Agnes Shanley is senior editor of Pharmaceutical Technology.

Agnes Shanley

Drug development has reached a point where nine out of every 10 new drug candidates fail in the clinic (1). Competitive pressures have led to explosive growth in demand for research and development (R&D) outsourcing, especially as smaller biopharma and pharmaceutical companies play a more prominent role in drug development.

	Starting in the 1990s, larger contract development and manufacturing organizations (CDMOs) began to acquire drug substance manufacturers to diversify their business models beyond drug products. Since then, some have added other critical functions such as regulatory affairs and logistics.

	As a result, pharmaceutical manufacturers, especially small- to mid-sized companies, are discovering that partnering more closely with one diversified contract company can reduce development time and cost.

	CDMOs such as Patheon (now part of Thermo Fisher Scientific) performed their own research to quantify the potential savings. This work resulted in an “Eight Weeks Saved” marketing campaign for Patheon’s integrated service offering, recalls Jennifer Therrien, head of marketing campaign strategy.

	But, as outsourcing continued to grow, there was a need for independent testing to validate these claims and quantify the benefits of moving from multiple to single-partner service models. Patheon proposed just such a project to Tufts University’s Center for the Study of Drug Development (CSDD), which took on the project. Patheon funded the work. Results (2) came out in 2017 and were published in a white paper (3) in October 2017, and a paper is expected to be published in 

	CSDD grounded the study in the concept of net present value (NPV), a fundamental measure of project or product profitability that is based on the difference between the present values of cash inflows and outflows. Researchers analyzed data from five drug development projects, three involving monoclonal antibodies (mAbs) and two for small molecules, to get an idea of how single-source contracting made a difference. The center used existing data from CSDD’s studies of biopharmaceutical development costs and rates of return, using multi-vendor sourcing as a baseline.

	Results showed an average savings of 14 weeks using the single-vendor approach and total gains from reduced development costs and higher net revenues of $44 million. The greatest reduction in chemistry manufacturing and controls (CMC) time was found with small molecules in Phase I, where 19.1 weeks were saved, and in mAbs in Phase III, in which development times were shaved by 19.8 weeks. Overall, these shorter time frames resulted in $20.6 million savings in after-tax development costs.

	Reductions in after-tax preapproval development time costs reached $49.3 million for mAbs in Phase III and $18.9 million for small molecules in Phase II. The increase in the present discounted value of after-tax net returns was $32.6 million for small molecules in Phase I and $30.7 million for mAbs in Phase III, with total net gains of $80 million for mAbs in Phase III and $44.5 million for small molecules in Phase I. Tufts CSDD will continue this research, expanding its scope to include more therapeutic categories and may even drug delivery forms, in the future, according to Joe DiMasi, director of economic analysis and research associate professor, Tufts Center for the Study of Drug Development (CSDD).

, (5) 47:20-33 (2016).
	2. J. DiMasi, “Outsourcing Drug Manufacturing: A Study of the Economic Impacts of Single vs. Multi-Vendor Sourcing,” a presentation by the Tufts Center for the Study of Drug Development, October 2017.
	3. J. DiMasi, Z. Smith, and K. Getz, “Assessing the Economics of Single-Source vs. Multi-Vendor Manufacturing,” The Tufts Center for the Study of Drug Development White Paper, Tufts University School of Medicine, October 2017.  

	When referring to this article, please cite it as A. Shanley, “Outsourcing: Does Focus Pay Off?," 

Articles

Research suggests that working with a single contract partner can reduce development time and improve economics.

Outsourcing: Does Focus Pay Off?

	Joe DiMasi, director of economic analysis and research associate professor, Tufts Center for the Study of Drug Development (CSDD), discussed research into the impacts of working with single source contractors with 

: When will the full results of the study be published?

: We expect the full study to be published shortly. Currently, we are making minor changes to the paper in response to peer reviewer comments. 

: Did the analysis also take into account the costs due to potential risks that might result from relying on a single vendor (e.g., when special products are involved and an outage or compliance problem develops at a contract manufacturing organization? [CMO] facility)? If not, are there plans to address this issue in subsequent work on this topic?

