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Generic Pharma Overview and Trends 2013

Generic Pharma: Excellence Within a Rapidly Changing Landscape

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contents

Finding the Good in GDUFA page 3

Generics Industry – Under Pressure page 5

Outsourcing Excellence in China and India page 17

Visit Website:The State of Quality by Design in Generics page 22

A QbD Implementation Roadmap for the Generics Industry page 24

Visit Website:Quality by Design for ANDAs: An Example for Generic Modified Release Dosage Forms page 29

Additional Resources page 30

www.pharmamanufacturing.comGeneric Pharma Overview and Trends 2013

www.pharmamanufacturing.com

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IT’S bEEN just under a year since the U.S. Congress enacted the Food and drug Safety and Innovation Act containing the Generic drug User Fee Amend-ments, or GdUFA in the parlance of the industry. As most are aware, GdUFA is intended to speed the public’s access to safer, effective generic drugs by supporting financially the expansion of the Food and drug Administration’s reg-ulatory efforts covering the generics space. It is also intended to reduce overall costs to the industry by speeding up the Abbrevi-ated new drug Application (AndA) approval process, which most in the industry recognize is broken.

At this year’s Interphex, Jason Money, senior direc-tor of Federal Government

Affairs for The Generic pharmaceutical Associa-tion (GphA) participated in a panel session “Un-derstanding GdUFA” to discuss the emerging regulatory environment and its impact on the industry. According to

Money, whose trade or-ganization was one of the principle negotiators of GdUFA, the intent was “to fund all activities, so not only just the review and approval of generic-drug applications, but also with the inspections.”

And funding has been woefully inadequate,

witnessed by the number of AndAs languishing in regulatory purgatory. one panelist noted 2,800 AndAs are backlogged right now and that he was still waiting for one pre-approved in 2009. of course, this kind of

uncertainty is extreme-ly costly, disrupting the industry’s ability to bring new generic formulations to the market. Said Money, “the key goals of GdUFA are: to advance the public health, the timely review and approval of generic drugs, ensure the safe and high quality of generic medicine, increase FdA


GDUFA, As it is strUctUreD, will begin to deliver benefits to the industry, bUt it’s GoinG to tAke some time

Finding the Good in GDUFAProviding funding certainty to the fdA’s office of generic drugs will help unjam the AndA backlog, but many see the fee structure unduly burdening smaller players

Steven E. Kuehn, Editor in Chief




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transparency, help FdA address the challenges of globalization through greater inspection and advance regulatory science.”

Money explained that an important portion of his association’s negotiations involved getting the FdA to agree to performance metrics that commit the administration to processing 90% of all AndAs within 10 months of acceptance within five years. Currently the average approval takes 32 months. The intent was to assure that the FdA would cre-ate an efficient, well-staffed infrastruc-ture to administer the approximately $300 million program.

GdUFA aims to address safety and quality concerns and level the playing field among the global players. panel-ist ed price, president and Ceo of pCI Synthesis offered this insight: “There are definitely concerns about the sup-ply chain, and the safety of the sup-ply chain, and by having all of these sites around the world self identifying themselves it allows the FdA to start collecting that data to the end, and im-plementing a system like GdUFA. And, hopefully, over the long term, it will re-duce the risks within that supply chain.”

Unfortunately, GdUFA’s fee rubric is coming to be recognized as something that will disproportionately and neg-

atively impact smaller players in the industry, primarily CMos. “obviously a big concern within the industry is who decided all of this,” said price. “There seems to [have been] very little involve-ment of small to mid-sized companies.” panelist padam bansai, vice president of r&d at Amino pharmaceuticals, offered this: “It may create financial hardship to many small-scale industry. Some small branches may not be able to sustain such user fees, and ... it may discourage small business to enter into this field looking at these heavy expenses, and it may also discourage entrepre-neurship in the field of pharma develop-ment and manufacturing.”

There is a great deal of evidence to suggest that GdUFA, as it is structured, will begin to deliver big benefits to the industry, but it’s going to take some time. At least the performance metrics the FdA and Congress agreed to set a timeline to meet these goals. but there’s also been some pushback and not ev-eryone is happy about it — especially smaller players in the industry. never-theless, as the AndA process begins to untangle and producers begin to see less risk and a faster path to positive cash flow, the market and its regulatory environment will be healthier for all.

STEvEN E. kUEhN, EDITOR IN ChIEF [email protected]


mailto:[email protected]


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“IT IS not the strongest of the species that survives, nor the most intelligent, but the one most respon-sive to change,” explained Charles darwin in Origin of the Species, his treatise on natural selection and its role in evolution. For the generic drug industry, this universal maxim is hard at work, and it’s clearly evident the industry’s players are busy adapting to the pressures the current commercial and regulatory environment is presenting.

What does the future hold for the generic drug “species?” Time and profitability will tell, but it is obvious that some entities

will thrive and prosper, while others less blessed with scale, cost-efficient operations, competitive agility and financial health will go the way of the mastodon — weakened by poorly understood or con-trolled processes and risk prone to expensive quality and compliance excursions — destined to be hunted down by faster, more effi-cient predators.

