Patricia Van Arnum was executive editor of Pharmaceutical Technology.

Patricia Van Arnum

The bio/pharmaceutical industry's intensification in product development for biologic-based drugs has had an effect on the demand for supply-chain services for clinical-trial materials and commercial drugs. During the past year, several CDMOs and CMOs have expanded their cold-chain logistics, distribution, and storage capabilities. Other companies, such as third-party logistics providers, also have enhanced their capabilities to serve the pharmaceutical cold chain. These expansions are part of an overall growing market for healthcare cold-chain logistics. The total size of the healthcare cold-chain logistic services market is expected to expand from its current size of  $6.1 billion to nearly $9.5 billion by 2016, according to the IMARC Group, a research and advisory firm. 

Last May, the CDMO Almac Group opened a new $120-million North American headquarters in Souderton, Pennsylvania, which provides the company with parallel service offerings in the United States and in Europe through the company's Craigavon, Northern Ireland, site. The new 240,000-ft

  North American headquarters integrates the company's clinical technologies and clinical services activities into one location after being housed in separate locations in Audubon and Yardley, Pennsylvania. 

(IMAGE: DATACRAFT CO LTD / GETTY IMAGES) 

The facility has two interlinked buildings, the first a 74,250-ft

  building providing administrative work space for Almac Clinical Services, Almac Clinical Technologies, Almac Sciences, Almac Pharma Services, and Almac Central Services. A second 166,135-ft

  building, houses production and logistics services, including, packaging, testing, and distribution of clinical supplies. The facility has extensive storage capabilities for pharmaceutical materials, including raw materials, in-process materials, and finished goods. The facility provides a range of storage solutions, including temperature- and humidity-controlled 41,150-ft

  of warehousing (15 to 25 °C and 65% relative humidity) and refrigerated and frozen storage space. A 271,000-ft

  drive-in cold storage unit is maintained at temperatures of 2 to 8 °C, and a 6131-ft

  walk-in storage unit stores products at between–25 and –15 °C. Additional critical storage space is offered through the use of mobile units  

In March 2011, in response to increased client demand for cold and dedicated frozen storage capacity for biopharmaceuticals, Almac's Pharma Services business unit expanded its commercial facilities to include an additional 6124 ft

  of cold and frozen storage. The expansion was a joint investment with a commercial client for which Almac provides central European Union importation, warehousing, and distribution services. This space includes dedicated -70 °C, –20  °C, and 2–8 °C storage for drug antibody, drug linker, bulk drug substance, placebo, and filled vials. The company added 20 additional dedicated freezer units to its existing 10 for the storage of the monoclonal antibody and bulk drug substance products. 			

The opening of its North American headquarters in 2011 and the addition of cold-storage capacity in the EU were in addition to several other expansions in Almac's clinical-trial-materials operations. In January 2012, Almac opened a new £3-million ($4.7 million) 30,000-ft

 building at its Craigavon headquarters, which will house 150 employees from Almac's Clinical Services business. In December 2011, Almac launched a new forecasting platform, Compass, which is designed to improve the accuracy and efficiency of the supply-inventory process during clinical studies. Compass is part of Almac's Supply Chain Management services to aid in the packaging, labeling, and distribution of trial supplies on a global level. Also, in June 2011, Almac's clinical-services business unit increased its presence in the Asia-Pacific region with the addition of five new depots in Japan, Thailand, Hong Kong, and Taiwan, thereby providing the company with 36 depots in its network with another five planned for 2012.  

In August 2011, Catalent Pharma Solutions expanded its cold-chain supply and distribution capabilities in all major areas of the company's cold-chain storage and distribution, including 2–8 °C and–80  °C capabilities, in some cases more than tripling existing capacity for storage and distribution. The cold-chain expansions at Catalent's European sites in Bolton, United Kingdom, and Schorndorf, Germany, were scheduled to be completed by the end of 2011.  

Catalent also made other key moves to improve its clinical-services business. In October 2011, the company opened an European development and clinical services laboratory in Swindon, United Kingdom. This expansion followed recently expanded clinical-supply service capabilities in Schorndorf, Germany. Also, in 2011, Catalent acquired the clinical-trial supplies business of Aptuit, positioning the company as the number two provider globally in clinical-supply solutions.  

In December 2011, the logistics company UPS agreed to purchase Italy-based Pieffe Group, a pharmaceutical logistics company. The acquisition adds two major healthcare distribution facilities, one in Milan and the other in Rome, to UPS's existing global network. The facilities provide a combined space of nearly 753,500 ft

 , including 12 cold-storage areas, with options for further expansion. These facilities add to UPS's global healthcare distribution footprint of more than 4 million ft

. UPS's existing healthcare network of 30 facilities worldwide offers services, such as temperature-sensitive handling capabilities, regulatory compliance, monitoring and security, kitting and labeling, as well as order management and accounts receivables. 

In September 2011, the logistics company DHL launched DHL SmartSensor GMS, a device for temperature monitoring, as an advanced version of the company's SmartSensor RFID. The DHL SmartSensor GSM is a small, high-technology device that is packed inside the DHL shipment and which sends real-time data to the solution's web portal. The device uses GSM (Global System for Mobile Communication) technologies that permit data to be controlled without opening the shipment. The device acts as a data-gathering sensor and sends email or text-message notifications if problems arise during transport, such as a change in temperature or the premature opening up of parcel as the light sensor is activated. The device can be used for land and ocean-freight transports. For air transport, the device's GSM antenna is automatically switched off before take-off. The sensor continues to retrieve data but does not send the information in flight as to not to interfere with the aircraft's electronics, according to a Sept. 22, 2011, DHL press release.  

