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As their product pipelines thin and the competition from generic firms heats up, companies in the pharmaceutical industry are in a state of flux. Under the oppressive shadow of what is the most fiercely regulated industry in the US, pharma companies are watching their product margins being eroded, while coming under pressure to reduce product prices. In response, execs are having to dig deep to root out inefficiency and maximise return on investment.

However, while traditionally investments have been directed towards R&D, where each dollar could be expected to return high multiples in revenue downstream, attention is now being focused on areas such as manufacturing in order to improve efficiencies and achieve cost savings. Indeed, as NGP discovered when we met with Dennis Constantinou, Sr Industry Director, Life Sciences, the potential for cost savings in pharmaceuticals manufacturing is considerable. It has been reported that manufacturing accounts for around 25 percent of the total cost base in a life sciences company and, when you consider that utilization rates of factory equipment are commonly in the region of 15-20 percent, it’s clear that companies in the industry are vastly under-using their capacity within the manufacturing area.

According to Constantinou, when it comes to streamlining manufacturing operations and realizing the potential savings, it is all down to the way companies manage their most important asset – their data. “Pharmaceutical manufacturers need to minimize duplication and storing of their information, ensuring visibility at what we call a ‘single global instance’ across all manufacturing facilities and operations,” says Constantinou. “In doing so, costs can be balanced and efficiencies can be managed across all of those areas, to the extent that even the number of plants may be reduced as a result of rising utilization rates in the existing facilities. We, as an IT company, are enabling companies to assess their current IT infrastructure and to eliminate as much waste from that process as possible.”

Pennsylvania-based Colorcon is a classic example of a global manufacturing company that was being held back by having several non-integrated management systems. The organization lacked visibility across its manufacturing operations – spending significant time, effort and resources to ensure that it was using a consistent methodology for formulations, as well as uniform manufacturing processes across its various production facilities. “We wanted to achieve visibility across our enterprise, from sales through manufacturing to better serve our customers,” said CIO Perry Cozzone. “We also wanted to service all of our pharmaceutical industry customers with a consistent methodology as it pertains to new product development.”

Colorcon recently upgraded to a newer version of Oracle E- Business Suite to take advantage of expanded functionality – in particular the addition of Oracle Process Manufacturing (OPM) Quality Management. Through this, Colorcon has achieved a single source of truth across all of its production facilities, enabling it to better manage the variability of its manufacturing processes and, as a result, to scale its business while improving customer service. The solution has, according to Cozzone, also driven new efficiencies in inventory management and production lead times.

Companies are fast discovering that by implementing these changes, and enabling this enterprise-wide visability, the benefits and cost savings extend into numerous areas and address various issues. Perhaps foremost among these is that of compliance. As Constantinou explains: “The tendency within pharmaceutical companies to silo or compartmentalize information is one of the reasons for the high cost of compliance in the industry.” He continues: “This has led to issues of transparency across the various value streams and the entire supply chain, which could, for example, involve numerous manufacturing plants operating globally. It’s important to have all of those plants tied together through a common enterprise system that enables visibility and consistency of processes throughout.”

The struggle with compliance
Compliance is an extremely important part of any life sciences manufacturing operation, and especially so in pharmaceutical manufacturing, manufacturing, one of the most regulated manufacturing industries around. It is, as Constantinou says: “one of the things that keeps CEOs up at night,” unsurprising perhaps in light of the media attention given over to compliance in recent years. As some of the high profile cases and product recalls have demonstrated, the repercussions can be enormous, devastating and in some cases global for the companies concerned, and the industry as a whole.

“The cost of a product recall can be in the billions of dollars and is measured not only in terms of loss of revenue but also its impact on the welfare of the public,” says Constantinou. “After all, it’s important we don’t lose sight of the fact that, while pharmaceutical companies and manufacturers must of course, generates revenue, they and their products have a huge impact of public welfare and health.”

Companies can ensure they are doing everything in their power to reduce the risk of a recall situation by having the right information at the right time. “Central to that is providing the right information through a company’s IT system, using a single version of the truth rather than a variety of sources of information. Having that single source of truth then enables departments and executive management within a company to make the right decisions, quickly and with confidence.”

Constantinou explains that in the life sciences industry, there are four main types of compliance that companies must address: industry specific, internal compliance (a company’s own SOPs), generic compliance – those affecting companies across all industries, such as SOX – and customer requirements (contracts). “Therefore, for a manufacturing pharmaceutical company, the issue of compliance really touches every single functional area. One way to reduce the cost of compliance is to implement a system that enables visibility across the value stream about all key functional areas that provide you with the information. This provides the assurance that you are getting the right information to the right people at the right time to ensure you are a compliant organization.”