: We acknowledge that there are potential risks, but we had no way of quantifying them for the study.

: Did you see differences in time reduction for small- versus large- molecule development?

: With the caveat that the sample size is small, there actually was, on average, no appreciable difference in time reduction between small and large molecules. The mean time reduction for the monoclonal antibodies (mAbs) is 14.3 weeks, while the mean time reduction for the small molecules is 14.1 weeks.

: Why was the time reduction so notable in Phase III compounds, particularly mAbs? 

: The time reduction was somewhat above average, but it was mostly a structural aspect of the model with regard to R&D costs. The model assumes that clinical testing for a phase for which manufacturing is contracted with a single vendor can begin sooner than otherwise. That brings ultimate approval closer on the timeline to testing of the earlier phases. So, the model yields lower opportunity costs for all earlier phases. The later you are in the process, the more that earlier phases are affected.

: What are your plans for continuing this research?  What additional factors and economic issues will be examined?

: We hope to expand the analysis to obtain data on more projects, which will serve to validate our initial analysis and allow for a comprehensive analysis of key variables of interest, such as molecule type, route of administration, and therapeutic class.

: Why didn’t the concept of single-source manufacturing take off in the 1990s when the programs were first introduced? Were there any flaws in the basic business models and have they been addressed since?

: This is a point that came up in interviews [with subject matter experts] for this research.  The early efforts may have been more ad hoc, and outsourcing companies may have lacked the comprehensive capabilities needed to carry through effectively.

: Small-to-mid-sized pharma companies are using single vendors, but large companies might also benefit from leveraging them to achieve improvements. Why haven’t more large pharma companies embraced the concept, and what would be needed to change their established point of view?

: Large companies have the resources to keep this entirely in-house. On the other hand, they also have the resources to better manage and leverage their outsourcing activities, and thus to optimize the advantages of single-source manufacturing if they do outsource.

	When referring to this article, please cite it as A. Shanley, “Reducing Development Timelines and Costs," 

Joe DiMasi, director of economic analysis and research associate professor, Tufts Center for the Study of Drug Development (CSDD), discussed research into the impacts of working with single source contractors with Pharmaceutical Technology.

Reducing Development Timelines and Costs

	In December 2017, TraceLink released findings from a survey of 660 serialization partners, including 174 pharmaceutical companies and 155 contract manufacturing organizations (CMOs) (1). Results, due to be published during the first quarter of 2018, suggest that only one third of the pharma company and CMO executives surveyed see their companies as being “very ready” for the US Drug Supply Chain Security Act (DSCSA) serialization deadline in November 2018.  

	Most of the companies who feel well prepared had taken many of the necessary steps, but there were some notable gaps. For example, only 8% had integrated efforts with most (i.e., 81-100%) of their CMOs. Only 11% reported that 81-100% of their CMOs were ready to ship serialized product, while only 12% reported that internal packaging line equipment had been ordered and fully installed, and that 81-100% of their internal packaging lines were ready. In addition, 23% were not concerned about equipment and skills shortages affecting serialization compliance, and only 37% had moved away from paper-based lot transaction records. Half of CMOs surveyed felt very ready for DSCSA, but only 23% reported that they are integrated with their pharma customers, while 22% say brand owners are ready for integration. Only 9% are concerned about equipment shortages having an impact on compliance. For pharma companies and CMOs, only one third reported feeling “very ready” for the EU’s Falsified Medicines Directive (FMD).

	An earlier 2017 survey (2) by the Healthcare Distributors Association examined the industry’s readiness for serialization based on responses from professionals at 67 manufacturers, including 15 of the top 20 based on product sales. This survey also found readiness gaps, with 3% of generics and 34% of branded-product manufacturers expecting to ship 100% serialized product to distributors by November 2017. By November 2018, however, 69% of generics and 91% of branded pharma companies are expected to do so. 

	By November 2017, 24% expected to send serialized data to distributors, 33% said they will send it by November 2018, and 30% expect to send it between 2018 and 2023. However, 13% are unsure that they will send serialized data.