In November 2011, DHL Global Forwarding, the air and freight specialist within the Deutsche Post DHL Group, expanded its services for temperature-controlled shipments. The company entered into a lease with CSafe, a heat-and-cool container provider for the temperature-sensitive air-freight market. The CSafe heat-and-cool containers maintain temperature within a range of 4 °C to 25  °C by means of rechargeable batteries for temperatures ranging from ambient to more extreme temperatures of from –30  °C to 49 °C. 

In September 2011, DHL Global Forwarding and Lufthansa Cargo changed their ownership of their 50–50 joint venture, LifeConEx, a life-sciences cold-chain logistics provider, to make it a 100% owned subsidiary of DHL. In April 2011, DHL Global Forwarding opened a new competence center in Vienna to expand services to the life-sciences sector. The facility includes 500 m

  of refrigerated warehouse space for handling temperature-sensitive products to allow them to be prepped for air shipment. The center, located at the Vienna airport, is expected to transship approximately 20,000 pallets annually in temperature ranges of 2–8  °C and 15–25 °C. In addition to the warehousing service, the company offers loading and unloading of refrigerated containers, packing of products, coordination of freight space, and organization of the necessary transport equipment. DHL Freight and LTL ColdChain Europe, a pan-European road-freight pallet network for the life-sciences and healthcare industries, are connected to the Vienna competence center.  

In March 2011, Bristol-Myers Squibb selected Exel, part of DHL, to be its third-party logistics provider handling US distribution. As part of the contract, Exel purchased the existing Bristol-Myers Squibb distribution centers in Mount Vernon, Indiana. Exel is providing logistics operations and finished-goods distribution services, including storage and distribution of cold-chain and non-cold-chain products, clinical-trial materials, samples, and exports. Exel also is managing second distribution in Mechanicsburg, Pennsylvania, for Bristol-Myers Squibb. 

Movianto Nederland, a logistics and transportation company specializing in pharmaceuticals and healthcare, is building a new warehouse in Oss, the Netherland to offer a large facility for the storage of deep frozen pharmaceutical products. The new warehouse, which will be operational by April 2012, will provide a range of new facilities, such as a deep frozen storage area (< –20 °C) with a capacity for 350 pallets. The 13,000-m

  good-distribution practice (GDP)-compliant warehouse encompasses 21,000 temperature-controlled pallet places, including 17,700 in the area of ambient (15–25 °C) 2200 chilled pallet locations (2–8 °C), and 1100 pallets for narcotics. The facility includes a mezzanine with 1300 m

  for repackaging and relabeling services according to GMP guidelines. The expanded storage capacity will serve as a central European warehouse with a dedicated cross-docking area and bonded warehouse facility. Movianto's transport solution manages freight and distributes the products to local warehouses throughout Europe. 

In July 2011, Sherpa Clinical Packaging, a privately held provider of clinical-trial material-management services, opened a new cGMP production facility in San Diego, California, colocated adjacent to the CDMO Althea Technologies campus in Sorrento Valley. Sherpa and Althea entered into a comarketing agreement in March 2011. 

Sherpa's new facility includes five controlled access and monitored packaging suites, and walk-in 2–8 °C and –20 °C storage areas. Redundant refrigeration systems, alarms, and onsite emergency backup generator power were specified to minimize potential risks associated with cold storage. "We purpose-built the facility to accommodate the needs of pharmaceutical and biotech clients that require controlled environments for their clinical study materials," said Mark Paiz, president of Sherpa Clinical Packaging," in a July 2011, press release. "The site offers companies conducting clinical studies an option to label, package, store, and distribute on the West Coast, which is particularly important for many biotechnology companies whose products require cold storage." 

Marken, a provider of clinical-trial management services, reported in December 2011 that it has expanded its depot network with a new facility in Buenos Aires. The Argentina depot joins Marken's already operational depots in Mexico and Singapore and includes a full range of temperature control, including controlled ambient, cold storage (2–8 °C) and frozen (–20 °C) as well as a secured drug store. Each of Marken's depots offer specimen kit distribution, collection, storage, and management as well as reverse logistics for dosage kits, drugs, and equipment, including reconciliation and certified destruction. Additional depot facilities are being developed in Europe, Asia, and the Americas, according to the company. This expanded network builds on Marken's current Latin America business, which serves over 1200 clinical research investigator sites in the region. 

In May 2011, BioStorage Technologies, a provider a sample-management solutions, opened a new biorepository facility in Indianapolis, Indiana. The $4.6-million, 60,000-ft

  facility is dedicated to the preparation, storage, and cold-chain transport of human biological samples for academic centers, CROs, donor programs, and biotechnology companies. The facility expansion provides the company the ability to offer sample-preparation services, including automated liquid handling technology for high-throughput DNA and RNA extraction and verification. The new biorepository facility offers a wide range of storage options, including automated carousel controlled-room temperature storage at 15 °C to 27 °C, bulk sample storage at 15 °C to 27 °C, walk-in cold sample storage at –20 °C to 5 °C, ultra-low temperature storage at –70 °C to –80 °C , and –190 °C vapor-phase liquid nitrogen. 

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Articles

As biopharmaceutical development and commercialization increases, companies are expanding their cold-chain capabilities.

