The latest pacts from the pharmaceutical supply chain.  

) entered into a collaborative agreement for the development and commercialization of apixaban, an anticoagulant that BMS discovered. The companies are studying the ability of apixaban to prevent and treat various venous and arterial thrombotic conditions, including deep-vein thrombosis and pulmonary embolism.

According to the agreement, Pfizer will pay $250 million upfront to BMS and will fund 60% of development costs from January 1, 2007 onward. BMS will pay the remaining development costs. Pfizer may make as much as $750 million in additional payments to BMS, depending on the achievement of developmental and regulatory milestones. The companies will share responsibility for devising the clinical and marketing strategies for apixaban and will divide commercialization expenses, profits, and losses equally.

BMS and Pfizer also agreed to cooperate on the research, development, and commercialization of a Pfizer discovery program. Among the program’s focuses are advanced preclinical compounds that potentially could treat metabolic disorders such as obesity and diabetes.

Under this agreement, Pfizer will supervise all research and early-stage development activities for the metabolic-disorders program. The companies will conduct Phase III development and commercialization activities jointly. BMS will pay Pfizer $50 million upfront as part of the agreement. Pfizer will assume 60% of development and commercialization expenses, and BMS will assume the remaining portion. The companies will share profits and losses the same way.  

) to develop a cell line for high-level production of one of Affitech's lead oncology therapeutic antibody candidates. ProBioGen will use its cell-generation process combined with an automated cloning process to identify and develop a high-producing line that is suitable for a fed-batch development process. 

) entered into a collaboration agreement with 

) to develop and commercialize products to treat human papillloma virus (HPV) diseases using Transgene's vaccine program. Transgene currently has a vaccine candidate, TG 4001 (MVA-HPV-IL2), in clinical development. Roche will lead the worldwide development and commercialization of TG 4001 and pay Transgene EUR 13 million up front (approximately $17.5 million) and EUR 10 million (approximately $13.4 million) as a near-term regulatory milestone payment related to planning the Phase III studies. 

) entered into an agreement with active pharmaceutical ingredient and intermediate manufacturer 

). Lundbeck will supply one of the active components of MCT-125, MultiCell's Phase IIb drug for the treatment of chronic fatigue in patients with multiple sclerosis. 

) for ANX-514 (docetaxel emulsion), a chemotherapy drug. Hyaluron will manufacture ANX-514 for preclinical and clinical studies.  

) signed a technology collaboration agreement with 

) related to Codexis's biocatalyst panels.  Merck will become the first subscriber to the product, which enables pharmaceutical manufacturers to use the power of biocatalysts to increase research and development and manufacturing productivity. The three-year agreement gives Merck nonexclusive access to Codexis biocataysts for use in its pipeline. 

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The latest pacts from the pharmaceutical supply chain.

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				The latest regulatory and association news for pharmaceutical manufacturers and contract manufacturing organizations			

) manufacturing facility in Guayama, Puerto Rico. Conditions at the Guayama facility prompted a Warning Letter in May 2006. 

The 2006 Warning Letter cited several violations of current good manufacturing practice (CGMP) regulations stated in 21 CFR Parts 210 and 211. One of the most prominent violations was the company's failure to investigate unexplained discrepancies and out-of-specification results in batches of Triphasil 21 and 28 tablets as required under 21 CFR 211.192. A stability interval assay test for the tablets indicated an unknown peak at high levels, and subsequent tests confirmed the presence of the peak. FDA contends that Wyeth did not take any action against the affected lots of Triphasil or describe corrective or preventive measures the firm planned to take to prevent future peaks. The Warning Letter noted that between December 2003 and August 2005, 17 other incidents of unknown peaks were inadequately investigated. 

FDA claimed that Wyeth violated 21 CFR 211.67(a) by failing to clean and maintain its packaging equipment, and the company also did not adequately inspect its packaging and labeling equipment as required under 21 CFR 211.130(e). In addition, Wyeth did not submit NDA Field Alert Reports in a timely manner in accordance with 21 CFR 314.81, and the company's quality control unit did not review production records to ensure that no errors occurred or fully investigate errors that occurred during the manufacturing process as stated under 21 CFR 211.22(a).  

Wyeth intends to respond to any observations issued by the FDA inspector no later than mid-April. In addition to being reinspected by FDA, the Guayama site underwent a CGMP inspection by representatives of the European Medicines Agency (EMEA, London, 

) released an interim final rule that imposes federal security regulations on high-risk chemical facilities. The new rule gives the department authority to seek compliance through the imposition of civil penalties of as much as $25,000 per day and the ability to shut down noncompliant facilities.  

Under the rule, DHS will require owners of chemical facilities that house certain quantities of specified chemicals to complete a preliminary screening assessment that determines the level of risk associated with the facility. If a chemical facility preliminarily qualifies as high-risk, its owners will be required to prepare and submit a security vulnerability assessment (SVA) and site-security plan. Submissions will be validated through audits and site inspections. The department will provide technical assistance to facility owners and operators as needed. Security standards will be required to achieve specific outcomes such as securing the perimeter and critical targets, controlling access, deterring theft of potentially dangerous chemicals, and preventing internal sabotage.  

Facilities contacted by the department will have 120 days from the publication of the regulation in the Federal Register to provide information for the risk-assessment process. Other requirements will follow that time period. Additional facilities will follow a similar timeframe after future Federal Register publications. 

Some states have existing laws for regulating chemical facilities. Only state laws and requirements that conflict or interfere with these regulations or the purpose of the regulations will be preempted. DHS says the department currently has no reason to conclude that any existing state laws are applied in a way that would impede the federal rule. DHS says the final regulation will be published in the 

www.dhs.gov/xlibrary/assets/IP_ChemicalFacilitySecurity.pdf

The Synthetic Organic Chemical Manufacturers Association

), the US-based trade association representing custom and batch manufacturers, including contract manufacturers of active pharmaceutical ingredients and intermediates, outlined its concerns about the new rule.  