GlObAl MARkET wARMING

Total spending on medicines globally is projected to rise to $1 trillion in 2013 and to $1.2 trillion by 2016, says IMS Institute for Healthcare Informatics. For generic drugs,

Reacting to growing regulatory, competitive and financial pressures, the generic drug industry’s quickly evolving to survive and thrive in its fast-changing environment

By Steven E. Kuehn, Editor in Chief



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the market was worth $110.8 billion globally. In the report “Generic drugs: World Market 2013-2023,” pharma industry analyst firm Visiongain predicts it will reach $156.9 billion by 2016, reflecting a com-pound annual growth rate of 5.5%. Visiongain set the U.S. market at $43.1 billion for generic drugs in 2011, making it the world’s largest national market for generics, followed by Germany, a distant second, at $8.6 billion. Visiongain says “the ge-nerics market is expected to achieve significant revenue growth over the forecast period owing primarily to the greater demand for cost-effective generic medicines.” (see sidebar: Generic drugs: Cost effective Indeed)

2012: A PIvOTAl yEAR For the generic drug in-dustry 2012 was a pivotal year. In 2012, more than 40 branded drugs repre-senting some $35 billion in sales lost patent pro-tection. reporting for the New York Times, pharma

industry observer Katie Thomas said the value of drugs scheduled to lose patent protection will be cut in half to some $17 billion and, consequently, have a negative impact similar to the effect pat-ent expirations are having on the branded industry. While the ultimate effect of a constricting pipeline of generic drug patent expiration opportunities remains to be seen, ge-neric producers, contract manufacturing operations (CMos), excipient suppliers and other players are re-sponding to market and competitive pressures,

evolving and adapting to challenge adversity and win opportunity.

Some are seeking to exploit niche markets and technical acumen by focusing on producing difficult formulations. others seek market share, global production assets and strategic therapeutic category positions through acquisitions, partnerships and alliances. When one starts looking across the supply chain, it’s obvi-ous this behavior is being repeated again and again. A recent visit to CMo dSM pharmaceutical products

At every point in the processing line where human activity might impinge on quality, the BD Rx team and its technology suppliers sought technical solutions to remove direct human interventions from the process.


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affirms the pervasive view among in-dustry players that smart collaborations and well-ordered alliances will provide longer-term advantages and healthy revenue streams. According to Wayne Weiner, vice president of business devel-opment, “dSM is establishing strategic alliances worldwide which build on our technical, manufacturing and regulatory expertise with partners’ understanding of patient needs to bring generic and specialty medicines to market in a reli-able and sustainable way; and consistent with dSM’s Quality for Life program.”

noteworthy, and with a certain irony, large generic pharma is also looking to secure positions in branded pharma to support strategic business goals and attain longer-term financial and busi-ness success, pursuing a hybrid business model to help assure sales and revenue, as well as investor returns. of course, big branded pharma has also, over the years, been busy staking out its territory in the generics space.

bIGGEST FISh Last october, Watson acquired Activ-is, adopted its name and in the process made itself the third largest generic maker in the world. Seven months later, Valeant pharmaceuticals was reported to be chasing Activis, as was Mylan which offered $15 billion for the parsippany, n.J.-based company — an offer it reject-ed according to a May 14 reuters report.

Just over a week later, media reported that Activis agreed to acquire specialty pharmaceutical company Warner Chilcott plc. in a $5 billion deal. A Wall Street Journal piece May 21 provided insight: “The Warner Chilcott deal would help Activis — whose core generic-drug busi-ness faces difficult market conditions — further diversify into patented, brand name drugs.” According to the report, Activis said the Warner Chilcott acquisi-tion would strengthen its portfolio and boost annual revenue to about $11 billion.

other companies are creating alliances and defining new partnership models, as well as closely examining, then trim-ming asset costs or looking to divest noncore assets to achieve similar ends. Teva, widely acknowledged as the global generic drug industry’s leader (ranked 10th by IMS as among the top 20 pharma manufacturers in 2012 by sales of $24.8 billion), has been responding to business environment pressures, busy restruc-turing itself to compete in the generics industry’s fast-changing environment.

In April, bloomberg reported Teva is reducing manufacturing operations as part of a $2 billion, 5-year cost-cutting effort, with most of the savings under the plan com-ing from lowering procurement expens-es. Teva Ceo Jeremy Levin offered this assessment: “Some parts of manufacturing will be affected, but this is not the major thrust of this,” said Levin.



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Teva is also pursuing the production of difficult formulations as is Mylan (ranked 20th on IMS’ top 20 list with $10.5 billion in 2012 revenues) — both looking to cre-ate generic versions of Advair, a tough

nut to crack because it combines two ApIs delivered via a specialized inhaler.

hEADwINDS AND UNDERCURRENTS Macro market themes aside, there are numerous undercurrents and headwinds buffeting the generic drug industry chal-lenging large, medium and small compa-nies alike. despite its market successes,

several generics producers and suppliers in recent years have been troubled by well-publicized product recalls, process quality excursions, bioequivalency issues and even industrial accidents.

ranbaxy provides the most recent, if not spectacular, cautionary tale. In May, ran-baxy pleaded guilty to federal drug safety violations and forced to pay $500 million in fines to settle claims it knowingly sold drugs that fell short of FdA required standards. According to the Justice department, the settlement is the largest in history involving a generic

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At BD Rx, maintaining 100% sterile conditions throughout the process has been accomplished by closing it to humans. Shown here is a BD RX Vapor compression station for pharmaceutical grade water production.