Expanding Capabilities in the Pharmaceutical Cold Chain

A new class of nanoparticles, synthesized by a research team at the University of California, Davis, to prevent premature drug release, holds promise for greater accuracy and effectiveness in delivering cancer drugs to tumors. Kit Lam, professor and chair of the Department of Biochemistry and Molecular Medicine and his team reported on the synthesis of a novel class of micelles called dual-responsive boronate cross-linked micelles (BCMs) , which produce physicochemical changes in response to specific triggers. 

The researchers reported that micelles reversibly cross-linked by boronate esters show 

 stability and thus minimize premature drug release under physiological conditions. After reaching the tumor sites, drug release is activated by cleavage of the boronate esters by the acidic conditions around the tumor or in the target cells or by the administration of  mannitol (1). A micelle is an aggregate of surfactant molecules dispersed in water-based liquid such as saline. They  are nanosized, about 25–50 nm , and can function as nanocarriers for drug delivery. "This use of reversibly cross-linked targeting micellar nanocarriers to deliver anticancer drugs helps prevent premature drug release during circulation and ensures delivery of high concentrations of drugs to the tumor site," said Yuanpei Li, a postdoctoral fellow in Lam's laboratory who created the novel nanoparticle with Lam, in a Jan. 18, 2012, University of California at Davis press release. "It holds great promise for a significant improvement in cancer therapy." 

Stimuli-responsive nanoparticles are gaining  attention in the field of drug delivery due to their ability to transform in response to specific triggers, notes the university release. Among these nanoparticles, stimuli-responsive cross-linked micelles (SCMs) can serve as a nanocarrier system for tumor-targeting drug delivery. 

SCMs and other nanoparticle systems seek to address the problem of premature drug release, which results in a drug not delivering its payload to a given target. SCMs can better retain the encapsulated drug and minimize its premature release while circulating in the blood pool. The introduction of environmentally sensitive cross-linkers makes these micelles responsive to the local environment of the tumor. In these instances, the payload drug is released primarily in the cancerous tissue, according to the release.  

The dual-responsive boronate cross-linked micelles that Lam's team has developed are a second generation of SCMs able to respond to multiple stimuli as tools for accomplishing the multistage delivery of drugs to a complex 

 tumor micro-environment, according to the university release. These BCMs deliver drugs based on the self-assembly of boronic acid-containing polymers and catechol-containing polymers, both of which make these micelles unusually sensitive to changes in the pH of the environment. The research team has optimized the stability of the resulting boronate cross-linked micelles  as well as their stimuli-response to acidic pH and mannitol. 

This  nanocarrier platform shows promise for drug delivery that minimizes  premature drug release and can release the drug on demand within the acidic tumor micro-environment or in the acidic cellular compartments when taken in by the target tumor cells. It also can be induced to release the drug through the intravenous administration of mannitol. 

1. K. Lam et al., "Well Defined, Reversible Boronate Crosslinked Nanocarriers for Targeted Drug Delivery in Response to Acidic pH Values and 

. online, DOI:10.1002/anie.201107144, Jan. 17, 2012.  

A new class of nanoparticles hold promise for preventing premature drug release and offering greater accuracy and effectiveness in drug delivery.

Formulation Development Forum: Boronate Cross-linked Micelles

The US Department of Justice, on behalf of FDA, filed a consent decree of permanent injunction against the generic-drug manufacturer Ranbaxy in the US District Court of Maryland. The consent decree was filed against Ranbaxy Laboratories Ltd., an Indian corporation, and its subsidiary Ranbaxy Inc., headquartered in Princeton, New Jersey. The decree was filed on Jan. 25, 2012, and is subject to court approval.

In addition to the companies, Dale Adkisson, senior vice-president and head of global quality, and Arun Sawhney, CEO and managing director, both of Ranbaxy Laboratories, and Venkatachalam Krishnan, regional director Americas of Ranbaxy Inc., were named as defendants. The consent decree addresses outstanding cGMP and data-integrity issues at Ranbaxy’s Paonta Sahib, Batamandi, and Dewas, India, facilities as well as cGMP issues at Ranbaxy Inc.'s wholly owned subsidiary Ohm Laboratories facility located in Gloversville, New York.

Ranbaxy’s Paonta Sahib, Batamandi, and Dewas, India, facilities have been on FDA import alert since 2008, and Ranbaxy has closed its  Gloversville facility, according to a Jan. 25, 2012, 

. The consent decree requires that Ranbaxy comply with detailed data-integrity provisions before FDA will resume reviewing drug applications containing data or other information from the Paonta Sahib, Batamandi, and Dewas facilities. Specifically, Ranbaxy must:

Hire a third-party expert to conduct a thorough internal review at the facilities and audit applications containing data from the affected facilities

Implement procedures and controls sufficient to ensure data integrity in the company’s drug applications and

Withdraw any applications found to contain untrue statements of material fact and/or a pattern or practice of data irregularities that could affect approval of the application.

In addition, the consent decree prevents Ranbaxy from manufacturing drugs for introduction to the US market and for the President’s Emergency Plan for AIDS Relief Program at the Paonta Sahib, Batamandi, Dewas, and Gloversville facilities until drugs can be manufactured at such facilities in compliance with US manufacturing quality standards.

“Because this company continued to violate current good manufacturing practice regulations and falsify information on drug applications, the FDA took these actions in an effort to protect consumers,” said Dara Corrigan, FDA associate commissioner for regulatory affairs, in the FDA press release. “The FDA continues to be committed to protecting consumers from potentially unsafe products that may be offered on the market.”