"SOCMA wants to commend DHS for their hard work in promulgating these regulations," said Joe Acker, the group's president, in a prepared statement. "We support the phased-in approach to the rules, but would like to have seen more time given for companies to perform their SVA, especially small companies with limited resources. The shortened timeframe will make it extremely difficult for companies to evaluate the new rules and then perform the appropriate tasks in the prescribed timeframe required by the rule." 

SOCMA pointed out issues relating to the type of facilities able to conduct alternative SVAs. "DHS's decision to limit alternative SVAs to only Tier 4 facilities is disappointing," said Acker. "Facilities that have taken the proper action over the last five years, which include all of SOCMA's member facilities, will need to unnecessarily reconduct risk assessments, even though nothing has changed in their overall risk profiles." 

Under the rule, DHS places facilities in one of four risk-based tiers, ranging from Tier 1, which contains the highest-risk covered facilities, to Tier 4, which contains the lowest-risk covered facilities. 

SOCMA also raised concerns about the possible omission of certain risk-reduction measures in DHS guidance. "SOCMA understands and supports DHS's intent to use guidance for assisting facilities in meeting the new security standards," said Acker. "SOCMA expects that many risk-reduction measures that could be taken by facilities will not be captured in the guidance. These risk-reduction measures should be given the same consideration as measures found in the DHS guidance materials," 

) adopted a policy of Inherently Safer Technology (IST) at its March meeting. SOCMA is the US-based trade association representing custom and batch manufacturers, including contract manufacturers of active pharmaceutical ingredients and intermediates supplying the pharmaceutical industry.  

The goal of IST is to use traditional engineering, chemistry, and other scientific concepts to reduce the risk associated with chemical processing. SOCMA approved its policy to state its support for the philosophy of IST and "the belief that it should not be mandated in any regulatory regime," said SOCMA in a prepared statement.  

In issuing its policy position, SOCMA said that no federal mandate of IST exists in the US Department of Homeland Security's April 2007 interim final rule on chemical-site security.  

 "While the concepts of IST are not appropriate in a regulatory context, the US Department of Homeland Security should encourage the private sector to incorporate IST as a means to reduce security risks at chemical facilities wherever possible," said SOCMA.  

In explaining its position of IST, SOCMA said that IST does not necessarily involve reducing the amount of hazardous chemicals used in manufacturing and processing. "IST is a conceptual framework that covers chemical-processing procedures, equipment protection, and, when feasible, the use of safer substances. Many non-scientists have been led to believe that the only road to inherent safety is by way of reducing the amount of hazardous chemicals used in manufacturing and processing. IST, however, is limited by the laws of physics: a simple reduction in the use of hazardous chemicals is often not possible or may only result in the redistribution of risk without actually reducing it." 

The latest regulatory and association news for pharmaceutical manufacturers and contract manufacturing organizations.

Regulatory and association news

I received a call the other day from a sourcing professional at a top five pharmaceutical company looking for recommendations for manufacturers of clinical supplies. It seems that his current three suppliers aren't answering his phone calls in a timely manner, and he is getting fed up with the poor service he is receiving. He's also frustrated with the constant turnover in project managers at his suppliers. 

The sourcing professional's problems are a common story these days, as demand for development services has never been greater. Major biotechnology and pharmaceutical companies are under enormous pressure to advance their pipeline compounds, while funding for early-stage companies continues to flow. As biotechnology and pharmaceutical companies push to keep studies moving, contractor resources are being stretched as they try to meet client requirements.  

Project managers are the focal point of most customer interactions once a contract has been signed, and their performance affects both the reality and the perception of how well a study and a relationship are going. Clients depend on project managers to be their advocates to ensure that their studies get scheduling priority and the necessary resources. They also expect project managers to keep them informed about progress and problems as they arise. When a project manager has worked a long time with a particular client, he or she can make studies run more smoothly by knowing the way a client expects work to be done or reports to be written. The very personal relationship between a project manager and his or her client counterpart is viewed as critical to study success, and any disruption is seen as putting the project at risk. 

Clinical contract research organizations (CROs) have long been aware of the critical role of the project manager in maintaining client confidence, and have occasionally taken advantage of it during the competitive bidding process by promising to assign a trusted project manager to a study. Too often, however, the promised project manager was moved to another study shortly after the contract was signed, creating a sense of distrust and alarm on the part of the client. Many biotechnology and pharmaceutical companies have taken to insisting on contract language that assures the client that this "bait-and-switch" doesn't happen again. 

Attributes of the current market environment are particularly tough on project managers. The large number of early-stage companies needing services is especially demanding because managers at those companies often have little hands-on drug development experience and depend on project managers for guidance on what needs to be done and when. As a result, the project management input for these clients is often way out of scale to the size and nature of the work that actually has been done. 

As for the major pharmaceutical companies, many are using contractors to an unprecedented degree so their sourcing managers have little direct experience with contractor performance or managing outsourcing relationships. The fact that much of this work was previously done in-house may mean that the client-side managers are unaware of the cost and time implications of changes to the scope of work or project schedules. It may take all of the project manager's diplomatic skills to explain to the client that doubling the order for clinical trial supplies will increase delivery time because suite capacity already has been committed to other projects. 

Clearly, the industry must invest more in its project-management capabilities, but it's not always easy to justify. The benefits of excellent project management are often intangible and difficult to justify on a cost-benefit basis, so it may be easier to spend $40,000 on a new high-performance liquid chromatography system than it is to invest that amount in training project managers (especially given the rate at which project managers seem to be changing companies). Still, companies are getting the message, and companies such as 

 (Phoenixville, PA) are going so far as to have their project managers earn professional certification from organizations such as the 

A further impetus comes from CRO business models built around integrated solutions that promise to get a biotechnology and pharmaceutical company's candidates into the clinic faster than if the company were using independent suppliers. The success of these "one-stop shops" will depend on the effectiveness of their project-management groups in tying the various and geographically dispersed services into a seamless offering. 