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drug manufacturer and drug safety. The settlement comes in the wake of the FdA’s consent decree issued to ranbaxy after officials identified a rash of man-ufacturing lapses at plants in the United States and India, as well as finding that it knowingly sub-mitted false data to the FdA. A New York Times report on the announced settlement noted that “ranbaxy’s troubles have not been limited to lapses outlined in the federal settlement. Last november the company halted production of generic Lipitor while it investigated why glass particles turned up in pills dis-tributed to the public.” In fact, among the prosecuted viola-tions, the company admitted that in August 2007, batches of gabapentin tested positive for unknown impurities and that the subsequent recall involved some 73 million doses.

do ranbaxy’s problems shine a light on poor oversight of overseas generic drug producers by the FdA? perhaps. The New York Times reported that off-shore plants are inspected once every 7 to 13 years compared to domestic plants which are inspected every two years. Certainly not optimal and the agency recognizes it:

In the United States, the generic drug industry is having a tremendous impact on per capita spending on medicines. In its May 2013 study “declining Medicine Use and Costs: For better or Worse,” IMS finds that the total dollars spent on medications in the U.S. reached $325.8 billion in 2012, which translates to an $898 per capita expense, down $33 from 2011. According to IMS, the reduction in per capita drug spending was the result of a number of influences, but driven to a large degree by the increasing availability of viable generic alternatives. “In addition to lower utilization of branded drugs, the primary drivers [of the reduction] were: the increased availability of lower cost generics.”

over the last decade or so, the savings on drugs consumers and the healthcare industry is experiencing has been dra-matic. In IMS’ recent study “Generic drug Savings in the U.S. 2012,” the Generic pharmaceutical Association (GphA) finds that its industry saved the U.S. health care system more than $1 trillion over the last 10 years, achieving $192.8 billion in savings alone in 2011. “Against the backdrop of escalating costs, the generic drug savings analysis shows conclusively that the use of lower cost generic prescription drugs is a vital component of holding down the growth rate of health care spending.” Given that the national Health expenditure Accounts (nHeA) is reporting the average annual growth rate is expected to be 6.2% per year and that national health care spending will reach $4.4 trillion by 2018, the braking effect of lower drug spending due to the increased availabil-ity and demand for generics will help hold down the cost of health care significantly. The bottom line, says IMS, is that in 2012 per capita spending on U.S. medicines fell 3.5% due to generics, which now account for 84% percent of all prescriptions.

offering a bit of historical context, the GphA report ex-plains that “This remarkable record of savings over the past decade dwarfs initial savings estimates made in 1984 when the Hatch/Waxman Act established the modern-day generic industry. At the time, it was projected that generics could save up to a billion dollars over the 10-year period follow-ing the enactment of the bill.” After the bill’s enactment, actual savings over the next 10 years had reached nearly $10 billion. “Today,” says the GphA report, “that amount is being saved every 18 days.”

GENERIC DRUGS:


COST EFFECTIVE INDEED


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The FdA’s recent budget request included an additional $10 million for inspections in China for fiscal year 2014.

MORE OR lESS? do the recurring reports of quality and bioequivalency lapses support the notion that there is actually more regulatory scrutiny or is it that manufacturers have become more lax in managing quality? nigel J. Smart, Vp & managing partner for Smart Consulting Group, proposes that “one shouldn’t over-generalize be-cause there are a lot of things going on in the industry right now. remember the regulatory climate is always an evolving situation, so one must continuously upgrade what one is doing to maintain a state of compliance.”

Smart explains that, like other federal agencies, the FdA is going about enforcing the laws on the books and is using its resources to assure compliance so the public is protected. “one must remem-ber that in the last few years we’ve had a number of unfortunate situations with poorly manufactured drugs and medical products, some from overseas, and this always causes Congress to ask questions of the FdA. domestically when things change, generic companies don’t always have the resources to respond quickly enough and that’s why these companies fall out of compliance. process validation is a good example of this changing land-scape and it’s taking time for companies

to adapt from how they’ve been working for the last 30 years.”

At GphA’s annual meeting in February, FdA commissioner Margaret Hamburg set the table for the agency’s renewed focus on generic drug quality oversight in her speech to attendees: “year in and year out we say much about safety and efficacy. but without product quality, none of us can feel confident that the product will be either safe or effective ... and unfortunately, we’ve seen far too many quality lapses throughout the pharmaceutical industry over the past few years. Quality concerns are not ex-clusively the province of generic drugs, as you well know. I’m sure you’ve cringed when you heard some of the stories — glass shards and other particulates in products, ... bacterial or endotoxin contamination found in products man-ufactured in an aging sterile injectable facility, and concerns about prescription meds mixed in with bottles of over-the-counter medication. These are not the norm, but they are warning signals that we can and must do more.”

And the FdA is doing more. between 2009 and 2010 the number of warning letters sent by the FdA increased 42%. recent regulatory zeal is also causing drug shortages (see sidebar “Caught Short”). between 2010 and 2011, the number of warning letters increased 156%. According to Sigfried Schmitt,



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principal consultant and Qbd practice lead for contract research provider pArAXeL, “For many makers, some prominent compliance issues are related to unreliable or even falsified records. Warning letters and 483s are clear indicators of this widespread issue.”