The 2017 Global Drug Supply, Safety and Traceability Report

,” tracelink.com, Dec. 7, 2017.
	2. Healthcare Distribution Alliance, 

Manufacturer Serialization Readiness Survey: Executive Summary

	When referring to this article, please cite it as A. Shanley, "Surveys Redefine ‘Ready’," 

Pharmaceutical companies and contract manufacturing organizations report lack of readiness for the US Drug Supply Chain Security Act serialization deadline.

Surveys Redefine “Ready”

	It was a busy year for the Open-SCS working group. Charlie Gifford, technical director of the group, summarized developments that occurred in 2017.

: How did you decide to use good automated manufacturing principles (GAMP) lifecycle best practices for the serialization standards?

: The User Requirement Specification (URS) and Functional Specification (FS) for the standard Packaging Serialization Specification (PSS) version 1.0 were approved by members in August. Three member companies are already using them as templates for projects, and providing feedback into ongoing validation testing. 

	However, in June, we took the International Society for Pharmaceutical Engineering’s (ISPE’s) recommendation and adopted the GAMP lifecycle best practice of conducting a full validation test and report using prototype OPC-UA interfaces in order to refine PSS 1.0’s URS, FS, and operational and installation qualification (OQ/IQ) templates. The new PSS 1.0 package is set for formal release in March 2018, depending on available member resources. Eleven vendor members have committed a developer to build prototype interfaces for the validation test. This design-build-test exercise has already brought out many updates to functional requirements that had not been addressed in the previously approved draft.

	In December, work began on a PSS 2.0 URS working draft, which is scheduled for member review in February. Six inter-plant solution providers and two end users are working on this project. Depending on availability of member expert resources in 2018, the technical committee hopes to accelerate and release PSS 2.0 by the fourth quarter of 2018.

: What kind of participation are you seeing among pharma companies and contract manufacturing organizations (CMOs)?  

: Membership is now over 25, with 100 interested companies saying that they will join the group, either when PSS 1.0 is released addressing plant operations (Level 3), to enterprise (Level 4) exchange use cases for regulation reporting, or once the PSS 2.0 addresses Level 2-Level 3 exchange use cases.

: What have been the most challenging technical aspects of developing this standard?  How are they being resolved?

: One major challenge was dealing with the high-level complexity of the packaging serialization scope and problem data (product, order, reporting) and their associated integration technologies. As we’ve learned after working on these problems for the past 24 months, the root of the problem often lies with pharma customer requirements. Most pharmaceutical manufacturers’ serialization exchange requirements force their vendors to customize GS1’s Electronic Product Code Information Services (EPCIS) schema into forms that are not interoperable across systems.  These interfaces don’t scale, corrupt good data, and do not apply required interoperable transaction methods.  GS1’s EPCIS experts have worked directly with our team to ensure that the PPS 1.0 [specifications for each use case] comply with EPCIS, or at least are as closely aligned as the scope permits.

	Because EPCIS’s scope does not address serial number management and serialization events between the packaging plant and enterprise, another major challenge was developing a Serialized Identifier (SID) event lifecycle model for the events, states, and transition for serial number management and serialization events between the packaging plant and enterprise. Along the way, we’ve had to respond to the challenge that any new collaborative organization faces: how to fund all this work. We are still working to find the best business model that will support new projects and updates from changed and new regulations.

: How difficult has it been to establish consensus among members from such different groups?

:  It was especially challenging during 2015 and 2016, when there was a great deal of debate on whether PSS 1.0 should address data exchange between the site serialization manager-actor (Level 3) and the enterprise serialization manager-actor (Level 4) or between the packaging line serialization manager-actor (Level 2) and Level 3. We held four workshops on this topic alone during that period.

: How difficult is it to get the high-level IT help that serialization and traceability programs demand?

: Hiring skilled developers, for the funding that is available, is a challenge for all manufacturing and business sectors, especially as Manufacturing 4.0 initiatives take shape. Integration-specific developers are a rare breed. They need to have over five years of experience and mentoring in order to be competent enough not to compromise data accuracy and security.  This challenge has dramatically affected the quality of serialization solutions deployed in the life-sciences industry. Having a standardized integration approach will significantly reduce risks.

