Once bitten … forever shy.
Take it from Bob Sheroff. He’s an experienced pharma supply-chain leader who’s held hefty supply-chain management roles at Warner Lambert (Pfizer), J&J, and Biogen. If your organization relies on outsourcing development and manufacturing: “Absolutely most important is reliability of supply.”
“I was impacted badly once, when a supplier suffered a major regulatory issue,” says Sheroff, about an infamous supplier breakdown affecting numerous drug sponsors some years ago. “We were rendered unable to supply a cancer drug of last resort. The damage had little to do with revenue loss, since we were a large company with numerous marketed products. However, the issue was letting patients down … and all the negative press. After an experience like that, you know reliability of supply is paramount. Without it, there’s nowhere to go in the pharmaceutical space.”
Know The Hand That Feeds You
The experience Sheroff mentions above concerns a major quality setback, but there’s more to the story, which taken together ultimately rendered the situation insurmountable.
“Rightfully so, we perform audits that are focused on compliance to cGMPs and quality,” explains Sheroff. “However, there's another important aspect that attracts less attention, but can be just as damaging: Assessing the ‘business health’ and ‘business climate’ at your CMO.” In this specific case, the CMO was owned by a larger organization, whose business resolve to remedy the quality challenges was not equal to the task.
Sheroff offers a second example of the need for a “business assessment.” He recalls two drugs competing for market share in the anti-TNF space. The market demand for the first product “took off,” but there was no capacity for increased production at the contract manufacturer. That became an enormous market opportunity for the second product. Sheroff says the issue was the business climate at the CMO: Business was too good to allow for more capacity or increased production for its customer.
He draws two lessons from both these reliability-of-supply challenges (quality and business climate). “Fundamentally, you hate to be single sourced; you never know what could happen to any company, and should try to avoid this situation. The other lesson is to ensure you have a CMO with the business climate and resolve to facilitate upside potential should your product gain greater demand than you planned.”
The Case For Compliant Quality
“Even very good companies can find themselves on the wrong end of a bad inspection.” That’s how Sheroff introduces his next subject, which he calls “continuous compliance,” and which includes a certain symmetry in the provider-owner relationship.
Sheroff says both CMO and drug-owner must remain diligent in checking for potential challenges over time. “A periodic audit provides a snapshot, but you really need to watch the entire movie,” Sheroff says. “For example, performance metrics for the contractor are a good way to gather continuous input on operations. These metrics should be reviewed on a routine basis, and by a joint team from the drug-sponsor and the service provider.”
Which raises some questions. How much should a sponsor assist a service provider who gets hit with some unfavorable item in an FDA inspection? How much understanding is forthcoming … before flight to a second or new source?
“We have a vested interest in our contractors, and therefore own the responsibility to assist them whenever we can,” replies Sheroff. “There's only one response to ‘they can't supply,’ and that is to correct the situation ASAP. It's that simple, second suppliers or not. As long as the CMO does its part, most drug-owners are in fact going to help. The downside far outweighs whatever you invest in spending or resources to help out.”
There is a caveat. According to Sheroff, because CMOs have so many customers and relationships, they can actually become overloaded with outside input. He believes this is one of the least recognized difficulties of being a contractor. “You're everybody's supplier. Sponsors come with their own demands and solutions. Often all this input leads to even greater complexity at the CMO.”
Because of this, Sheroff is impressed with CMOs that say, “This is our approach, and the standard for our work. Otherwise, we create more problems for all our other customers.” This is opposite of a provider attempting to do things differently for every customer, particularly when a production challenge emerges. “That just puts much more strain and stress on the CMO,” says Sheroff. “Therefore, continuous compliance does require accepting a large degree of standardization, and ensuring mutual understanding between the drug-sponsor and CMO.”
We Have A Response
This doesn’t imply CMOs can get away with a lack of responsiveness. Particularly, says Sheroff, when addressing new product forecasts.
“The forecasting process on any new product is fraught with inaccuracy. We joke that we know the forecast is wrong, but no one is quite sure by how much or in which direction,” he says. “A CMO is a real partner if it, too, recognizes the “unknowns” in demand planning for a new product, and appreciates that we are dealing with patients’ health. If you don't have a certain degree of responsiveness, ensuring uninterrupted supply is almost impossible.”
Of course in practice, who is asking the CMO to be “responsive” comes into play. For example, I ask Sheroff if it wasn’t easier to get a response when he was at a Big Pharma versus at a smaller Biotech.
“This is interesting,” he replies. “CMOs have two different customers: Pharma with numerous products and greater volume, and the biotechs with perhaps a single product at a smaller volume, and who rely more heavily on the developmental capabilities of the contractors. Successful CMOs have to deal with both these differing businesses and models.”
Why? Sheroff reminds me that small biotechs have been more prolific in bringing new products to market, either directly or eventually via alignment with Big Pharma. “If you're a CMO, you're dealing with these two vastly different customers, but you better be responsive to the smaller drug developers as well. Biotechs have certainly proven their value in driving product innovation leading to CMO opportunities.”
A Venue For Discussion
As we wrap up our conversation, Sheroff muses aloud that he’s often wondered, “What would happen if you lined up what I'm concerned about, with the concerns of the CMOs? If there were a real opportunity to discuss approaches and challenges, I’m sure we’d find we aren’t as far apart as we thought.”
“Well, welcome to your first Outsourced Pharma conference,” I reply. “That's what you will experience in Boston. Every panel discussion includes representatives from bio, pharma and service providers. The mission is to provide the authentic opportunity for people like you to talk to your counterparts at CMOs. You can start with reliability of supply, responsiveness, and continuously compliant outsourcing.”
And thanks to Sheroff for a great preview to those discussions.