Patheon (Toronto, Canada) completed its search for "strategic and financial alternatives" last month with the announcement that it would receive a cash infusion from a private equity firm. The new investor, 

(New York, NY), will invest $150 million in Patheon ($138 million after expenses) in exchange for preferred stock, three seats on the company's board of directors, and voting rights equivalent to 25% of shares outstanding. The investment is subject to shareholder approval, which is expected at a shareholder meeting scheduled for mid-April. The new funds will be used to reduce Patheon's long-term debt, which stood at $338 million at the end of January. 

With the completion of the investment, Patheon's executives will turn their attention to restructuring the company's operations to improve profitability and performance. Despite 10 years of rapid, acquisition-driven growth, the company has had problems achieving sustained profitability and its cash flow has been insufficient to fund ongoing capital improvements. The problems came to a head in 2005–2006, when its Mova Pharmaceuticals operation in Puerto Rico, acquired at the end of 2004, received a warning letter from the US Food and Drug Administration and failed to achieve revenue projections. In April 2006, the company's long-time CEO was dismissed, and the company began a concerted focus on performance improvement while its board evaluated its strategic and financial options. 

The restructuring efforts to date have included plant-level operating improvement campaigns, a program to generate savings in procurement by leveraging the company's buying power, and ongoing reductions in staffing. The restructuring drive is expected to pick up steam once the JLL investment is completed and its nominees join the board of directors. JLL Partners is known for investing in turnaround situations, and JLL is expected to push for more aggressive measures, including possible plant closings. Rumors to that effect are already circulating on Internet discussion sites. 

Evidence from Patheon's first-quarter results indicate that the company is already seeing results from its restructuring efforts while benefiting from the strong drug-development services environment. Revenues were up almost 9%, driven by a whopping 23% jump in product development services (formulation, analytical and clinical trial material manufacturing) and 13% growth in commercial prescription drug manufacturing. A sharp decline in manufacturing of over-the-counter products prevented even stronger top-line performance. Driven by higher utilization and greater efficiency, operating profit margins rose to 13.5% from 8.9% in 2006. 

The strong first-quarter results suggest that clients are sticking with Patheon despite its recent problems. Some difficult issues remain to be tackled, but indications are that the company may once again be headed in the right direction. 

is president of PharmSource Information Services, Inc., and publisher of 

Outsourcing

Strong demand is straining service providers' project-management capabilities; Patheon receives a much-needed cash infusion.

Project Managers in the Spotlight

Regulatory, consumer, and political organizations continually question the pharmaceutical industry concerning the quality and cost of the medicine that it manufactures. Contract manufacturers experience even further pressure as existing and potential customers weigh the quality and cost of manufacturing their products themselves 

 outsourcing them. This pressure was increased by a recent study, 

Pharmaceutical Manufacturing Research Project–Final Benchmarking Report

, conducted by the McDonough School of Business at Georgetown University and the Olin School of Business at Washington University in St. Louis (1). While the summary report contains useful observations for contract manufacturers to consider such as linking electronic deviation-management systems to superior performance metrics, the study also concluded that contract manufacturing correlates with inferior performance metrics.   

While the report's conclusion raises significant questions about contract manufacturers and their performance, contract manufacturers also may have questions about the process used and data collected to arrive at this conclusion Such questions arising from the report include:  					

Were they adequately defined and did they meaningfully compare similar processes as they relate to contract manufacturing? 

What was the study's scope and how did it influence and generate these benchmarks for contract manufacturers and their product-owner brethren?

Was this scope adequate to draw such a conclusion?  

While the enormous amount of data and statistical analysis in the report may suggest pathways for further study, it seems premature to draw such a broad conclusion regarding the contract-manufacturing industry based solely upon this data and analysis. This article examines the performance metrics used in the benchmarking study by outlining several concerns with the context used to link contract manufacturing to these performance metrics. This article also reviews key operational strategies contract manufacturers should glean from this study and suggests a framework for continual improvement and efficiency. 

Study design, participation, and data pooling 

A brief review of the study's design and the level of participation from the contract-manufacturing industry and those firms that manufacture their own products is necessary to begin to understand the data and analysis upon which the study's conclusions on contract manufacturing is based. The four-year study statistically analyzed survey data collected from 42 pharmaceutical manufacturing facilities, focusing on selected performance indicators such as batches failed, cycle time, yield, and deviation management. The study used a survey instrument to gather a large amount of data for each facility regarding general company and business-unit information, manufacturing facilities, human resources, product development, performance metrics, teams, deviation management, and supplement management. Study participants were asked to select and provide performance data for up to five representative products that were manufactured in their facilities between 1999 and 2003. Participants were requested to preferably select large-volume products that had been introduced within the past five years and had at least three years worth of data. Batches failed, cycle time, yield, and deviations were selected as representative key performance indicators.The study attempted to statistically demonstrate relationships between these performance indicators and numerous independent variables spanning from facility size to batch disposition authority.  

 The researchers asked each facility to complete a survey, and each facility was asked whether it was a contract manufacturer. According to the study, the 42 manufacturing facilities that participated were actually owned by only 19 companies. This distinction between company and facility is important because it suggests that a company could manufacture its own products and provide contract-manufacturing services. A total of eight injectable facilities participated in the study, of which only two were engaged in contract manufacturing. Twenty-two oral and topical facilities participated in the study: 13 facilities were engaged in contract manufacturing. Given that 50% of the 30 facilities were engaged in contract manufacturing, it seems probable that some of the 19 companies that participated in the study both manufacture their own products and provide contract- manufacturing services. This duality may present a potential concern because companies that manufacture their own products and provide contract-manufacturing services may operate differently than those companies that are solely dedicated and designed to provide contract-manufacturing services. Unfortunately, the study did not account for this distinction. Despite clear differences in processes, the data from oral, topical,  and injectable manufacturers was pooled as one set for analysis and discussion, further complicating the data pooling. This pooling becomes problematic for key performance metrics such as cycle time and yield. 

 as "the number of batches per month that failed and were not able to be successfully reworked" (1). This definition, however, does not account for the monthly volume of production for the product in question. Although 

 was one of the performance measures described in the study and requested by the survey, it does not appear to have been used for this metric.  