	At this point, though, life-sciences companies are not openly acknowledging and reacting to the supply of talent. For example, the going hourly pay rate for developers with the necessary skills has increased to $180-200 per hour. Pharma companies are paying $80-120 per hour, so many developers in life sciences get serialization experience and additional training and leave the sector for better-paying jobs elsewhere.

: What have you learned from the pilot tests?

: We achieved a number of benefits by using OPC Universal Architecture (UA), which allowed us to find and fix holes in the original draft standard specifications. We used UA to develop the validation test, FS, and associated OQ and IQ modules. The validation tests have provided a foundation for certification programs, and, as previously mentioned, solutions providers are participating in the validation test by developing interfaces.

: What are you planning for the next phase of this work?

: We began working on a draft of the PSS 2.0 URS in December for review by members in February or March. The approved scope of this standard specification will extend use cases for serial number provisioning and return as well as serialization master data, and event reporting. 

	It will also address use cases for rework and multistep processing and incorporate new use cases determined through customer surveys and an April 2017 workshop, including serial number provisioning for lot start; end-of-lot issues such as unused serial number returns and unused, decommissioned, orphaned, or sampled serial numbers; end-of-lot issues with full batch data and mid-lot runs; production order downloads for new and rework orders, including aggregation hierarchies; and handling exceptions.

	When referring to this article, please cite it as A. Shanley, "Moving Toward Open Standard Specifications for Serialization Integration," 

A review of 2017 advancements from the Open-SCS working group with Charlie Gifford, group technical director.

Moving Toward Open Standard Specifications for Serialization Integration

	For more than a decade, the bio/pharmaceutical industry has struggled to establish a true electronic pedigree that would allow its products to be traced and verified at any point along the supply chain. The US Drug Supply Chain Security Act (DSCSA) and the European Union’s Falsified Medicines Directive set timelines and requirements for serializing product packaging, aggregating product and lot-level transaction data electronically, and sharing information with distributors and at the point of use or sale. 

	Even though serialization is only the first leg of the journey toward full traceability, the technical challenges and costs are significant. This is due to a fundamental mismatch of applied integration technologies for inter-plant, plant-to-enterprise, and distribution repack exchanges,” says Charlie Gifford, technical director of the Open Serialization Communication Standard (OPEN-SCS) Working Group.

	In addition, he says, distinct data elements required for serialization and traceability are interrelated. Examples include workflow rules; serial number formats; data sets (i.e., those established by regulators vs. those used by vendors vs. those for users); provisioning and serialization events; master data and associated technologies (e.g., for production, ordering, and reporting) so the data and their relationships must be agreed upon and specified for data accuracy and exchange interoperability. Understanding and agreeing on data relationships across the overall serialization process is extremely challenging, Gifford says.

	Four large life-sciences companies and five solution providers established the OPEN-SCS working group in February 2015 to sort through these issues. Their goal was to stem pharmaceutical counterfeits by developing open, vendor-neutral data-exchange solutions that would simplify integration of the components and systems required for product serialization and traceability. 

	The group now has more than 25 active members and 100 interested supporters. OPEN-SCS achieved a number of important goals in 2017 (see 

), establishing a collaborative agreement with the International Society for Pharmaceutical Engineering (ISPE) and approving the first version of the OPEN-SCS Packaging Serialization Specification (PSS 1.0).

	Plans call for OPEN-SCS to release Good Automated Manufacturing Practices (GAMP)-compliant user requirement specifications (URS), functional specifications (FS), and operational and installation qualification (OQ/IQ) templates in March 2018. A core group of vendors (ACG Inspection Systems, Advanco, Antares Vision, Arvato Systems, Optel Vision, Systech, TraceLink, Tradeticity, Uhlmann, Vantage Consulting, and Wipotec-OCS) are developing validation test interfaces for one or more of the four use cases of PSS 1.0, says Gifford. Each vendor may commercialize compliant interfaces by the end of the third quarter of 2018.

