picture and not see that there was a network issue involved and not simply a plant issue." TRUST YOUR EXPERIENCE If you have spent enough time evaluating CMOs, at some point you will start to trust your experience and gut instinct when vetting them. There are certain things you will hear or not hear that will give you the confidence to trust or reject a CMO. The level of investment is one metric that seems to give most sponsors a certain level of confidence. If you believe the amount of investment over a number of years has not been sufficient and you are considering moving an important product line there, that should send up a red flag. While many quality issues might be obvious from touring the plant, our many companies take to avoid short- ages is what is called "project boxcar." They take a boxcar, fill it with API, and hope that will mitigate their risk of a supply disruption. This does not ade- quately replace a good second supplier. Unfortunately, with the high cost involved with finding, vetting, and establishing a secondary supplier, the boxcar method seems more cost-effective for many small bio firms. Even when a sponsor claims two sources for a product, it might be a situation where 90 percent of the product is coming from one facility and 10 percent from another. If the former were to go down, it would be almost impos- sible for the latter to make up the shortfall. The situation also varies greatly depending on whether you are dealing with a new or existing product. With an existing product that has been around for maybe 15 years, a sponsor might have six months of inventory on hand. A hiccup with one supplier will not matter. With a product just being launched, that inven- tory doesn't exist, and there has to be zero risk with your suppliers. In these different situations, a one-size-fits-all model is not going to prevail. Supply Chain And Contingency Planning Best Practices You were able to discover a promising molecule, get it manufactured, and obtain approval for clinical trials. You were even able to secure VC funding to get you through to commercialization. But it all may be for naught if you don't properly manage your supply chain. ow do you ensure you have selected the right partners and are doing what is nec- essary to minimize your supply chain risk? Having a good match between sponsor and vendor is critical to this relationship, so finding partners who are a cultural fit is important. Do the two companies manage communications in a similar way? Does your supplier have the same thoughts on managing risk? Do the two companies share similar views on quality and regulatory issues? These are topics that can make or break a rela- tionship from the outset. Once you get beyond the selection process, supplier management is criti- cal. Proper supply chain management will minimize quality issues, avoid shortages and regulatory problems, and allow you to sleep at night. A panel at the inaugural Outsourced Pharma West Conference and Exhibition addressed this topic and produced several recom- mendations to make the process as risk- free as possible. BOXCARS ARE NOT A STRATEGY Several speakers noted that the approach H E D M I S E T A Executive Editor @OutsourcedPharm

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