To understand why this omission is important, consider the following example. Assume Facility A and Facility B both make Product X. Facility A manufactures approximately 10 batches of Product X each month on average. Facility B manufactures approximately 100 batches of Product X each month on average.  If both facilities reject 1% of their monthly production of Product X on average, how do these facilities compare in terms of batches failed? Facility A has a batches-failed metric of 0.1 batches per month. Facility B has a batches-failed metric of 1.0 batches per month. According to the study, the mean for batches failed for oral, topical, and injectable facilities was 0.13 batches failed per month, but this does not consider the number of batches manufactured. Using this example, Facility A performed slightly better than the mean for Product X, and Facility B performed poorly and well above the mean for Product X. Both facilities, however, rejected an equal percentage of their monthly production. 

 What is the relevance of this point for the contract manufacturers that participated in this study? To address that question, it is important to examine the size and scope of those participating contract-manufacturing facilities. For injectable manufacturing facilities, the two contract-manufacturing facilities both were fairly large. For example, one contract-manufacturing facility ranked first with the largest average facility size, highest number of compounds, and largest average number of employees and operating hours. Oral and topical contract manufacturers generally were large as well. Five of the nine facilities that were above an average of 22,000 m

  from 1999 to 2003 were contract manufacturers, one of which was ranked the largest of all facilities that provided data for the study. A contract manufacturer also ranked first in terms of average total facility employees. In fact, three of the four facilities reporting over 1000 total facility employees were contract manufacturers. Contract manufacturers held five of the top six rankings in terms of manufacturing-facility operator hours per month, averaging over 600 hours per month from 1999 to 2003. Additionally, contract manufacturers held the top four rankings of the 18 facilities that reported data concerning the number of compounds manufactured.   

Not surprisingly, the top three contract manufacturers had a combined total of as much as 200 compounds manufactured. A large number of compounds, employees, and operating hours using a large facility suggests a large monthly production volume that should be accounted for in benchmarking batch failure. The need to account for monthly production volume for the product under analysis becomes even more evident when considering that the study reported a large range—0 to 19—of batches failed per month. While using an absolute metric such as batches-failed-per-month may provide an indication of overall product unavailability and waste, it does not provide the best comparative measure for a facility's ability to manufacture a product in such a way that will ultimately lead to its release.        

 as "the average number of days between batch start and those batches either accepted or rejected during the month" (1). It reports the mean cycle time for all oral, topical, and injectable facilities as 27.14 days. Although this may seem like a reasonable standard of comparison for benchmarking both contract manufacturers and product-owners alike, two points should be considered.   

First, in order to compare facilities that manufacture their own products with contract-manufacturing operations, it must be assumed that the cycle processes that each facility follows are equivalent; however, this situation often is not the case for contract manufacturers. Because the product's license holder assumes the ultimate legal responsibility for product release to the market, product owners often review the associated batch documentation and provide release and authorization for shipment to the contract manufacturer. This additional step can take days or even weeks, depending on the prioritization and schedule of the product's owner.  This difference does not appear to have been accounted for in the study.   

Second, this study pools cycle times stemming from many different processes that may have inherent cycle-time limitations. For example, an injectable product typically requires sterility testing as part of its release criteria. Samples undergoing this test have a fixed incubation time that must be built into any cycle-time expectations. Nonsterile processes such as those governing oral and topical products do not require this time-consuming test. Compressing a batch of tablets may take hours; some freeze-drying cycles for sterile products can take nearly a week. This point is made clear by examining the standard deviation and the range of cycle times given for the study. The standard deviation was given as 28.76 with a range of 1.00–187.00 days. For a benchmarking study, the need for large pools of data to yield statistically significant conclusions makes sense; however, this need must be weighed against the similarity of the data and its ability to be pooled. In this case, given the large variation among the processes and the enormous variability within the data, the presented pooling does not appear to be nearly as useful as it might seem. 

 is defined as "the ratio of the theoretical amount of output that would be produced at any appropriate phase of production of a particular drug product to the quantity of components used, in the absence of any loss or error in production, stated as a percentage" (1). The 

then is the ratio of the actual yield to the theoretical yield at the same phase of production. The mean actual yield for this study was reported as 96.38%. While the mean itself could be recognized by pharmaceutical facilities across the industry as a reasonable expectation, the standard deviation of 6.64% with a range of 24.00–124.00% suggests otherwise.    

The fact that this study allows and pools yields taken from any appropriate phase of production is somewhat surprising given the number of potential production phases in oral, topical, and injectable operations. Granulation, tableting, encapsulation, film-coating, sorting, liquid manufacturing after filtration, semisolid manufacturing completion, and filling and packaging operations are among the many phases where a calculation of yield may be both appropriate and necessary.  The report does not appear to categorize survey data according to the yields reported in phases; instead, the data is pooled into the overall assessment. Should a value that measures the amount of sterile bulk filled against the quantity that was manufactured be compared with a value representing the number of compressed tablets arising from the amount of powdered granulation manufactured? Would the expectations be the same? A review of the standard deviation and range suggests that in many cases, similar processes are not being compared. Again, the need for meaningful comparisons appears to have been sacrificed to generate a statistically significant data pool upon which to base conclusions. 

Deviations were divided into three categories: raw material, product component, and product/process specification. This metric reports the number of each type of deviation that occurred for the product in question per month.  As with batches-failed, this metric does not account for the product's production volume.  Although this metric provides an indication of the amount of time wasted by addressing each type of deviation, it does not provide the best comparative measure for a facility's ability to manufacture a product in such a way as to avoid deviations. The metric, however, does look at how the number of deviations of each type changes over time. With regard to contract manufacturing, the study concluded, "OT&I [oral, topical, and injectables] contract manufacturing has no impact on production unavailability or the level of deviations. It does lead to lower product and process specification deviations over time" (1).  

