Life Science Leader Magazine Supplements

CMO 2016

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GLOBAL BUSINESS UPDATE insights Snapshot analyses of selected companies developing new life sciences products and... LIFESCIENCELEADER.COM THE CMO LEADERSHIP AWARDS 2016 8 JANSSEN leaders By L. Garguilo RELIABILITY ROOMS AND SUPPLY CHAINS AT JANSSEN In Pharma, There''S Little Daylight Between Reliability and Quality As a convicted wordsmith, or perhaps more positively because words do matter, it's of interest to me how the pharmaceutical industry interchanges these two words: reliability and quality. This was again brought to mind when talking with Remo Colarusso, VP of manufacturing and technical operations, about Janssen's Reliability Rooms. Along with the allure of alliteration, there was certainly more to Janssen's decision to use "reliability" instead of "quality" for this impor- tant supply chain initiative, wasn't there? Before asking Colarusso, let's consider: Where are the Reliability Control (RC) or Reliability Assurance (RA) titles to match those of Quality Control (QC) and Quality Assurance (QA)? This is no trivial pursuit. A more stringent division of these two words might help in the continuing efforts to alleviate product shortages and to market drugs of the highest quality standards. Reliability is to supply chain performance as quality is to individual products (within the chains). Yes, they are intrinsically connected, but does our industry make the distinction clear enough to improve both sides? A Reluctant Division I ask Colarusso if the pharmaceutical industry's intoning of quality — no doubt for good reason – in some degree detracts from supply chain management and actually impacts overall reliability. Let's say Colarusso doesn't quite take the bait. He does, though, take the thought seriously, and provides some valuable insight. "At Janssen, like other companies, it is very much both," he replies. "We start from our long history of being a 'high quality organization.' We view that, first, as meaning we are a fully regulatory-compliant company. Yes, there has been so much talk and emphasis around quality in the industry, and that's been no different for us. I'd agree that, comparatively, perhaps the broader supply chain reliability has not been as emphasized." If there has been any under-representation of reliability as the overall process of the supply chain, Janssen is addressing it via the Reliability Rooms. That initiative will also reach CMOs and other external partners. Considering outsourcing and external supply chains, which as we know have become essential elements of drug manufacturers' business models, the discussion here seems to tilt heavily to the topic of quality. However, I'd submit that with the now very experienced and well- established cGMP-compliant CMOs — which have undergone years of FDA and other regulatory inspections — quality is actually less of a concern than the overall reliability of product delivery. Here's what I mean: As CMOs and other pharma partners continue to grow in importance, will they be able to effectively manage projects, handle compressed development and delivery timelines, coordinate larger alliances (with various product lines), and plan sufficiently for steady (reliable) supplies of starting and raw materials? Can they keep costs down and their margins up to stay viable? Do they understand their position within the chain for each product they provide services for? These are reliability questions of growing concern. "We talk about how both quality and reliability are foundational elements to our success," says Colarusso, "and that has to include our partners. Note that it is quality and reliability. Because of that dual emphasis, I think everyone understands these are not the same, but also that there is not an emphasis on one over the other. To me, they remain synergistic, and that's what we stress as an organization and in terms of overall business performance," Colarusso adds. "The reality is, the reliability of the pharma supply chain is still most heavily impacted by quality. One quality problem in the chain can quickly lead to a supply disruption." Partners In Performance I think we would all agree that there can only be one ultimate measurement. The supply chain is either reliable or it is not. It either consistently delivers the requisite amount of goods (on time) that meet quality standards or it doesn't. If it is not, or it doesn't, external partners have become as important as internal resources in rectifying the situation. "An older term was 'supplier performance management,' wasn't it?" Colarusso asks rhetorically about external partners. "That kind of signifies how procurement groups throughout the industry would look at outsourcing. It was more about the 'buy' — 'Here's an order, deliver our product by this date at this price.' "At Janssen, we realize that some of our partners are doing sophisticated manufacturing for us," Colarusso continues. "We want them to continue to get better because that means we get better. Their reliability to us can translate to our reliability to our customers. That's why we are moving forward in sharing more of our processes that have demonstrated improved performance." Along with this process sharing, what advice might Colarusso offer other pharma companies? "The best advice I could give any organization is to first make sure any relationship you are about to enter makes sense for your business. You've got to be consistent with your business strategy," he replies. As an example, he says it's good policy to utilize your core strengths and technologies, and outsource what you may not be focused on as a company. He also says that, to the extent possible, sponsors should provide CMOs and suppliers with meaningful opportunities to become true partners. "Both sides need to move away from transactional-based thinking. You should have the perspective that you both win, by both winning." What about advice to the service providers for ensuring they become reliable partners? "It's very similar," he says. "Service providers also need to look for the customers willing to provide the opportunity to establish those win-win relationships. Next, I'll go back to the original discussion we had on this. It is paramount for any company in the pharmaceutical industry, no matter external or internal or where they are in the process, to focus relentlessly on the quality of supply and the reliability of the entire chain. Those two are foundational. You can't do anything else without that."

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