	The group expects these efforts to reduce the cost and time required to implement serialization and traceability projects by at least 50% when applied across multiple packaging plants. “For most companies today, integration typically means custom projects,” says Evren Ozkaya, founder and CEO of Supply Chain Wizard. “OPEN-SCS will improve the standardization of exchanged data and their data structure in communications between plants, and between plant and enterprise systems, which will reduce cost.” 

	Reducing integration complexity and cost will be crucial to advancing traceability initiatives within smaller companies, especially generic-drug manufacturers and smaller contract manufacturing organizations (CMOs), whose margins are extremely tight. “These companies don’t typically see any direct benefits by investing in expensive systems to track their products throughout the supply chain,” says Marcel de Grutter, OPEN-SCS executive director. “Even major multinationals struggle with the fact that they are currently releasing fewer blockbusters so they are continuously restructuring to support their commercial products,” he says. As a result, implementations are delayed, as serialization competes with priorities such as ensuring a continuous supply of product. In 2017, after realizing that many smaller firms had not even begun serialization efforts, FDA extended DSCSA’s original serialization enforcement deadline by one year, to November 2018 (1).

	Still, a readiness gap remains underestimated. Most large pharma companies are ready, or were a while ago, but some companies still haven’t begun formal serialization programs, while others that see themselves as ready. have only serialized part of their packaging lines, says Ozkaya (see 

). “Painful days are ahead of them,” he says, because serialization efforts can lower productivity and line efficiency during early implementation stages.

	The number one issue is CMO readiness, says Ozkaya. “FDA’s enforcement delay was a welcome move, but companies need to staff project teams properly, partner more closely with solution providers, and manage their internal site and external CMO compliance risks more proactively,” he says.

	Observers see industry mindset as part of the problem. Until recently, most pharma company leaders viewed serialization as a compliance need, with no return on investment, says Gifford. At a time when more countries around the world are setting serialization requirements, regulators often underestimate what it takes for any company to implement a full track-and-trace system. “Changing requirements and timelines do not help,” he says.

	Even though basic compliance issues remain unresolved, more companies are starting to explore ways in which their efforts and investments in serialization can be leveraged to improve overall operations. One common focus is to improve overall equipment effectiveness (OEE) in packaging, to offset decreases in efficiency. “Some companies have assigned dedicated leaders to work on this, while others have invested in finding business use cases to extract value from serialization data and their ecosystems,” says Ozkaya.

	Instead of keeping these efforts to themselves, more companies are talking about them at industry conferences, conducting internal pilot projects and collaboration initiatives with trade partners to create long-term strategies. “A few years ago, we were trying to convince companies to look into supply chain and operational improvements in the serialized world. Today, more firms are taking the initiative and reaching out for help, a positive sign,” says Ozkaya.  “The industry is moving in the right direction, even though its initiatives may still lack speed and momentum,” he says.

FDA Pushes DSCSA Serialization Enforcement Deadline to 2018


	Vol. 42, No. 1
	January 2018
	Pages: 64, 66

	When referring to this article, please cite it as A. Shanley, "Pharma Serialization Nears a Tipping Point," 

Everyone may not be ready for the deadline, but open standards based on GAMP and GS1 will soon be released; more companies are also leveraging what they’ve learned from serialization to improve overall efficiency. 

Pharma Serialization Nears a Tipping Point

Vaccines have had a tremendous impact on human quality of life, increasing life expectancies by eradicating deadly diseases.  The cost of developing and manufacturing vaccines remains extremely high, however. Given unprofitable prices, improving access to vaccines has been a major challenge.  Despite these problems, innovation is reaching a new level, while new approaches to manufacturing and distribution involving non-government organizations and contract manufacturers offshore have helped improve access.  This article touches on some of the innovations, and the types of business models that have made them possible, and includes an interview with the director of the Sabin Institute.

Pharmaceutical Technology and BioPharm International

Vaccine Development and Manufacturing 2017

	When referring to this article, please cite it as A. Shanley, "Making Vaccines Accessible," 

Pharmaceutical Technology and BioPharm International Vaccine Development and Manufacturing 2017 eBook

Despite the challenges and high cost of development, vaccine innovation is at an all-time high, as new approaches aim to improve global access.