The study did an effective job selecting key representative performance metrics and listing the numerous variables that may affect them. Taken as a whole, these metrics suggest some strategic guidelines that all contract manufacturers should follow. 

The study shows that contract manufacturers were among those facilities with the greatest number of compounds and processes. Each new compound that a contract manufacturer introduces provides an opportunity to expand its library of pharmaceutical knowledge. When captured and used properly, this knowledge may lead to improved technical transfers, reduced deviation rates, fewer batch failures, improved yields, and improved cycle times.  Contract manufacturers must have systems in place that identify, collect, and assess all necessary information regarding the processes they use to manufacture their customers'products and the resulting outcomes. 

 To fully capitalize on manufacturing experience, contract manufacturers should define, track, and trend metrics for key performance indicators such as those considered for this study. Management must understand what these metrics are intended to measure. For example, everyone would agree that tracking a measurement for batch failure is of critical importance.  

Of equal importance, however, is defining which aspect of batch failure to focus on. For example, is a company interested in what percentage of its total production is rejected? This metric may indicate how well overall operations are performing. Perhaps a company wants to know what percentage of a newly introduced product fails. This metric may give an indication of the technical transfer success. A company may even be interested in how much cost in time, materials, and opportunities is lost because of batch failures. Each of the measurements is valuable, and each would be calculated and presented differently. Contract manufacturers should make clear to their entire value chain what is being measured, how it is being measured, and why it is being measured. These metrics must be tailored to fit the existing and potential customer's needs and concerns. Contract manufacturing is a service business, and the metrics are only meaningful if the customer can understand them in terms of their own operations.  Metrics can be a tool that not only serves to suggest areas where operations can be improved, but also may be used to help convince potential customers to outsource a similar product type. 

Employ electronic deviation-management systems.

 Contract manufacturers should use electronic deviation-management systems. The study looked at how companies employed information technology systems to track and manage their deviation process. Specifically, the study questioned whether the deviation-management system used had the capability to: 					

track people assigned to resolving the deviation;

Contract manufacturers were among the first to adopt these systems. For orals and topicals, seven of the 10 contract manufacturers had such a system, and four of the seven have had their system in use since 1999. The study links the routine usage of such a system to improvements in cycle times, batches failed, and deviations. These systems allow deviations to be easily categorized, tracked, and, most importantly, trended.  Once a trend is identified, corrective and preventative actions (CAPA) can be initiated, and future occurrences of similar deviations can be avoided. Once this CAPA has been implemented, repeat occurrences of deviations will disappear,  potentially leading to an overall decrease in the number of deviations, as the contract-manufacturing data from the study observed. Fewer deviations will lead to fewer failed batches. It also may result in a decrease in the overall cycle time from not having to waste days performing time-consuming and costly investigations. 

 conducted by the McDonough School of Business at Georgetown University and the Olin School of Business of Washington University in St. Louis (1) is useful for contract manufacturers because it accurately identifies the performance metrics most associated with quality and cost. Few pharmaceutical manufacturers would disagree that the need to avoid deviations and failed batches drives quality, and that reducing cycle time while optimizing yield affects cost. The study further offers a multitude of variables that may affect these parameters. Unfortunately, when considering how to define these key performance metrics, the study fails to take production volume into account and thus fails to assess each facility's ability to manufacture a batch without deviation or need for rejection.  

The study also fails to recognize the need to further categorize the data before pooling, and therefore the data lose any meaningful comparison. As a result, the study's conclusion that contract-manufacturing performance corresponds with inferior performance metrics can't be supported because of the limitations of the data. Despite these limitations, the study does illuminate several strategic operating points for contract manufacturers to consider for optimizing their operations and improving both quality and cost.  

First, the sheer number of variables considered in the study serves as a reminder of the importance of having meaningful metrics. A variable cannot be improved unless it can be measured, but the variable should not be measured until it is understood what is being measured and why it is being measured.   

Second, the data suggesting that the contract-manufacturing facilities that participated in the study were generally large in size and scope can be an enormous strength for contract manufacturers if they have systems in place to ensure they capitalize on every experience.  

Lastly, to reduce the number of deviations and batch failures, contract manufacturers must identify the root cause and take the appropriate corrective and preventative actions.   The study accurately linked the use of electronic deviation-management systems with success in that endeavor. Contract manufacturers should employ electronic deviation-management systems to make trending, correction, and prevention easier. Supported by a strong, metric-driven trending program stemming from an electronic deviation-management system and robust processes that capitalize on every experience, contract manufacturers should have little trouble demonstrating superior performance to potential customers. 

Shane Ernst* is the quality assurance director at DSM Pharmaceutical Products, Inc., PO Box 1887, 5900 NW Greenville Blvd., Greenville, NC 27835-1887, tel. 252.707.2327, fax 252.707.7512, 

				*To whom all correspondence should be addressed.			

 1.  J. Macher and J. Nickerson, "Pharmaceutical Manufacturing Research Project–Final Benchmarking Report," McDonough School of Business, Georgetown University, Washington, DC and Olin School of Business, Washington University in St. Louis, St. Louis, MO, Sept. 2006, 

www.olin.wustl.edu/faculty/nickerson/results/

Global Feature

The author analyzes the study design, participation, and data pooling from a recent benchmarking study on pharmaceutical manufacturing and raises concerns about the process used and data collected in evaluating the performance of contract manufacturers.

Pharmaceutical Benchmarking: A Contract Manufacturing Perspective

), a contract drug-development company, is embarking on a growth strategy upon which it hopes to double its revenues by 2009. The company recently completed a financial restructuring that includes new equity and term facilities totaling nearly $50 million. That financing will help Ricerca to implement a multiyear business plan, which includes a $15-million investment to add chemistry and biological laboratories to its site in Concord, Ohio. 