Under this agreement, once Ranbaxy has achieved compliance with the data- integrity requirements, a third-party expert must conduct audits of the facilities to confirm that compliance is being maintained.  The company must authorize an individual to be responsible for all quality-assurance and quality-control activities to ensure that drugs have the required safety, identity, strength, quality, purity, and potency and are in compliance with the law and the decree.  In addition, the company must establish an Office of Data Reliability to conduct presubmission audits of all applications submitted from any facility after entry of the decree.

Ranbaxy has agreed to relinquish any 180-day marketing exclusivity that it might have for three pending generic-drug applications. The firm has further agreed to relinquish any 180-day marketing exclusivity that it may have for several additional generic drug applications if it fails to meet certain decree requirements by specified dates.

The consent decree contains liquidated damages provisions to cover many potential violations of the law and the decree. In addition to a provision requiring Ranbaxy to pay $15,000 in liquidated damages for each day defendants violate the law or the decree at the facilities covered by the decree and an additional sum of $15,000 for each overall violation of the law and the decree, the decree specifies two other requirements. If defendants distribute any drug from the facilities covered by the decree, Ranbaxy shall pay liquidated damages equal to two times the retail value of such drug, not to exceed $10 million in any one calendar year. Also, if the defendants submit an untrue statement in connection with any application they file with FDA, Ranbaxy shall pay up to $3 million dollars in liquidated damages for each such statement, not to exceed $30 million in any one calendar year.

The decree also permits FDA to order additional Ranbaxy facilities to be covered by the decree if the agency discovers through an inspection that the facility is not operating in compliance with the law and/or has serious data-integrity issues.

Ranbaxy issued the following statement in response to the filing of the consent decree. “Today’s announcement is the next step in the process of finalizing our agreement with the FDA to resolve this legacy issue,” said Arun Sawhney, Ranbaxy CEO and managing director, in a Jan. 26, 2012, 

. “We are pleased with the progress we have made in upgrading and enhancing the quality of our business and manufacturing processes and remain committed to ensuring that all of our facilities and products meet the high standards that patients, prescribers and the public have come to expect from Ranbaxy.”

The US Department of Justice, on behalf of FDA, filed a consent decree of permanent injunction against the generic-drug manufacturer Ranbaxy in the US District Court of Maryland. The decree was filed on Jan. 25, 2012, and is subject to court approval.

FDA Files Consent Decree Against Ranbaxy

Effective project management is an invaluable competency in a successful outsourcing relationship.  Catalent Pharma Solutions, SAFC, and Neuland Laboratories, offer examples of successful project management, respectively in blow/fill/seal operations, viral-product manufacturing, and real-time project management in API manufacturing. 

Project management underpins successful relationships between contract technology and service providers and their sponsor companies. As pharmaceutical companies increase their level of outsourcing, it becomes increasingly important for contract technology and service providers to provide not only the technical capabilities needed to execute a given project, but the management skills to deliver a project on time, to specifications, and with the necessary communication to prevent or mitigate project delays. To illustrate the importance of project management in outsourcing, several industry members provided case studies on how to coordinate, organize, and implement a successful project. Participating in this technical forum on project management are Norman Weichbrodt, strategic account manager at Catalent Pharma Solutions; Nick Johnson, marketing manager at SAFC; and Saharsh Rao Davuluri, president of contract research at Neuland Laboratories. 

Norman Weichbrodt, strategic account manager at Catalent Pharma Solutions

Catalent Pharma Solutions is a provider of drug and biologic development services, delivery technologies, and supply solutions. Effective project management is the cornerstone of being a complete provider of services ranging from development of new products to technical transfer of existing products. Building the proper project team and employing the correct methodology for handling a complex project is the foundation on which success is achieved. 

In July 2010, Catalent was approached by a major pharmaceutical customer to transfer an ophthalmic product approved for sale in Europe to Catalent's blow/fill/seal (BFS) manufacturing site in Woodstock, Illinois. The successful technical transfer of the manufacturing process for this product would potentially lead, following FDA approval of the product already made in the European facility, to approval of the drug for manufacture and sale in the United States.   

 The actual scope of this project was much larger for the Woodstock facility than a simple technical transfer. The project required the following:  

A complete renovation of a formulation and filling suite, including a new separate air-handling system

Designing, building, and qualifying an automated formulation skid

Upgrading an existing BFS filling machine to match the capacity requirements for the product

Designing, building, and qualifying new vial molding and filling systems to duplicate the existing European design

Qualifying the room, formulation skid, BFS machine, and secondary packaging to produce stability and process-validation batches to support the customer's submission and approval timeline

Developing and approving the required documentation for supply-chain, manufacturing, and quality assurance functions to meet the production timeline

Analytical-method transfer for chemistry and microbial testing

Complete process-validation protocols, test plans, and final reports to meet the submission timeline. 

 To manage a project of this scope, the Catalent New Product Development (NPD) group and the site-management team agreed to form a group of cross-functional resources. The team members served as the primary representative of their functional area for the project and were assigned for the duration of the project.  The project team consisted of a project manager from NPD, an engineering project manager, a development scientist, an operations specialist, a validation specialist, a quality-assurance product specialist, a technical writer, and various contract resources as required. A strategic account manager had overall responsibility for the project team. The establishment and use of an expanded core project team of cross-functional resources was a new approach for Catalent's Woodstock facility, but the scope and timeline for this project and the Catalent goal of meeting customer needs required an innovative solution.   