And, whether that means complying with GXPs, having the ability to manage those effectively from the ordering of raw material right through to packing and commercialization is vital.

HyClone, a leader in manufacturing cell culture media, sera, and BioProcess Container systems, is typical in the industry in having serious concerns about meeting FDA requirements, in particular for electronic signatures and audit trails, Information Systems Manager Chris Johnson saying: “When the regulations first came out, we weren’t sure how we would be able to meet them.” The company had discussed getting rid of its paper system and moving to an electronic batch record for some time, and finally did so by upgrading to Oracle E-Business suite 11i. As Johnson explains, Hyclone are very happy with the results, finding Oracle Process Manufacturing key in enabling it to comply with FDA regulations. As Johnson comments: “Oracle helps us meet regulatory requirements and ensure our manufacturing systems are GMP-compliant. Plus, it gives us the documentation we need to back that up.”

Colorcon also uses Oracle E-Business Suite in a validated environment as well as Oracle Tutor to help document its processes for regulatory compliance and consistency with best manufacturing processes specific to each country in which it operates manufacturing facilities.

“As a supplier to the pharmaceutical industry, we must comply with stringent regulations, many of which require extensive documentation of our manufacturing and supply chain processes,” said CIO Perry Cozzone, “Oracle has made a significant effort in OPM to recognize validation and regulatory requirements, including 21 CFR Part 11, which requires companies to employ procedures and controls to ensure the authenticity, integrity, and when appropriate, the confidentiality of electronic records. Oracle provides effective tools and extensions that enable organizations like ours to accelerate validation and compliance processes.”

The highly regulated environment in which life sciences and pharmaceutical companies must operate has also impacted on the industry’s willingness and ability to evolve with the times. Constantinou explains: “The daunting task of having to revalidate an entire process in order to be compliant with FDA regulations has in the past made the pharmaceutical industry very reluctant to implement changes in its processes. That reluctance, however, has raised concern, resulting in a pharmaceutical manufacturing sector that has failed to stay in step with the progress made in other manufacturing areas.”

Innovation in pharmaceutical manufacturing has also suffered as a result of the burden of compliance, as Constantinou explains: “Companies have, in essence, had to slow down their manufacturing systems in order to catch up with their compliance requirements, which has traditionally been accomplished through a very heavily paper-based or hybrid system. With an enterprise-wide system and IT infrastructure and systems, however, it is possible to automate almost all of these processes, including GMPs and the documentation required to maintain regulatory compliance, maintaining the integrity of the compliance process.” He also points out that by automating many of these processes, it also streamlines manufacturing, “helping to reduce costs and enabling manufacturers to reengineer some of their processes to be more effective and more efficient, and to ensure that compliance stays in step with that.”

Maintaining standards
Fortunately, the industry’s struggle with compliance has not fallen on deaf ears. The FDA has responded by examining the processes involved in compliance, aiming to help pharmaceutical manufacturers improve efficiency and better achieve compliance. The FDA is now steering the industry further in the direction of a quality-by-design approach, and away from the quality-by-testing approach traditionally taken by the pharmaceuticals industry. That, says Constantinou, may seem like a subtle difference, but it represents a huge change in the way companies deal with their processes and quality systems.

Quality is something that is measured right from the start in a life sciences or pharmaceutical company, starting with the ordering of the initial raw materials and ending in the final dispatch and commercialization of that batch. And, as Constantinou explains, the ability of companies to achieve consistently high standards throughout that lifecycle goes back to the need for a single source of the truth in terms of their information. “Information on a particular batch is maintained throughout so that, when finally released from the manufacturing plant, it is possible to trace it all the way back to the initial raw materials, as well as the results of any testing that was conducted on that batch. Through the IT infrastructure and applications of a company like Oracle, a company can have a very clear picture of the geneology and the lifecycle of that product and the processes it has gone through.

Looking forward
Asked how he feels the technology at the heart of pharmaceutical manufacturing has development over the years, Constantinou says, from Oracle’s viewpoint, it’s easiest to look back at the technology’s development on the database side. “Our applications are really an extension of this, building on the robustness of the database. We’ve seen that grow and improve to the point that we can now do things on the application side more efficiently than ever before. Data mining, for instance, can be used with very sophisticated algorithms to look for patterns in a company’s data, insight that could enable them to make key business decisions.” These developments in the software have, of course, developed in tandem with the computer themselves, with increases in processing power, for example, enabling us to now achieve things in near real-time.