A review of the Food & drug Administra-tion’s Inspections Citations data supports Schmitt’s assertion. Most compliance issues in 2012 point to gaps in process understanding and from poor or non-ex-istent documentation.

bikash Chatterjee, president and CTo of pharmatech Associates offers context and perspective to help better understand the emerging generic drug regulatory en-vironment. “Generic manufacturers have been operating under a quality model that was first established in the mid-80s. despite admonitions from the FdA and other regulatory bodies to adapt and evolve, little has changed in the scientific level of product development and quality assessment. The level of enforcement we see today is much more in line with brand drug manufacturers and that is why there is more regulatory action of generic drug manufacturers. However, the agency is in a pickle: With a mandate from Con-gress to drive down payer costs while maintaining public safety and meeting the demands of the marketplace, the inevitable drug shortages from regulatory actions hurt everyone.”

SURvIvAl OF ThE FITTEST The pressure to succeed and thrive in this industry is enormous; the stakes are high, but superlatives aside, the rewards are there to reap for companies able to leverage the tools and the technological resources required to achieve business success manufacturing and marketing generic drugs. The market (which at its heart, are millions of people seeking better health and longer lives through the therapeutic consumption of medicines) is demanding the generics industry deliver ever increasing quantities of safer, more effective and less expensive drugs. The industry, in turn, is seeking to supply this demand within the context of capitalistic free enterprise, but due in part to its growing complexity, technical density and scale, is struggling to achieve the almost mandatory perfection demanded by regulators, society and the financial community.

For the most part, the industry’s major issues of supply, quality, formulation, purity, batch and process understanding, compliance, profitability, etc., all tend to point to gaps and disconnects across the manufacturing continuum and the slow adoption of applied processing science and supporting technologies. Following this are regulatory imperatives that are insisting the industry invest in and integrate what producers can prove empirically are current good manufacturing processes that assure product quality by process design.



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Controlling process variability and assuring product quality in real time (rTQA) is the desired state of pharma manufacturing as prescribed by regu-lators. The focus on Qbd is prompting pharma manufacturers to make larger investments in the means of production earlier in the product development life-cycle. The strongest, if not the fittest, are indeed recognizing that the road to redemption for some, and long-term financial health for others is paved with GMp and Qbd methodologies. Successful companies are investing time, resources and especially capital to implement these tools, not merely for survival commercially, but to move themselves and their organizations further up the generic drug industry food chain.

Companies adept at sensing opportuni-ties in the market’s dynamics are moving into generics with a competitive agility that leverages their technical and busi-ness acumen achieved in other segments

of the pharmaceutical industry supply chain. For example, in March, bd (bec-ton, dickinson and Company) announced the FdA approved its first drug to be offered in the just-launched bd Simplist product line of ready-to-administer pre-filled injectables to be commercialized by bd rx, its wholly owned subsidiary.

As recent regulatory actions suggest, producing high volumes of sterile inject-ables is neither easy nor very profitable if not done with high-volume precision. delivery systems are also evolving in response to medication errors stemming from a number of issues involved in the physical administration of injectable drugs. For bd rx, “our initial goal was to create a new value proposition for injectable drugs,” says Mark Sebree, president, bd rx, “that merged the idea of what an original container would be with what the final delivery device would be.” Sebree notes that a lot has changed in the environment, the call for companies

Company 2012 Sales* Location Employees MFG. Facilities

Teva Pharmaceutical Industries Ltd. $10.4 billion Israel 46,000 75

Sandoz $8.7 billion Germany 25,000 30

Activis $5.9 billion Switzerland 10,000 30

Mylan Inc. $5.8 billion United States 20,000 9

Hospira $4.1 billion United States 16,000 14

Sanofi $1.8 billion France 110,000 112

Ranbaxy $2.3 billion India 14,600 8

Aspen Pharmacare $1.5 billion South Africa 3,100 17

STADA Arzneimittel $1.5 billion Germany 7,800 14

Sources: About.com, company financial statements, GlobalData, EvaluatePharma * Currently available figures



About.com

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to transition away from older technolo-gies, for instance, and especially away from older manufacturing processes.

In pursuit of scale, quality and flexibility, bd rx created its new facility to inte-grate high-order GMp and Qbd prin-ciples to process the formulations and

package them in an innovative and safer form. Tracy Hottovy, director of operations, says that early on they wanted to take a ground-up approach. After taking a close look at existing processes and facilities they concluded that “what we wanted to go after was to put in place the best manufacturing

robust FdA oversight and enforcement is a force for good, but like most government intervention there are often un-intended consequences. of growing concern is the contro-versy surrounding critical drug shortages, almost exclusively involving sterile injectables produced by generic drug man-ufacturers. An IMS study “drug Shortages: A closer look at products, suppliers and volume,” finds the problem is highly concentrated with more than 80% of the products generic and more than 80% involving injectables. In June 2012, the U.S. House of representatives Committee on oversight and Government reform issued the staff report “FdA’s Contri-bution to the drug Shortage Crisis.” According to the report, the widespread shortages of generic injectable medications are due to two main factors: “The first is growing market concentration over the past decade, which was accelerated by a provision in the Medicare Modernization Act (MMA). The second is increased FdA enforcement and regulation.”