The project was divided into six major activities: the room, the formulation skid, the BFS machine, method transfer, secondary packaging, and documentation. The NPD project manager was the owner of the overall project timeline. Each major activity was included in a Microsoft project schedule and maintained by the project manager. The engineering project manager handled all activities involving the renovation of the filling suite, making use of contractors from design through construction and qualification. He also participated in the design and construction of the formulation skid, primarily focusing on the software development. The development scientist and the operations specialist focused on the design of the formulation skid and the interface of the skid with the BFS machine to ensure the system had the proper design and controls to replicate the process already being used in Europe. The validation specialist developed the installatoin qualification, operational  qualification), and product qualification protocols and had oversight of all factory acceptance testing (FAT) and site-acceptance (SAT) activities. The technical writer and the quality-assurance product specialist worked with the NPD project manager to manage the change-control process for the project and to complete all the required documentation, including material specifications, standard operating procedures, and manufacturing batch records. The NPD Project manager also provided oversight of the analytical method transfer, development of secondary packaging materials, and the documentation of project activities. 

 The technology-transfer process was initiated by creating a comparability document that detailed every aspect of the manufacturing process. The process used in the European manufacture was listed step by step in the document with Catalent's suggestions and capabilities side by side. A final agreement for each step was included and served as the approved path forward. The specifications for in-process testing at each stage of the formulation as well as finished-product specifications were included in the document. The formulation process required bulk sterilization of a multicomponent polymer base with a relatively tight viscosity range. Two APIs were combined in a second part of the formulation and transferred to the polymer solution by sterile filtration. Of course, the entire formulation skid required steam sterilization of the product path through the BFS machine and maintenance of the sterile boundaries for the product during the entire filling process. Electronic documentation of all temperatures, times, and controls for each process step also were also required.     

 The NPD project manager and the strategic account manager facilitated weekly calls with the original equipment manufacturers of the formulation and BFS equipment as well as construction meetings during that phase of the project. Weekly calls were held with the customer representatives who were in liaison with the project team. A standard methodology was used to ensure that the meetings had a structured agenda and minutes issued for review in a timely fashion. A joint Project Steering Committee was formed, which was comprised of customer senior leadership members, Woodstock site leadership members, and Catalent business-development members.  

Project Steering Committee meetings were held every three weeks during the course of the project. A formal presentation was made at each meeting to discuss progress toward major milestones in the project plan. Strategic decisions were discussed and developed through the Project Steering Committee meetings, and the decisions were ultimately made by the joint project team. This management design reduced the cycle time for critical decision-making between the customer and Catalent.  

Figure 1 (Catalent): A blow/fill/seal suite at Catalent’s Woodstock, Illinois, facility. (FIGURES 1-3 (CATALENT) ARE COURTESY OF THE AUTHOR) 

An example of such decision making was approval of a change to the SAT/FAT strategy originally planned for the formulation skid. The formulation skid is a fully automated two-tank system with over 100 control and process valves that are actuated in approximately 20 sequences. When the  software development lagged behind the construction of the hardware, the opportunity arose to do a mechanical FAT, ship the formulation skid to the Woodstock site, complete the installation and mechanical troubleshooting of the skid and wait for the software to complete the qualification as a SAT. This decision saved as much as six weeks in the project schedule and enabled Catalent to meet the customer's timeline for stability and process-validation manufacturing. It also resulted in a formulation system that is part of a robust technical transfer process from the customer through the NPD group to Catalent's commercial manufacturing team. 

 To date, all of the engineering, stability, and process-validation batches have met the in-process and final-product test specifications. With nine batches produced, there have been no out-of-specification results for bulk or final product. In addition, no human error deviations have occurred in the formulation and filling of these batches. 

Figures 1–3 (Catalent) show the facility upgrade and project equipment after installation.

 Figure 2 (Catalent): A blow/fill/seal cavity fill machine at Catalent’s Woodstock, Illinois, facility. 

In summary, Catalent did not employ new or groundbreaking methodology for this project. However, supplying the proper structure and resources for a project team is the crucial first step in meeting a customer's timeline and supplying the customer with quality product, reliably supplied. 

Figure 3 (Catalent): A fully automated formulation skid at Catalent’s Woodstock, Illinois, facility. 

This case study in project management involved the partnership between SAFC and Oncolytics Biotech, a biotechnology company headquartered in Calgary, Canada, which has developed a novel cancer treatment, Reolysin, based on a modified wild-type reovirus expressed in suspension-adapted human embryonic kidney cells (HEK 293). In 2007, Oncolytics partnered with SAFC's Carlsbad, California, site as part of the commercialization process for Reolysin. After officially announcing SAFC as the contract manufacturer for the project in early 2011, Oncolytics announced in November 2011 that validation studies were underway. Now in Phase III clinical trials, SAFC and Oncolytics have worked as partners to manage this project from the initial phases of identifying how to make the technology work through to making the consistent batches required for licensure. The current goal is to obtain a successful regulatory approval for Reolysin.  

 The production of the modified reovirus presented a significant manufacturing challenge. Not only was it going to be the first time for this type of product to be made on such a large scale, it also involved transferring technology from a contract development organization (CDO) in Canada to the SAFC site in Carlsbad. At the beginning of the project, there were four partners in different locations, including Oncolytics, its CDO, SAFC, and SAFC Biosciences in St Louis, which developed the novel media used in the production process. 

SAFC Carlsbad already was filling the bulk product for clinical trials out of a product that was being made at another CMO in the United Kingdom. As the product progressed into later-stage clinical trials, the production was ramped up and transferred to Carlsbad, at first on a 40-L scale, and up to the present 100-L batches. The technology transfer was a whole new ballgame in terms of scale and complexity and required a new project team to be formed. On the SAFC side, this included a director of operations plus senior managers in manufacturing, quality assurance, quality control, and project management. Business-development support was also brought in when new scopes of work and new contracts needed to be worked out and finalized.   

