Pharma's supply chain pitfalls

posted by Jennifer Lopez
26 November 2018

With the pharmaceutical industry ever-expanding against a backdrop of prolific mergers and acquisitions (M&A), its increasingly globalised supply chains heighten the potential for compliance procedures to be mismanaged by manufacturers.

As many companies struggle to balance the need to innovate to stay in the game with demanding R&D costs – for instance, the development of a new active pharmaceutical ingredient (API) can cost up to $2.6bn – it is perhaps unsurprising that such strain can take a toll on the successful management of compliance procedures.

Violations of Current Good Manufacturing Practices (cGMPs) – which are laid out and enforced by the US Food and Drugs Administration – are increasing on a global scale. Areas of non-compliance at pharmaceutical plants include failure to operate computerised systems sufficiently to prevent unauthorised access to data, systematic data manipulation, and violations associated with hygiene and quality control.

Despite the FDA’s emphasis on the responsibility of manufacturers to “extend to the quality and review of any outsourced activities and quality of purchased materials”, problems arise in part due to overwhelming outsourcing of manufacturing processes, resulting in a growing difficulty to maintain central visibility and control over these processes.

Reportedly over 75% of companies that have acquired a new business in the past year failed to execute proper due diligence. Therefore, a proactive approach on the part of pharmaceutical companies to tighten compliance procedures through having a compliance team overlook manufacturing processes over the course of M&A is vital for a company to be fully equipped to assess the potential risks that may come from the takeover.

The power of M&A to cloud risk visibility should not be underestimated by manufacturers. Often, the acquiring company’s analysis of manufacturing operations limits the ability of personnel to manage quality issues that may arise, thus adversely affecting compliance procedures. Despite focus on the race to close the deal, it is paramount that identification and management of non-compliance are appropriately handled, especially considering successor liability laws, since it is the responsibility of the purchasing company to ensure due diligence.

For pharmaceutical companies in the US and across Europe to continue expanding and prospering in a busy market, it is clear that there is an urgent need for quality, safety and risk management controls to be brought in line with regulatory requirements, regardless of a pharmaceutical manufacturer’s company climate.

Manufacturers should prioritise tightening compliance through well-managed supplier and quality agreements and successfully executing these requirements, in order to maintain the highest cGMP standards.

☛ Jennifer Lopez is director of solutions delivery at Maetrics.

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