“The web too has become a tremendous enabler,” adds Constantinou. “Our applications are now all web-based to enable improvements in efficiency and streamlining of processes, both within a company and externally across the whole supply chain. This means it is now possible to collaborate ever closer with your external partners. Service oriented architecture – providing services based on key applications that can be extended across a variety of areas – is the next step, and forms the focus of Oracle’s investment for the future.”

Constantinou also predicts further integration, and therefore streamlining, of data and information from electronic medical records, clinical trials applications and clinical development of pharmaceuticals, which will also have an impact on the manufacturing sector.

Concluding our discussion, Constantinou looks forward to an exciting future when it comes to what the technology will enable: “In addition to the technology developments we have discussed, in particular the move towards service-oriented architecture, there will be a whole coalescence of standards – both open standards and those adopted in the industry – which will streamline data in the future. Together these factors will be the next wave of developments in the industry and will provide the information and knowledge that companies desperately require in order to become more efficient, more compliant and more competitive.

FACTBOX: ORACLE E-BUSINESS SUITE
To date, more than 1500 companies are live on the Oracle EBusiness Suite, the industry’s first integrated suite of internet business applications that automates critical business processes across both front and back office operations. The Oracle EBusiness Suite can streamline every area of a business –marketing, sales, service, contracts, order management, product design, procurement, supply chain, manufacturing, financials, projects, human resources and professional services automation. Since its initial introduction, Oracle has delivered several releases of Oracle E-Business Suite enhancements, resulting in a mature, function-rich set of applications. Oracle E-Business Suite also offers customers unprecedented choice and flexibility in implementing business applications; its open architecture and single data model allow applications to be deployed as individual modules, business flows, or as an entire integrated suite. The Oracle E-Business Suite is offered as traditional software on CD ROMs or as an outsourced service.

SNAPSHOT: CUBIST PHARMACEUTICALS, INC.
Cubist Pharmaceuticals, Inc., a biopharmaceutical company focused on the research, development, and commercialization of products that address unmet medical needs in the acute care environment, has traditionally focused on developing business and product opportunities in the anti-infective marketplace.
Challenges
• Improve ability to manage product safety monitoring and pharmaco-vigilance compliance. *Support commercial activities
and US sales force.
• Facilitate regulatory compliance related to pharmaceutical manufacturing processes.
• Reduce operational costs through introducing more efficient business processes.
• Improve ability to analyze and act on financial, sales and other business data.
Solutions
• Implemented Oracle Adverse Events Reporting System, improving Cubist’s ability to effectively and efficiently manage
pharmaco-vigilance processes.
• Improve Cubist’s ability to rapidly and effectively respond to FDA inquiries.
• Expand Cubist’s ability to interpret safety and pharmacovigilance data.
• Implemented Oracle Process Manufacturing to improve inventory control and track lots to facilitate regulatory compliance.
• Implemented Oracle E-Business Suite applications to automate

A CASE IN POINT
The company: Three Rivers Pharmaceuticals (3RP) is a privately owned pharmaceutical company that develops and markets generic prescription drugs.
The challenge: While still in its start-up phase, the company wanted a technology infrastructure that would help measure and track its compliance with complex FDA requirements. The company also sought software that would help it coordinate information with its international manufacturers, contract manufacturers, and research organizations, which would enable it to develop drugs, seek FDA approval, and market generic drugs less expensively. The technology solution it was looking for had to be affordable and deployed within a few months – before its first major FDA inspection.
Why Oracle?
After comparing cost of implementation with other vendors the company opted for Oracle E-Business Suite On Demand, to address its technology challenges. “We hadn’t thought of using outsourced services until Oracle's experts suggested it,” said Christine Sheehy, 3RP's director of finance. “We were going to bring everything in-house, and we were prepared to spend the resources to hire staff to support it. At first the thought of using Oracle E-Business Suite On Demand seemed too great a departure from what everyone had in mind, so we said no. But additional analysis found it really made sense. We realized by using Oracle On Demand we wouldn’t have to hire a DBA and two administrators, and we could be up and running in an Oracle EBusiness Suite environment in a matter of weeks.” In anticipation of the first FDA inspection of its facilities’ systems, 3RP needed to be up and running on Oracle in less than 6 months, which Oracle achieved with ease.