Despite the disparate locations, the communication between the teams in the different sites worked well with routine weekly conference calls and many coordinating activities carried out electronically. Some face-to-face meetings were essential, including the manufacturing representative and project manager visiting the CDO to address process scale-up. A week also was spent with all partners, including the CDO, watching the process and filming it so that it could later be used for operator training in Carlsbad.  

The whole process took quite some time with many technical challenges, leading to a stop–start of operations from late 2008 through to 2009. By the end of 2009, however, sufficient clinical material had been made to continue with the trials, so there was less urgency from that perspective. Once the 100-L scale was reached, one or two batches were made per year until the program was ready to initiate process validation batches. Now that the product has advanced to conformance batches, three to six batches will be made per year.  

From a production standpoint, Gantt charts (i.e. charts used to show the project's schedule) are used for all SAFC projects. They are mapped out further than just a single department and include everything that might affect the timeline from the vendor through to the customer. The anticipated timings were all shared with the customer as well as the troubleshooting of possible technology-transfer issues that the technical team mapped. The team was tasked to look through historical data from the previous partnership to identify where there were areas for improvement and to help resolve issues quickly with input from both the SAFC team and the CDO. Specifically, SAFC Biosciences also helped by developing a custom growth media that increased the viral productivity and eased the purification process.  

When SAFC inherited the contract, it already contained the required specifications that were used as an ultimate metric for success. The new goal became making and purifying the product to the required level for a commercial launch. After a number of changes to the process on the CDO's side and a few creative manufacturing approaches from SAFC, these specifications were exceeded and brought the project to the current point. Oncolytics is now in a position where accessing materials for its clinical needs is no longer a constraint, and the project has advanced into process validation in anticipation of commercial launch.  

 One issue the team faced was the presence of an impurity that prevented the product from meeting specifications. The teams were brought together, and all the possibilities that might have led to the impurity were considered. From there, action items were distributed to the teams for them to pursue, including the review of historical data. This approach was successful as by the time of the next team meeting, the problem had been pinpointed. By adapting the process for the next batch slightly, a solution was found allowing the product to met specifications and the issue was resolved.  

A key factor in the overall project's success was the customer relationship. In addition to the customer having a very good project manager, the relationship was developed based on trust and a common goal. Another key factor was ensuring that we had the resources needed to move the project forward. When the program moved into the process-validation phase, a second project manager was added to increase bandwidth. The way all parties worked together allowed the manufacturing to enter into conformance batches within a relatively short period of time with only a limited number of clinical batches having been completed. 

Saharsh Rao Davuluri, president of contract research at Neuland Laboratories

On-time execution of API project development is a challenge for manufacturers. Neuland Laboratories has designed its GuarD project-management system around the principles of critical chain project management (CCPM), a concept developed by Eliyahu Goldratt, a prominent management consultant, who introduced the theory of constraints business model. Unlike other project-management systems, CCPM emphasizes flexible start dates and shared project resources. CCPM also uses buffers as a shared project resource rather than an individual task resource, thus enabling the overall project to be completed on time without requiring the individual tasks to be completed on time. 

 Neuland is an API and contract manufacturer based in Hyderabad, India. Almost 80% of the company's products are sold into the US and European markets, and these product must meet strict regulatory standards. In a typical year, Neuland scientists complete 30–40 projects ranging from complete API development, production of starting materials, and development of alternate processes for new molecular or chemical entities, as well as a variety of contract-manufacturing assignments for pharmaceutical ingredients and peptides. Depending on their complexity, projects may require process chemistry, analytical chemistry, technology transfer, production, developmental quality assurance, supply-chain management, regulatory affairs support, and project-management services.  

Figure 1: (Neuland). A screenshot illustrating how a project’s progress can be tracked and how a user can participate directly through the GuarD web portal. (FIGURE 1 (NEULAND) IS COURTESY OF THE AUTHOR) 

Organizational framework and real-time monitoring. 

 Under GuarD's CCPM approach, each project is broken down into its basic tasks by a cross-functional team. The project has a designated team leader, usually an experienced scientist from the process-chemistry department, and a project manager responsible for managing timelines and communications. The team leader is the technical head of the project and responsible for overall execution. 

Once the project has been divided into the basic tasks and sub-tasks, the details are transferred to a Microsoft project software template. This ensures that all the dependencies, resource requirements, and tentative start and end dates are recorded. The project is not considered "live" until the cross-functional team signs off on the detailed project plan. The finalized project document is uploaded to a web portal, and managers update respective tasks and sub-tasks as the project progresses. Managers can make qualitative updates detailing how tasks are proceeding, or quantitative updates to help respective task managers track how long a task will take to complete. Teams are encouraged to make at least one status update per day. 

The ability to make both qualitative and quantitative updates in the GuarD project-management system is highly useful. Personnel in downstream operations, and more importantly the client, get an accurate picture of progress upstream and can plan accordingly. Neuland's customers also can track a project's progress and participate directly through the GuarD web portal.  

 A key advantage of the GuarD system is that its detail and interactive nature make it easier to promptly identify and manage delays at any step, thereby facilitating on-time completion. For example, when the process-chemistry department requires more time to complete their tasks, the project manager is immediately aware of the situation and can work with all task managers to identify opportunities downstream to recover that time. Although it is important for the project manager to investigate the reasons for the delay, the immediate focus is on finding ways to deliver a quality project on time. Solutions might include running additional shifts or vessels or staggering batches. In most cases, customers are invited to join these discussions and contribute to the solution based on their experience and priorities. 