In a nutshell, the effect of the MMA was to first, cut the reim-bursement rate for injectables. Three primary chemotherapy drugs, Carboplatin, ondansetron and Irinotecan experienced price declines of approximately 90% in just their first year off-patent. The effect of these artificial and forced econom-ics was chilling, essentially driving smaller producers out of the market and concentrating the remaining production capacity with smaller number of large producers with the scale to manufacture large lots of sterile injectable drugs at razor thin margins.

The congressional report blames the FdA’s “prodding” for compounding the crisis, pointing out that in response to warning letters, the major producers, responsible for manu-facturing the lion’s share of these drugs, took their injectable

manufacturing off line. The House Committee supported their criticism noting in the report that none of the drug mak-er’s lapses identified by FdA inspectors posed a demonstra-ble threat to public safety or harmed consumers.

of the 219 drugs listed on the American Society of Health System pharmacists (ASHSp), said the report, 58% of the drugs on the shortage list were produced by at least one facility undergoing FdA remediation. “prior to these actions, bedford Laboratories, Hospira pharmaceuticals, Sandoz pharmaceuticals and Teva pharmaceuticals were producing nearly 1 billion units of generic injectable products per year. Facilities at these companies are currently operating at about 700 million units per year.” Further exacerbating the prob-lem, said the report, the shutdowns occurred simultaneously with competitors taking their capacity off line as well.

AT A lOSSnot surprisingly, the market conditions forced on the indus-try pushed many manufacturers to produce these high-de-mand drugs at a loss — in spite of shortages. “The Com-mittee asked America’s largest manufacturers of generic injectable medications whether they were losing money on oncology drugs, which tend to be administered in non-hospi-tal settings. Most companies indicated they were producing several oncology drugs at a loss.” one company, noted the report, said that it was producing three quarters of its nearly two dozen oncology drugs at a loss. The congressional re-port concluded that: “The MMA had the large and negative unintended consequence of increasing concentration in the generic injectable drug market and reducing company incentives to invest in upgrading manufacturing capabili-ties for generic injectable drugs.”


CAUGHT SHORT


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process we could … to ensure the best quality of products in the supply.”

Hottovy explains that risk always comes from variation and that inevitably, that variation is caused by humans. At every point in the processing line where human activity might impinge on quality, the bd rx team and its technology suppliers sought technical solutions to remove direct human interventions from the process and designing in critical control parameters and quality control attributes right from the start. “So what we really did,” says Hottovy, “was develop an inno-vative process … a closed manufacturing system.” How closed? “Closed meaning from the time our process starts; bringing the ApI into the facility. We dispense it; do our compounding, filling sterilization, inspection, assembly, packaging … all that is within our control.” Hottovy explains that the new bd rx processing line is tech-nically a batch process, but incorporates continuous principles once the batch is in process, and that risk from human-intro-duced variation or contamination is virtual-ly 100% eliminated. “We actually put in place a … continuous process that starts the batch; and all of our … materials move through the entire plant without people moving them. That creates a great oppor-tunity for us to get very rapid feedback … on the manufacturing process and detect any variation that could come at any time.”

lEADERShIP by ThE lEADER According to Uri Hillel, head of r&d Quali-ty and Corporate Quality & Compliance for Teva pharmaceuticals, Teva has worked on implementing the FdA guidelines defining Quality by design (Qbd) guidance and has adopted the Qbd philosophy in its devel-opment of generic products. “For Teva, this means understanding the products, formulations and processes in depth, and submitting appropriate applications to the authorities using a more systematic development approach.”

Hillel explains that Teva implemented a global training program to train scien-tists and engineers on Qbd methodolo-gy principles and applications. Teva also developed internal Qbd Guidelines as well. “design of experiments methodology and statistical tools have been successfully implemented at global r&d sites,” says Hillel, and “r&d is interactively working with operations, regulatory and QA on the manufacturing process prior to production of the registration batches [while] identi-fying and proposing mitigation to risks at scale up, reviewing together the proposed control strategy, operation ranges and product specifications.”

Achieving appropriate quality outcomes is the generally understood goal of pre-vailing regulatory guidance, and those companies that adopt both Qbd and (ICH Q10) pharmaceutical Quality Sys-tems will achieve the “desired state” of



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pharma manufacturing. Teva’s Hillel agrees: “by implementing Qbd (ICH Q8, 9) together with ICH Q10 (which is an integrated part of Qbd implementation) we can reach the ultimate goal: provid-ing uninterrupted supply of affordable, high-quality medicines to our patient. This is the desired state for the custom-er and for the industry, while enhanced product and process understanding will facilitate substantial efficient tech transfers, higher rates of successful validation and timely introduction of new medicines to the patients.”

PROPER kNOwlEDGE USED PROPERly The FdA has coined the term “design for Manufacturing” to describe the use of process information to achieve ac-ceptable quality standards. For Teva, says Hillel, “proper prior knowledge utilization is one of the main tools for successful Qbd implementation in the generics industry. Having such a variety of in-house capabilities and product developed, it is critical to utilize this accumulated information and data to gain better understanding for future developed products.” At Teva, data-min-ing techniques are being utilized for historical data trending and modeling in order to identify potentially critical process parameters and materials attributes, or any additional sources of variability. “In addition,” adds Hillel,

“based on knowledge and experience gained, an internal database of Ishikawa diagrams for each unit operation was created in order to streamline the risk Assessment process.”