Strategy focuses on drug development services  

Ricerca focuses on providing drug-development services of small molecules from discovery through commercial manufacture using both biological and chemical capabilities. Its services include lead optimization, analytical and process chemistry, services for toxicology and pharmacology, radiosynthesis, manufacturing of active pharmaceutical ingredients (APIs), and regulatory support. Its API production facilities in Concord, Ohio include kilo laboratories operating at the 50-L scale and plant-production systems with capacities of between 200–2000 L in scale. Ricerca works with large pharmaceutical companies as well as emerging or start-up companies that often need a broader scope of services to support their drug development.

 The strategy of offering an integrated approach in biology and chemistry services has been successful. 2007 client revenues will approach $50 million. Between 2004-2006, Ricerca increased revenues from its  toxicology and bioanalytical services by more than 50%, and from chemistry services by over 40%, says R. Ian Lennox, executive chairman of Ricerca. 

Ricerca recently expanded its service offerings to include drug-discovery packages (early-lead selection paired with 

 analysis). Its drug-discovery services support advancing hit molecules to development candidates for a new investigational drug application (IND). These capabilities include medicinal chemistry services for evaluating, validating and optimizing active compounds for a discovery program, lead-chemistry optimization, custom-focused libraries synthesis, synthesis to establish structure activity relationships, chemistry and synthetic route development, and synthesis of reference compounds, scaffolds, building blocks, and starting materials. It also provides drug-ability assessment, metabolite identification, and impurity studies as well as  toxicology and pharmacology services, which include 

 absorption distribution, metabolism, elimination, and toxicity (ADMET) testing and 

 biological testing, including animal-efficacy models. 

To support IND candidates through clinical development, Ricerca provides process optimization, scale-up, manufacturing under good manufacturing practices (GMPs), and bioanalytical testing. 

Ricerca is preparing for production of commercial APIs following the completion of a successful preapproval inspection of its Concord manufacturing facility by the 

) in 2006.This effort is the first commercial preapproval inspection for Ricerca, reflecting the company's increased emphasis and strengthening of its compliance program to commercial production standards. 

Last month, Ricerca completed a financial restructuring that includes new equity and term facilities approaching $50 million that will help finance the company's growth plan. Lennox recently completed a business plan for the company through 2009, which set a goal of more than doubling revenues by 2009. The plan includes capital expenditures of more than $15 million over the next three years, the vast majority of which is to be invested in 2007 in new chemistry and biology facilities and equipment, as well as resources for training and staff additions. The company now employs 250 people and expects to increase staff by 15% in 2007. 

 "Our biology investment is in two areas," explains Lennox. "The first is in the development of our histopathological capabilities such as microscope-slide preparation. The facilities are now being built, and staffing is ongoing." The facility is expected to be operational in the third quarter of 2007.  

"The second investment is the building of our new comparative medicine laboratory," says Lennox. "This involves the construction of a very specialized new facility, instruments, and recruitment program," which includes a 19,000-ft

facility. These improvements are expected to be completed and operational by October 2007.  

"Our investment in chemistry is scheduled to occur throughout 2007 with significant investment in software and instrumentation," continues Lennox. " We will also be upgrading our toxicology data management system to the newest version of Instem's Provantis software. We are upgrading our enterprise chromatography capabilities with the implementation of the most current version of Perkin-Elmer’s Totalchrom. Additionally, we are enhancing our scientific data management capabilities with the upgrade of our Applied Biosystems' SQL*LIMS system to the most recent version, enabling further automation of chemistry operations".

Ricerca to date has grown organically with a strong service focus on North America biotechnology and well-established Japanese clients, small molecules, and nonclinical integrated research.

In late 2006, Ricerca established exclusive collaboration partnerships with Latitude Pharmaceuticals (San Diego, CA) to support client formulation requirements as well as the Bicoll Group (Munich, Germany and Shanghai, China) for drug-discovery services.

"Ricerca’s new investors, Bain Capital Ventures, Cowen Investments and SV Life Sciences like the Ricerca strategy, are keenly interested in growth and have significant capital resources for acquisitions. We don’t need to grow through acquisitions,"says Lennox, "but being in a position to do so is an inevitable characterization of the new Ricerca",he adds. 

Pharma Partner Focus

Ricerca Biosciences LLC a contract drug-development company, is embarking on a growth strategy upon which it hopes to double its revenues by 2009. The company recently completed a financial restructuring that includes new equity and term facilities totaling nearly $50 million. That financing will enable Ricerca to implement a multiyear business plan, which includes a $15-million investment to add chemistry and biological laboratories to its site in Concord, Ohio.

Ricerca Unveils Growth Strategy

A roundup of manufacturing and service expansions.  

) outlined its production strategy for  "Tamiflu"  (oseltamivir) for treating the H5N1 avian influenza virus. Roche's manufacturing network for Tamiflu production includes eight Roche sites and 19 external manufacturing partners located in nine countries. 

William M. Burns, CEO, Division Roche Pharma, outlined the company's current production plan."The manufacturing expansion went according to plan and Roche, together with external partners, now has the ability to produce more than 400 million courses of Tamiflu a year," he said in a company release. "To date, we have had orders from governments amounting to about 215 million treatments in total. Today, we can satisfy significant additional orders from governments and corporations and unless the demand picks up, Roche will be tailoring its production schedule accordingly. These measures include maintaining a buffer stock at all times while remaining in close contact with our manufacturing partners to respond speedily to a surge in demand." 

Based on current government orders, Roche says it will start tailoring the Tamiflu production schedule while maintaining stock of intermediates and active pharmaceutical ingredients (APIs) along the supply chain. It said gearing production up to full capacity will be triggered by one of two events: (1) Roche inventories of oseltamivir, the API in Tamiflu, drop below target levels or (2) the World Health Organization (WHO) declares the pandemic has evolved to phase 4 (human-to-human transmission). 