Neuland's project-management system helps its clients in several ways. It provides a platform of almost 100% transparency, providing more insight than weekly calls or project reports. A smart phone app will soon allow customers to access their projects real-time. It also enables higher on-time completion rates. Although the GuarD approach cannot promise 100% on-time completion, it has enabled Neuland to make considerable progress towards this goal.  

Customer trends: biopharmaceutical companies  

A technical forum featuring Catalent Pharma Solutions, SAFC, and Neuland Laboratories.

Case Studies in Pharmaceutical Project Management

The biotechnology industry represents an important source of potential outsourcing for contract providers of drug-development and manufacturing services, particularly among smaller, emerging biopharmaceutical companies. Financing trends in the biotechnology industry, therefore, are important indicators of the health of the biopharmaceutical sector and of the financial strength of a potential customer base for contract service providers. 

Although the biotechnology industry finished the first half of the 2011 on pace for one of its biggest years of fundraising, global economic worries and political fights over government debt in Europe and the United States weighed heavily on financial markets and tempered financing for 2011. “These pressures not only hampered companies' ability to obtain funding in the second half of the year, but also raised the specter of cuts to governments' expenditures on healthcare and biomedical research,” said G. Steven Burrill, CEO of Burrill & Company, a global financial services firm focused on the life sciences industry, in a Jan. 3, 2012, press release. “With capital scarce and expensive, companies will need to focus their investments on clear paths to revenues. They will also have to develop products that push beyond incremental improvements on available products and instead concentrate on disruptive solutions that make healthcare costs more sustainable,” he said. 

On a global basis, life-sciences companies during 2011 raised a total of $82.4 billion in public financings, up from $65 billion in 2010, according to Burrill & Company. Debt financings dominated fundraising both years and accounted for the overall fundraising growth in 2011. On a global basis, life-sciences companies’ debt offerings increased 46.4% from $37.8 billion in 2010 to $55.5 billion in 2011. Global life-sciences public-equity financings (initial public offerings [IPOs], private investment in public equity [PIPEs], and follow-on offerings totaled just $16.0 billion, a 7.9% increase over the $14.8 billion raised in 2010, due largely to follow-on financings in China.

In the United States, public-equity financings in 2011 totaled $5.7 billion, down 17.4% from $6.9 billion a year ago, according to Burrill & Company. As on a global basis, US life-science companies’ debt offerings increased 17.6% in 2011, from $30.6 billion in 2010 to $35.9 billion. Fundraising slowed considerably in the US in the second half of the year as markets swung in the face of the European debt crisis and the fights in the US over the raising of the debt ceiling, the Standard and Poor's downgrade of US credit, and the inability to reach agreement in Congress on how to reduce the budget deficit, explained Burrill & Company in its release. 

On a global basis, 46 life-sciences companies went public in 2011, up from 39 in 2010. Although the number of IPOs increased in 2011, the total amount raised decreased by 44.6% compared to 2010, down from nearly $6.8 billion in 2010 to $3.7 billion in 2010, according to Burrill & Company. In the US, a total of 16 life-sciences companies went public in 2011 and raised $1.4 billion compared to 20 companies that went public in 2010 and that also  raised $1.4 billion in those IPOs. As a group, life-sciences IPOs of 2011 fell 29% from their initial offering prices as of the close of the year. Ten companies that went public did so below their target price ranges and, as a group, these companies sold nearly 28% more shares than they had set out to sell while raising 13% less than they had hoped.

Mergers and acquisitions (M&A) were up in 2011, both globally and in the US. Global biotechnology M&A activity was valued $160 billion in 2011, up 7.5% from 2010, according to Burrill & Company. M&A activity with US targets also rose, up 32.5% in 2011 compared to 2010 from $71.9 billion in 2010 to $95.2 billion in 2011. Some key deals in 2011 included the completion of long negotiation between Sanofi and Genzyme in Sanofi’s acquisition of Genzyme, which included the use of contingent value rights that could be worth up to $14 each, notes Burrill & Company. These rights closed 2011 at $1.17, a reflection of Wall Street's uncertainty about their value. Those rights could add as much as $3.8 billion more to the agreed-on $20.1 billion deal. Other notable deals included generic-drug producer Teva Pharmaceutical buying the biopharmaceutical company Cephalon for $13 billion; Takeda buying Switzerland's Nycomed for $13.7 billion to broaden its access to Europe and emerging markets; and Gilead's planned $11 billion purchase of hepatitis C drug developer Pharmasset. 

Financing raised through partnering deals, however, declined significantly in 2011. Global partnering financing fell 38.3% in 2011, from $61.3 billion in 2010 to $37.8 billion in 2011, according to Burrill & Company. Financing from US partnering and licensing deals took a commensurate plunge and fell 32.8% in 2011 from $34.0 billion in 2010 to $22.9 billion in 2011. 

“As we begin the new year, the volatility that has characterized the financial markets in the second half of 2011 is likely to continue,” noted the Burrill & Company release. “Europe's sovereign debt crisis will take years to work through and with 2012 being an election year in the United States, the divide between the parties is not likely to be bridged. While the industry continues to raise a substantial amount of capital, much of it is going to fund large, well-established companies.”

Venture-capital financing was up last year in the US biotechnology industry, but public-equity financing, exclusive of debt, declined.