EvOlUTION Accidental changes which occur in the sequence of dnA result in mutations. Mutagenic chemicals, radiation, viruses, etc., all can cause mutation in the dnA of a cell, as well as errors from Meiosis or replication of dnA during cell division. Many times these errors are induced by an organism through what is known as hyper mutation. Most understand now that mutations can be good or bad. depending on the environment and circumstances, mutation-caused changes in protein sequence can improve an organism’s chance of surviving changes to its environment. For many generic drug processors, the environment is forcing change, but is it causing positive mutations at the “dnA” level to sustain commercial success? There is certainly evidence out there supporting the theory; the fittest are adapting, inte-grating new tools, and science-based process understanding to survive the tectonic lurches in the plates of the pharmaceutical market and changes to the business climate’s temperature. The fittest will survive because compa-nies are evolving, and it’s coming from something inside.



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INCREASING COSTS, high prices for raw ingredients and tremendous competition have forced many U.S. pharmaceutical and nutritional supplement companies to out-source significant elements of their business processes. Historically, what was traditionally a domestic industry is now global — one that relies on suppliers, contractors, manufacturers and researchers.

The need to reduce time-to-market, boost drug discovery and squeeze costs out of pharmaceutical and nutritional products have forced U.S. companies to look elsewhere for raw materials, active pharma-ceutical ingredients (ApIs) and manufacturing and packaging

Close collaboration effectively manages far-flung partnerships

By Alan S. Ryan, Ph.D., and Frederick D. Sancilio, Ph.D.

Optimizing QAOutsourcing Excellence

in China and India



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services. over the past several decades, the sourcing of pharmaceutical products migrated first to europe and then to Asia, namely India and China. recently, the production of a variety of dosage forms, including capsules, tablets and injectables followed suit, migrating to India and China.

Cost reduction is not the only reason for the observed increase in outsourcing to Asia. In 2006, more than 90% of the ma-jor pharmaceutical revenue was obtained from drugs that were on the market for five years.1 The patents on many of these products are soon to expire, exposing up to $157 billion worth of sales to ge-neric drugs.1 Fewer new drugs are being produced than ever before, even though twice as much money is being invested for drug development, probably as a result of the U.S. government’s purport-ed over-regulation of these new chemical entities (nCe). This patent expiry “cliff” has driven companies to consider new ways to increase drug discovery efficien-cy and improve profit margins by reduc-ing manufacturing and material expens-es. The patent expiry issue has enticed

foreign competition as well. In fact, gov-ernment-sponsored financial incentive programs in China and India are in place to help offset the imposed FdA user fees required for submitting new drug Applications (ndAs).

PROTECTING QUAlITy outsourcing has its challenges, particularly regarding all matters concerning FdA Quality Assurance requirements (QA). Although not a focus here, regulatory issues are also a concern when consider-ing outsourcing drug development and manufacturing. The regulatory landscape in China and India is uneven and unpre-dictable. protection of intellectual prop-erty in some Asian countries is difficult and has yet to meet western standards.1

Quality assurance of pharmaceutical products and nutritional supplements is important in every phase of development and manufacturing. For outsourcing to be successful, there needs to be a sup-ply of essential medicines of excellent quality, safety and efficacy. Absolute confidence in the quality of supply and service is critical. Quality assurance in pharmaceutical drug development (including nutritional products) and manufacturing includes all factors that influence the quality of a product.2 prop-er QA must ensure that the products are of the highest quality required for their intended use. Similarly, QA incorporates all aspects of Good Manufacturing prac-tices (GMps), Good Laboratory practices (GLps), Good Clinical practices (GCps),

China is the leading

outsourcing destination

followed closely by india.1



19


production and control of operations, use of correct starting and packaging materials and the incorporation of safe intermediates, bulk material and process controls such as testing, calibration and validation. The finished product must be correctly processed, checked, properly stored and handled. Any observed de-viation must be reported, investigated and corrected. Quality evaluations must be conducted routinely to ensure con-tinuous monitoring and improvement, and there must be a properly designed, implemented and routinely documented QA system. All parts of the QA system should be adequately staffed with com-petent personnel using suitable equip-ment and facilities to do the job.

TOP OUTSOURCING OPPORTUNITIES IN ASIA According to an evaluation by price-waterhouseCoopers LLp, China is the leading outsourcing destination fol-lowed closely by India.1 China and India are spearheading growth in the Asian pharmaceutical sector and this trend is expected to continue. due to low prices, China is the top producer of raw mate-rials and ingredients that are included in globally available drugs. In 2010, ApI sales exceeded $10 billion, increasing at an annual rate of 17.6%.1 The primary exports of Chinese ApI and bulk ingredi-ents include antibiotics, vitamins, amino acids and other organic materials.1 For example, the attractiveness for ApI manufacturing in China has convinced AstraZeneca to increase their outsourcing

investment in that country. The company has a dedicated outsourcing center in Shanghai and will use this center to make purchases — saving 10% over the next few years.1 In 2010, AstraZeneca’s total purchases were valued at $100 million. While China continues to build their fin-ished dosage form business, it still lags other Asian countries in this area of expertise. presently, India is the leading dosage form exporter to the United States. Chinese finished drug exports are estimated to be about $700 million, including the work completed by contractors and generated by new patent holders.2