Johnson & Johnson Pharmaceutical Research & Development, LLC

),  started construction of a new building on its Spring House, Pennsylvania, campus, that will add approximately 150,000 square feet in new laboratory, clinical development and office space to its existing facilities. The site will become Johnson & Johnson Pharmaceutical Research & Development's East Coast hub for discovery research and early clinical development upon its completion in 2009. Under the plan, Johnson & Johnson Pharmaceutical Research & Development, LLC, will retain 680 existing jobs at the site and expects to add another 120 jobs over the next three years. 

 announced plans for the groundbreaking of its expansion at its Portsmouth, New Hampshire mammalian biopharmaceutical manufacturing facility. The company will break ground for the 330,000-ft

   facility on May 17, 2007. Lonza is investing roughly $300 million for the project. The Portsmouth site is the company's largest scale mammalian cell culture plant commissioned to date by Lonza with total suite capacity of 93,000 L.  Lonza is adding a 5,000-L bioreactor to the existing facility that is expected to come on stream in mid-2008.  

), a provider of parenteral product development, CGMP materials management, and consulting services, is adding 20,000 ft

  facility to accommodate growing demand, particularly in its CGMP materials management business unit. The expansion also adds 15 employees to its existing base of 21 full-time employees and includes a multi-million dollar investment in facilities and equipment.  

) has opened two new offices, in Hyderabad and New Delhi, India. The offices offer access to a team of experts providing services such as drug development, technical consulting, facility design, process engineering, commissioning, and validation. 

) officially opened Abbott Biotechnology Limited (ABL), its new biologics-manufacturing facility in Puerto Rico. The 330,000-ft

 facility will produce "Humira," Abbott's biologic agent for the treatment of arthritis and Crohn's disease. ABL received 

 approval to commercially produce Humira for the US market in February 2007. 

) has provided a new schedule for the completion of a new manufacturing facility in County Cork, Ireland.  

In 2006, Amgen announced plans to invest more than $1 billion in new process development, bulk protein production, and fill-and-finish facilities, with an initial target of beginning operations in the 2010 timeframe.  

An Amgen official explained the company has outlined a revised schedule for starting operations based on a recently conducted periodic review of its manufacturing facilities. The bulk manufacturing capacity is scheduled to be operational in 2012, with regulatory licensure of the facility anticipated for 2013. The process development laboratories will be constructed in conjunction with the bulk facility or as needed to support start-up of the manufacturing capacity. The fill-and-finish capacity is scheduled to be operational by 2013, with regulatory licensure anticipated by 2014. Once fully operational, the site is expected to staff 1,100. 

) completed upgrades to its parenteral manufacturing facility in Charleston, South Carolina and its sterile product release operation in Wilmington, North Carolina. The upgrades were done to increase capacity and ensure that both facilities comply with European Union aseptic processing and testing guidelines.  

) opened its new pilot plant in Princeton, NJ. The plant is designed for process development and production and purification of early-phase preclinical proteins. 

) plans to invest EUR 250 million ($334 million) in its production site at Currabinny,  Ireland over the next five years, according to a release issued by the Irish Development Agency (IDA Ireland, Dublin, 

The investment will support production for lapatinib, the active ingredient in GSK's  "Tykerb," a new oral treatment for advanced breast cancer. In March 2007, the 

) approved Tykerb in combination with "Xeloda" (capecitabine), an anticancer treatment from 

),  for treating advanced or metastatic breast cancer.  

GSK Cork is a strategic global new product introduction site within GSK that manufactures the active ingredients of medicinal compounds. The Currabinny site was established in 1975 and employs more than 600 people. The new investment will create as many as 150 new high-level positions, according to IDA Ireland, an Irish government agency responsible for securing new investment from overseas in the manufacturing and internationally traded services sectors.  

–The contract manufacturing organization 

) broke ground for their large-scale commercial mammalian cell-culture manufacturing facility at Tuas Biomedical Park in Singapore. Bio*One Capital, the investment arm of the 

), is a biomedical sciences investment-fund management company. The facility will be Lonza's second large-scale mammalian manufacturing plant in Singapore and the third one globally that the company has built.  

The construction of the first shell of Lonza Biologics Tuas was initiated in February 2007. The final build-out of the facility will be completed and become fully operational at the latest in 2011, in line with custom commitments, said Lonza in a company release.  

The capital investment could amount to $350 million depending upon customer requests. Lonza Biologics Tuas Pte Ltd. will have up to four mammalian bioreactor trains, each with a flexible capacity of 1000-20,000 L, inclusive of purification units.  

A roundup of manufacturing and service expansions for April 2007.

Expansions

A roundup of company moves and positioning from the pharmaceutical and biotechnology industries and contract service providers. 

) for $15.6 billion. The deal is expected to close in June 2007. 

 The acquisition of MedImmune further advances AstraZeneca's biologics strategy, giving the company biologics manufacturing capacity and late-stage drug candidates. AstraZeneca is adding two late-stage drug candidates: "Numax," a next-generation product that follows MedImmune's "Synagis," and the refrigerated formulation of "FluMist" which has an anticipated US launch for the 2007â2008 influenza season. The acquisition of MedImmune also increases the percentage of biologics in AstraZeneca's pipeline from 7% to 27% and enlarges the latter's total pipeline by 45 projects to 163 projects.

 AstraZeneca also gains biologics manufacturing capacity. MedImmune has biologics manufacturing capacity of more than 30,000 L planned by 2010, with the potential to increase capacity as much as 60,000 L with further modest investment. This would secure production requirements for the long term and avoid the need for major near-term 'green-field' manufacturing investment by AstraZeneca to support its biologics strategy, said AstraZeneca in a release.

 AstraZeneca expects to achieve synergies of $500 million per year by 2009. David Mott, CEO and president of MedImmune, and James Young, president, research and development of MedImmune, have agreed to remain with MedImmune along with other senior management members, through the closing of the deal. Mott will also take a leadership role within AstraZeneca.

 (CQAC), a corporation formed by Chiral Quest's management and others. ChiralQuest specializes in asymmetric chemocatalysis and custom synthesis. The sale is valued up to $3 million; $1.7 million in cash is expected to be paid to VioQuest Pharmaceuticals upon closing, plus CQAC will assume Chiral Quest's liabilities of up to $1.3 million. The deal is expected to close in the second quarter of 2007.  