A Mixed Year for US Biotech Financing

A recent report by The Boston Consulting Group (BCG) examined the performance of the biopharmaceutical industry in comparison to other industries with respect to total shareholder return (TSR) as a measure of value creation during the five-year period of 2006–2010 (1). The report concluded that the biopharmaceutical industry lags other industries in terms of value-creation and that there is opportunity to improve growth prospects with sector-specific strategies for large-cap biopharmaceutical companies, emerging biopharmaceutical companies, and generic-drug companies.

Benchmarking the biopharmaceutical industry


 BCG examined 19 industries, manufacturing- and service-based, and found that the biopharmaceutical industry ranked last in terms of TSR. TSR is a measure of the total annual increase in value given to a shareholder. TSR measures the change in a company’s market value (i.e., often comprising of earnings and the share price/earnings [P/E] multiple) plus its free-cash flow (i.e., dividend yield and changes in net debt and the number of outstanding shares) (1). In compiling the TSR of the biopharmaceutical industry, BCG examined 43 companies with market valuation greater than $5 billion. Annual average TSR across all 19 industries was 6%, well below historical annual averages of 10%, but was only 0.7% in the biopharmaceutical industry. Despite the low ranking overall, there were some bright spots for individual companies. The top five performers in the biopharmaceutical sector had an annual average TSR of more than 17% in the five-year period of 2006–2010 (1). 

Examining biopharmaceutical industry performance


 To examine these rankings in more detail, BCG applied a proprietary system methodology to identify the drivers of TSR performance in the three major sectors in the biopharmaceutical industry: large-cap, emerging, and generic-drug companies. For purposes of this analysis, large-cap biopharmaceutical companies are companies with market capitalization of $30 billion or more, and emerging biopharmaceutical companies have a capitalization between $5 billion and $30 billion. Generic-drug companies are defined as companies that derive more than 60% of their sales from generic drugs. Overall, although sales growth remained strong for the biopharmaceutical industry during the five-year period of 2006–2010, expectations for future growth declined significantly. For example, P/E ratios for the large-cap biopharmaceutical companies declined from multiples of 35 times price to earnings in 2000 to 11 times price to earnings in 2010. More troubling is that the average return on investment (ROI) in R&D for new products is below the cost of capital, making R&D value-destroying (1). Near-term growth was the weakest in large-cap biopharmaceutical sector (7% per year), strongest in the generic-drug sector (21%), and the emerging biopharmaceutical was in between (11%). 

The factors contributing to better performance, as measured by valuation multiples, in each sector differed. Among large-cap biopharmaceutical companies, the key drivers are R&D productivity, operational efficiency and margins, financial policy, and the ability to maximize the sales value of the product portfolio before and after loss of exclusivity. For emerging biopharmaceutical companies, the key drivers were margin, R&D productivity, debt ratio, and sales growth. For generic-drug companies, the key drivers are scale and financial stability, particularly in the debt/enterprise value ratio.

The large-cap biopharmaceutical sector performed poorly on average, with a flat 0% TSR over the five-year period. For companies that performed better, four factors contributed to a higher TSR: improved R&D productivity, operational efficiency and margins, financial policy, and the ability to maximize the sales value of the product portfolio before and after loss of exclusivity. In measuring the net value of R&D as a percentage of enterprise value, the report found that in 2010, five companies–Amgen, Bristol-Myers Squibb, Celgene, Genentech, and Gilead Sciences–had positive ROI for R&D while five companies–AstraZeneca, Merck & Co., Pfizer, GlaxoSmithKline, and Eli Lilly had below average performance. In 2011, only two companies–Bristol-Myers Squibb and Pfizer–performed above average in ROI on R&D and seven companies–Amgen, GlaxoSmithKline, Merck & Co., Gilead Sciences, AstraZeneca, Celgene, and Eli Lilly–had below average ROI on R&D. To improve R&D output, BCG advises strategies to reduce bureaucracy in R&D and facilitate decision-making for “go/no” projects both operationally and culturally.

The report also found that companies that treat life-cycle management as part of product development proactively rather than defensively when confronting loss of exclusivity perform better. The report identifies four key strategies: maximizing patent life through technical, legal, and regulatory means; driving demand and scale immediately before patent expiry; progressively lowering the cost base for the product; and limiting revenue decline due to loss of exclusivity by preserving or replacing lost volumes by lowering prices in certain segments while maintaining a premium price in other segments that support the product (1). For example, the report estimates that as much as 40% of blockbusters’ potential revenue maintenance can come from geographic markets outside the established markets in the United States and five top Western European markets (1).

For emerging biopharmaceutical companies, the key drivers for creating value were margins, R&D productivity, debt ratio, and sales growth. Crucial for these companies is to have a follow-on strategy for a recently launched drug or licensed drug. For generic-drug companies, the key drivers are scale and financial stability, particularly in the debt/enterprise value ratio. Generic-drug companies often face a “land grab” situation, in which companies are building scale to win market share but need to do so without becoming financially extended.  Financial stability tends to favor the larger generic-drug companies that have available funds for investing in new growth opportunities (1).

1. M. Ringel, C. Foley, O. Wierzba, “The 2011 Health Care Value Creators Report: Strength in the Storm: How Biopharmaceutical and Medical Technology Companies Can Create Value in a Challenging Business Environment” (The Boston Consulting Group, Dec. 2011). 

Improving R&D productivity, life-cycle management, and operational efficiency are key approaches for enhancing growth prospects.