Contract manufacturing.
Almost 60% of respondents report using CMOs for some or all of their manufacturing. Although respondents show concern about
all aspects of their relationships with CMOs (e.g., reliability, visibility, flexibility, and IP) the most dominant concerns
are around quality and compliance (these are the only categories for which a plurality of respondents indicated "extreme concern").
To address these risks, the most commonly noted approaches include a comprehensive focus on prescreening and monitoring CMOs,
frequent audits, and keeping a representative on the CMO site (and dual-sourcing where possible and reasonable) (see Figure 5).
Disposables.
Over half of respondents (53%) currently use disposable technology for commercial manufacturing, and a total of 83% either
plan to or are likely to use disposable commercial manufacturing technology in the future. The most reported significant risks
around this technology focus, in decreasing order of reported significance are: comparability as products are scaled up for
commercial runs, timely availability of supplies from suppliers, and extractables and leachables. To address these risks,
respondents turn to many of the same approaches that they use for managing raw-material risks, including using multiple suppliers
where possible, stringent vendor qualification and audits, extensive quality control testing and validation, and carefully
constructed contracts specifying minimum inventory levels.
Forecasting and demand variability.
About half (49%) of the respondents consider forecast errors a significant risk; less than a quarter (24%) are not concerned.
In spite of this, 30% do not explicitly model demand variability in their planning process, and another 45% only model some
upside and downside scenarios; only 18% explicitly model demand dist ributions (see Figure 6).
By far, the dominant approach (70% of the respondents) to dealing with demand uncertainty is to hold extra inventory—most
of the other cited approaches have to do with securing extra capacity, either internally or through relationships with CMOs.
About one third of respondents explicitly track forecast accuracy by comparing point forecasts with actual demand, and about
one quarter suggest that their firms do not explicitly track forecast accuracy.
Survey respondents
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Distribution.
Of the various risks associated with finished-goods distribution, cold storage and expiration-related issues are more of
a concern than contamination, theft, and counterfeiting. No single approach stands out in the reported mitigation methods
for these concerns, although respondents seem to continually explore alternative suppliers and methods for packaging, shipping,
and storage (in particular, they mention continual quality auditing of transportation service providers, secure packaging,
tracking systems, diversification, inventory management software, and so forth). More than 80% of responding firms store inventory
in multiple sites, selecting these sites in most cases for their proximity to manufacturing sites or their low operating costs.
Once finished goods shift to distributor control, only 25% of respondents are not concerned with distributors' risks, although
only 20% are confident in their visibility into distributors' risks, suggesting a key area of potential improvement.
Conclusion and next steps
This survey provides initial insights into the current state of risk management and risk-mitigation strategies in the biopharmaceutical
industry. In subsequent surveys, the BOI team intends to explore specific risk-mitigation app-roaches and metrics currently
employed by progressive firms, in order to develop a better understanding of which metrics, tools, and approaches are particularly
useful. At the same time, there is clearly a need within the biopharmaceutical industry for analytical tools and approaches
that account for the specific characteristics of this industry, and that use the vast quantities of data available to help
managers make more rigorous, informed, model-based decisions to manage and mitigate the complex set of risks faced by the
industry.
References
1. Ernst & Young, "Beyond Borders: Global Biotechnology Report," 2007.
2.R. Johnson and P. Kaminsky, "Biopharmaceutical Operations: Developing the Science," PharmaFocus Asia
9 (2008).
Phil Kaminsky is a Professor of Operations Research and Industrial Engineering and Director of the CELDi Biopharmaceutical Operations Initiative
at the University of California, Berkeley, kaminsky@berkeley.edu
. Jiyang Liu and Julia Olsen-Claire work at the CELDi Biopharmaceutical Operations Initiative.
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