) plans to restructure its current network of six pharmaceutical manufacturing facilities in southern Ontario, Canada. The plan is part of the company's strategy to focus on manufacturing prescription pharmaceutical products and to improve its profitability. 

Patheon plans to divest the business related to its Niagara-Burlington operations, which provide commercial manufacturing of over-the-counter (OTC) products. The Niagara-Burlington operations consists of facilities in Fort Erie and Burlington Gateway and the commercial operations at Burlington Century. The sale will include the assets, including equipment, facilities, and land, at the Niagara and Burlington Gateway facilities. Third-party contracts will be assigned to the purchaser, subject to client approval. Patheon plans to retain its leased Burlington Century facility where its central quality control laboratory is based.  

Collectively, the three sites serve 14 clients, manufacturing and packaging on their behalf about 60 products in several dosage forms, including tablets, liquids, and powders. Commercial manufacturing revenues at the three facilities were approximately $37 million in fiscal 2006, generating earnings before interest, taxes, depreciation, and amortization before repositioning costs of $2.6 million. 

 facility in Fort Erie employs 250 people and the 22,800-ft

 facility in Burlington Gateway has 80 employees. The 45,000-ft

 facility in Burlington Century employs 20 in commercial manufacturing and also includes an 8000-ft

 laboratory employing roughly 110 people who provide raw-material, finished-product, and microbiology testing for Patheon's Canadian operations.  

To improve capacity utilization and profitability of the remaining Canadian sites, Patheon plans to transfer substantially all commercial production and development services at its York Mills site in Toronto to its site in Whitby, Ontario, and some production to its sites in Mississauga, Ontario, Canada and Cincinnati, Ohio.  

 facility in Toronto, Ontario manufactures approximately 60 products on behalf of 15 clients and serves 30 clients with pharmaceutical development services (PDS). The 199,000-ft

 Whitby site employs approximately 400 people.  

The York Mills-Whitby consolidation initiative is expected to take up to two years to complete to allow time for regulatory approvals and to adapt the Whitby facility to accommodate the transferred production and PDS projects. After this process is completed, Patheon plans to close its York Mills facility. It expects that most, if not all, employees at York Mills will have an opportunity to transfer to Patheon's Whitby site or to another site within the company. Patheon also plans to sell the land and building at the York Mills location. 

The Whitby operations derives 63% of its revenues from prescription products and 37% from legacy OTC manufacturing contracts, primarily cold and flu medications, which Patheon acquired as part of its purchase of the site from Novartis Pharmaceuticals (Basel, Switzerland, 

) in 2001. Patheon says its client intends to repatriate production of its OTC cold and flu medication to its own internal production sites in 2008.  

), a supplier of disposable manufacturing technologies and processing equipment for the biopharmaceutical industry. The deal also includes Wave Biotech's European subsidiary, 

(Cork, Ireland). Financial terms were not disclosed. 

) will restructure to reduce ongoing operational costs and focus on building its portfolio of viral and bacterial vaccines. The company will reduce its workforce by 30% as part of the restructuring and leave its research facility in St. Louis, Missouri.  

–As part of its strategy to divest certain programs to focus on healthcare and pharmaceuticals, 

) will sell its Gerber baby food business to 

). Nestle will pay $5.5 billion for the business. The transaction is expected to close by the second half of 2007 

) acquired a privately owned manufacturer and supplier of bulk active pharmaceutical ingredients. Included in the transaction is a 75,000-ft

  manufacturing facility, which includes warehouse space and research and development equipment. 

) completed the previously announced sale of its Pharmaceutical Technologies and Services (PTS) segment to 

) for approximately $3.3 billion. Cardinal announced its plans to divest PTS in November 2006. The deal with Blackstone was announced in January 2007.  

) plans to reduce its workforce by approximately 30% over the next three months and divest certain noncore assets. The company will focus its resources on the development of trodusquemine, an obesity treatment, after terminating its "Evizon" wet age-related macular degeneration program. 

), a life-sciences testing facility that serves the pharmaceutical and medical-device industries. Pace will combine its laboratory in Minneapolis with P3's laboratory facility in Oakdale. The combined operations will offer compendial testing, raw materials testing, microbiology capabilities, finished product testing, extractables and leachables studies, and research capabilities. 

). The acquisition, valued at $315 million, gives Lilly sevaral new early-stage drug candidates as well as insomnia molecule HY10275, which is currently in Phase II development. 

) announced two acquisitions. The company acquired 

 (THP, Sunnyvale, CA) for $56.5 million. Roche plans to integrate THP into the Roche Pharma Center of Excellence for Protein Research in Penzberg, Germany. Roche also signed a merger agreement with 

). Roche agreed to acquire 100% ownership of BioVeris for $21.50 per share in cash for a total of $600 million. 

A roundup of company moves and positioning from the pharmaceutical industry and biotechnology industries and contract service providers.

Mergers, acquisitions, and restructuring

)announced that James M. Cornelius, who has served as interim chief executive for the past eight months, has been elected chief executive officer with a term through the date of the company's annual meeting of stockholders in 2009.

Cornelius has been a member of the Bristol-Myers Squibb board since January of 2005, previously serving as chairman and CEO of Guidant Corporation, chief financial officer of Eli Lilly and Company, and president and CEO of IVAC Corporation.. 

) named Brian Abeysekera, PhD, vice-president of manufacturing. Abeysekera joins the company after more than 20 years at MDS Nordion. 

–Kay E. Stremler was appointed vice-president of manufacturing at 

). Stremler was previously director, bioprocess research and development and clinical supply, pharmaceutical sciences for Esperion Therapeutics. She also was responsible for GMP manufacturing at Boehringer-Ingelheim Pharma KG. 

–Jeffrey S. Campbell was promoted to executive vice-president and chief financial officer of 

). Campbell joined the company as vice-president and controller in October 2002 and has been acting as interim chief financial officer since September 2006. 

PTSM: Pharmaceutical Technology Sourcing and Management-04-30-2007