India is one of the largest and lowest cost producers of generic drugs globally.1,3 Finished generics supplied from India account for nearly 20% of the global generic marketplace.1 In 2010, finished product sales exceeded 6 billion, increas-ing at an annual rate of more than 10%.1 Therapeutic drugs, as opposed to nutri-tional products, have driven these sales. These include antibiotics, anti-infectives, anti-inflammatory drugs, cardiovascular drugs, central nervous system drugs and

Finished generics

supplied from india ac-

count for nearly 20% of the

global generic marketplace.1



20


anti-diabetic drugs. India also contributes expertise in the production of a variety of complex dosage forms. recently, the priority of drug research has been refo-cused from the reverse engineering of generics to research involving nCes.1

India has excellent technology, r&d, production facilities and clinical research centers. Conducting clinical trials rep-resents a significant portion of drug development costs and is time consum-ing. The availability of a large number of potential study subjects has attract-ed pharmaceutical companies such as GlaxoSmithKline and eli-Lilly to conduct clinical trials in India.3 Typically, it is 40-50% less expensive to conduct clinical trials in India compared to western countries. patients also can be recruited in less than one-third the time than in the United States during similar patient recruitment activities.1

OPTIMIzING QUAlITy IN ChINA The FdA requires regular audits for all off-shore suppliers of drugs and drug products. However, outside the United States, few audits are completed due to a lack of FdA resources. While this situation is improving (evidenced by the recent hiring of locally staffed FdA per-sonnel), the problem still exists. Critics point out ethical issues citing instances of locally hired staff remaining loyal to their former local employers. In China, nutritional and pharmaceutical products are regulated by the State Food and drug Administration (SFdA), the

Chinese equivalent of the FdA. Chinese GMps are issued and are similar to those in the United States and in the eU. In China, a manufacturer must obtain a GMp certificate in order to operate4, granted after completing a time-consum-ing series of inspections when the plant is initially built. However, after certification, routine follow-up inspections and “re-certification” are rarely accomplished. Unlike the United States, in China it is the responsibility of management to monitor quality and validate the manufacturing procedures after certification. As a consequence, it is likely a majority of Chinese manufacturers would probably fail an FdA audit. After conducting numerous FdA-style audits in China, we have yet to find a supplier free from issues.5 of these issues, some can be easily corrected while others may require rebuilding the facility.

based on personal experience working with a variety of Chinese factories, ApIs and bulk materials that meet the high quality standards needed for sales in the United States can be found in China. However, finding reliable sources is difficult and requires considerable effort. Most ApIs and bulk products are purchased through import/export agents and brokers who invariably have a vested interest in selling these materi-als regardless of where they have been produced. Sometimes more than one supplier is used to produce the same product clandestinely.



21


Quality is not always consistent and a given supplier may use unacceptable GMps. A U.S. firm must continually check the suppliers to ensure that QA standards are being met and that changes have not been implemented in the manufacturing process that may jeopardize the quality and safety of the product. Auditing and unannounced inspections are necessary and must be viewed as a critical component of a company’s policy. We recommend using auditors that are native speakers of the local language; such a person can more easily communicate directly to the production and laboratory personnel staff to ensure that all procedures are carefully followed. buying products without first auditing and inspecting them is likely to result in problems. In China, the perception is that it is the responsibility of the buyer rather than the seller to ensure quality.

Some of the quality issues that Sancilio and Company encountered using U.S. independent auditors include:

• While appropriately trained employees were involved in the initial audits for plant certification, they were often replaced with new employees that were not well trained.

• Batch records were lacking/couldn’t confirm procedures used were identical to those specified in the contract.

• Laboratory testing was inappropriate or inadequate to ensure product quality.

• While new machines and procedures were initially validated, changes made after certification were not properly documented or validated.

• Cleaning records and validations were absent.

• Water systems did not meet U.S. purity standards. rust, inappropriate welds, valves and filters were often used.

In Asia, it is critical to monitor carefully all aspects of product manufacturing to ensure that regulatory requirements are met and that safe and efficacious products are produced. To accomplish this, it is necessary to have a team of locally fluent, but U.S. trained, auditors and conduct unannounced visits at supplier facilities. Since most products imported from Asia are purchased through an import/export trading company, it is strongly suggested one hire a multi-lingual purchasing agent who can complete the required paper-work to facilitate import transactions. Working with a local english-speaking law firm is also highly recommended.

Interestingly, the Chinese government issues a “seal,” to use as a signature for legal documents. While signatures are legally binding in the United States, this seal is the legally binding mark in China. Thus, seals are extremely valuable and should be controlled by an independent, third-party attorney employed by the parent company in the United States. To monitor daily activities, weekly



22

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CE8QFjAE&url=http%3A%2F%2Fwww.ispe.org%2Fpharmaceutical_engineering%2F12so-online-qbd-generics.pdf&ei=8nnIUfH1IanYyQG5gIHAAw&usg=AFQjCNGkQjVqBtl-yIlrjSg1BxKFwOWCZw&sig2=9X-1eHGaaLBYH2b_gT21XA&bvm=bv.48293060,d.aWc

conference calls/meetings are a necessity, as are quarterly visits to corporate facilities.

