Supply-chain practices and requirements
» Supply-chain integrity is a major issue when outsourcing, and its importance has been underscored by recent high-profile
events such as the incident of contaminated heparin from China. Have sponsor companies' requirements and expectations changed
as a result? Is there an increased focus on additional qualification, auditing, or supply-chain practices? Are there specific
programs that your company has adopted in response these changes?
Mukherjee (Dr. Reddy's):
Absolutely. The pharmaceutical companies are increasing their intensity when it comes to inspections and audits of sources
in Asia. These inspections are now a significant criteria for the selection of a CMO, which reinforces that price competitiveness
is not a single selection criteria anymore. The audit process typically looks to ensure that the CMO has a management system
in place that not only addresses individual problems that may occur, but that the root, the systemic problems, get recognized
and corrected as well. The customers expect that our management systems extend beyond our own works and that we apply the
same criteria and scrutiny to our supply base as well. While Dr. Reddy's has traditionally had strong quality and supply-chain
systems, these systems have been enhanced to clearly demonstrate to our customers that these programs are under control.
We haven't seen a marked change in the way that our customers deal with us as a result of these incidents. There have always
been rigorous qualification processes in place either through independent organizations such as FDA, MHRA [UK's Medicines
and Healthcare products Regulatory Agency], etc. as well as customer audits of quality systems, processes, and ESHA [environmental,
safety, and health affairs] standards. Customer audits have always contained a review of all aspects of supply-chain procedures.
[We] have always been open to any such audits and have maintained a policy of continuous improvement to our in-house systems
independently and following audit feedback.
Without question, this is one of the most critical issues that the pharmaceutical industry must address over the next few
years. As a result, both the criteria and the standards of acceptability have changed significantly for sourcing, not only
from Asia, but from the rest of the world. There are increased requirements for better understanding the quality capabilities
and security, of the Asian vendor/outsourcing partners, the vendor of their raw materials, and even further down the line.
As one customer told us: 'I want to know the farm that the potatoes came from.'
We find several of our customers battling the question of 'information at what cost' and, frankly we are in the midst of the
same conversation. As customers come to us with the question, we find it essential to answer it together. We both need to
understand 'how critical is the material,' 'what cost are we willing to incur to understand the material's pedigree?,' and
'how do we get there most efficiently?'
SAFC/Sigma-Aldrich has taken several steps to address this challenge. Firstly, we have developed explicit tiers of quality,
so that customers can balance their requirements with our quality systems to deliver the appropriate quality at the appropriate
cost. And, most importantly, do so with absolute clarity about what they are receiving. Secondly, we have recognized that
the industry's current standard of one vendor X one customer = one audit to be far too expensive to sustain as the criteria
and standards of the industry change. So, we have adopted two approaches to address the challenge. We have developed a vendor
audit service that aims to spread the cost of audits across at least two parties. We have also taken an active role within
the Rx-360 initiative to set stronger standards across the industry. Based upon standards that we see in other business sectors
in which we are active (AIB International for the food industry and SEMI for the semiconductor industry), we know that this
initiative will ultimately reduce costs for all industry participants.