Six biotechnology and pharmaceutical (biopharma) veterans with experiences in one of the most difficult challenges in the drug industry – preventing or correcting supply-chain disruptions – took the stage at Outsourced Pharma West (OPW) San Diego to provide insights and best practices.
These professionals are responsible for global supply chains in complicated RNAi therapeutics that utilize nanoparticles (Arcturus Therapeutics): anti-obesity drugs (Orexigen Therapeutics); orphan drugs (Retrophin); vaccines (MabVax Therapeutics); non-opioid analgesics (Pacira Pharmaceuticals); and providing the industry with global supply-chain logistics (UPS).
Despite the significance of the topic – and my best efforts at restraint – at one point during the discussion I couldn’t help but put some of their statements to music:
I’ve got 6 shipments in limbo
47 days on a tarmac
58 borders in Europe
And they’re taxing me at every step I take …
So … I’ll never make it in the music industry. But the real point is that setting up, maintaining, inheriting or fixing up a drug or materials supply-chain, even for those grizzled veterans of the industry, is almost always more difficult than first imagined. So keep imagining.
Start On The Right Note
Low probability-high impact events are difficult to foresee and thus plan for throughout the drug development and manufacturing continuum. Preempting disruption at any stage should be a goal for individual scientists, project teams and leaders, and a concern to all levels of management, investors … and ultimately markets and patients.
According to one of our experts, for smaller and midsized companies – and more established organizations at times – the “supply chain” often starts when somebody on the development team gets assigned to begin bringing in and/or sending out materials. The difficulty and importance of this first task is usually underestimated. The anointed person finds himself (or herself) spending weeks trying to “run down this material or that, and encountering issues receiving and shipping material, often across borders.”
One panelist gave the example of a project for protein therapeutics, where the bulk drug-substance needs to be shipped and stored as a frozen solid. There are various bags to select from, and decisions on which qualified containers are best to fit and essentially encapsulate the selected bag. “Just the calculations for dry ice are difficult, including the added expense as you’re moving these materials around.”
“Now you start to feel the pressure,” he continued, “because you realize your typical bulk drug-substance manufacturing campaign can be between $50,000 to $100,000, and so this shipping configuration becomes critical. Should something go wrong, you don’t want to lose more than a small percentage of your product at any one time, right?”
And the details keep multiplying. For example, before material gets to its destination, prepare for it “to be held up for five days while agencies go through your pro forma statements and take a hard look at your documentation. You might need sixty kilos of that dry ice in one of the shipping containers that’s coming into the U.S.”
“For one of our projects, we typically had six flights coming into the U.S. at multiple points of entry over two days to bring in the drug or the bulk substance. We couldn’t afford to lose more than a small amount of material. If for some reason the import officials within a specific U.S. entry point were overly aggressive, we could still get most of the material in a timely manner.”
His comments concluded with this: “Of course adding to the mix is that often there are project managers – or CEOs – trying to push the project timelines unrealistically. You’ve got to back that off, and get yourself to a point where everyone understands and agrees to real and manageable risks.”
Best Practices For Better Harmony
All our experts agreed the initial best practice applied to a supply chain is to understand that chain starts as early as when scientists and project managers are considering which materials to investigate in the R&D phase. At the least, your chain deserves serious consideration at the first need for shipping and receiving material for a project. All involved with the project should recognize “the exercise you’re about to go through requires a significant amount of looking ahead; time that goes into this up front is always well worth the efforts.”
In other words, don’t repeat the sins of the past:
“Yeah, we've all had nightmare scenarios,” said one of our panelists, “like 47 days on a tarmac with one project, and VATs [value added taxes] that were surprises and unbudgeted at every European border we crossed … it's so annoying if everyone goes through this learning curve, right?”
To cut down on the annoyance, I’ve selected two more areas of practical advice from among the many discussed in San Diego.
1. Stay Local?
An attendee at this Outsourced Pharma West session made the comment that with all the risks involved, it might be best to do everything possible to stay local when sourcing and selecting supply-chain partners. That elicited this reply from one of our panelists:
“It would be nice if all our compounds could be made right here in San Diego … but of course in reality that is not the case. The increasing sophistication of our products also makes for a more difficult supply chain. We aren’t particularly fond of traveling across the world to look for a CRO, or inspect an API manufacturing plant with 6,000-liter tanks – in principle they tend to look very similar! But at times you simply must in order to support the innovative programs the company is driving.”
But staying local can be a best practice at times:
“In the past we’ve made the decision to stay local and avoid the supply chain entirely,” said another panelist. “Just pay the extra $60,000 that's required per batch, and have the certainty that you'll take weeks off your development time, and avoid a whole lot of risk. I’m always looking for people that truly understand this area of our business, and will advocate for these hard decisions. I've already made the decision a couple times in my own career, where I said, ‘Let’s forget Europe or Asia.’ Just make it here even if it appears the cost of goods is more expensive. Measured correctly, the value is there.”
Here is another piece of advice:
“You may find yourself in a negotiation with a CDMO that has U.S. and European or Asian locations. If they are trying to move you offshore, negotiate hard to have all the shipping and logistics costs covered by them. It's going to be substantial to bring that material back into the U.S., and you're going to have a time factor associated with it. Push all of that back on the CDMO.”
And finally on this subject from a third panelist:
“You may have to single source, because there really is only one source for a material, or it just makes too little sense to bring in that second or third supplier because of distance, cost, or lack of trust. In this case, you have to think almost like a joint venture with that CMO or supplier. Structure deals much more closely, because they are now an integrated part of your business plan.”
2. Remedies For The Pocketbook
Key for those in charge of bringing a product – and that can mean bringing an entire company – commercial is going back and validating that the supply chain you have allows for “low-cost requirements.”
“We thought we had to ship using specialized containers that cost around $12,000,” explained one panelist. “We then found and verified a trucking service that would work closely with us at a cost of $4,200 to ship the same amount of material.”
A final anecdote to wrap things up:
“The earlier talk reminded me of a 60-kilogram package of drug substance we needed to ship that would require a crazy amount of dry ice. We found it much more inexpensive to pay about $590 for a smaller, battery-operated and disposable fridge that we could ship. And you can recharge some of them when you experience a customs hold or other contingency.”
Hopefully that recharge doesn’t have to last up to 47 days.