Looking ahead, U.S. investment in China and India will continue to grow. With con-tinued investment, there will be a gradual shift toward high-end drug discovery in Asia. Strategic partnerships and collabo-ration with companies in this region will be commonplace. The most successful companies will be those that successfully manage partnerships across a number of overseas locations while maintaining QA at the expected highest levels.

REFERENCES 1. PricewaterhouseCoopers. The changing dy-

namics of pharma outsourcing in Asia. Pricewa-

terhouseCoopers, 2008. http://www.pwc.com/

gx/en/pharma-life-sciences/outsourcing/index.

jhtml. Accessed January 2013.

2. Jia H. Chinese manufacturers vie for piece

of outsourcing pie. Nature Biotechnology

2007;25:1337-1338.

3. Shukla A. Rationale behind biopharmaceu-

tical outsourcing in India. Bio Outsourcing

2007;2:3-6.

4. Drug Administration Law of the People’s

Republic of China, Chapter II, Article 9.

http:/www.sfda.gov.cn. Acc. January 2013.

5. Sancilio FD, Spencer JJ, Newberger NC.

Doing pharmaceutical, nutritional outsourcing

in China and India: what problems may be en-

countered. Bio Outsourcing 2007; 2:30-32.

AbOUT ThE AUThORS Dr. Ryan is vice president of clinical research

for Sancilio and Company. He is involved with

directing clinical research to evaluate the

benefits of omega-3 fatty acids for a variety of

medical conditions. Before joining Sancilio and

Company, Dr. Ryan was employed at Martek

Biosciences and at Abbott Laboratories. Email:

[email protected]

Dr. Sancilio is the founder, CEO, and chairman of

Sancilio and Company. He has more than 40 years

of experience in the pharmaceutical research,

development, manufacturing and distribution

industries. Prior to founding SCI, Dr. Sancilio

founded three pharmaceutical companies,

including aaiPharma Inc. He has contributed to

the development of over 1,000 drugs marketed

in the United States, Europe and Asia.

Generic Pharma Overview and Trends 2013 www.pharmamanufacturing.com

Report on Joint ISPE - European Generics Association Meeting on Applying QbD to Development and Manufacture of Generic Medicines.

CLICK HERE

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CE8QFjAE&url=http%3A%2F%2Fwww.ispe.org%2Fpharmaceutical_engineering%2F12so-online-qbd-generics.pdf&ei=8nnIUfH1IanYyQG5gIHAAw&usg=AFQjCNGkQjVqBtl-yIlrjSg1BxKFwOWCZw&sig2=9X-1eHGaaLBYH2b_gT21XA&bvm=bv.48293060,d.aWc

http://www.pwc.com/gx/en/pharma-life-sciences/outsourcing/index.jhtml



www.sfda.gov.cn

mailto:[email protected]


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ThE PASSAGE of H.r. 3962, the Affordable Health Care for America Act of 2009, has changed the healthcare landscape forever, kicking up dust in the U.S. pharmaceutical marketplace. one beneficiary of this legisla-tion will be the generics industry. Generics got a boost from the Hatch-Waxman act in 1984, leading to a substantial increase in the number of filings and approvals of generic drugs. According to the Generic pharmaceu-tical Manufacturers’ Association, generics already comprise nearly 70 percent of all prescriptions written in U.S. market, and the portent for growth in generics will be tre-mendous once the new legislation is enacted.

The question that looms before us is this: Will the major generics manufacturers, such as Teva, Mylan, and Watson, seize this opportunity to turn to more sophisticated tools like Quality by design (Qbd) and pAT to drive a wedge between themselves and the competition?

Innovators within the brand-name pharma-ceutical marketplace have been debating the merits of ICH Q8, Q9 and Q10 since they were first issued more than five years ago.

While big pharma and biotech have grappled with leveraging risk and quality, generic phar-ma has had limited discussion on the merits of pursuing ICH Q8 and Q9. Their reticence to embrace the principles of Qbd revolves around the current business model for generic manufacturers in the U.S.

Unlike brand-name manufacturers that invest upwards of $1 billion and spend, on average, 10 years to bring a new drug therapy to mar-ket, generic developers and manufacturers operate on a much more limited develop-ment timeframe. Their focus is on two critical business metrics: they must demonstrate clinical bioequivalence to the innovator drug and be the first to file their Abbreviated new drug Application (AndA) for review and approval.

depending upon the type of AndA filed (paragraph IV vs. paragraph III), first-filers can be granted 180 days of market exclusivity. Such metrics change the paradigm completely when it comes to product development. A generic pharma company will have months, not years, to

A Qbd Implementation roadmap for the Generics Industryby bikash Chatterjee, president and CTo, pharmatech Associates


PRODUCT SELECTIO

N PRODUCT DEVELOPMENT EXHIBIT BATCHES

AN

DA FILIN

GREVIEW

TIME

APPROVAL

PILOT BIOEQUIVALENCE

3 MONTH STABILITY


25


reverse-engineer the performance of a brand product and demonstrate its bioequivalence.

The framework for proving bioequivalence is very tightly regulated by the office of Generic drugs (oGd), to the point where the Agency may actually define what specific assay or dissolution method is to be used by the generic company to demonstrate product performance.

Generic companies can enjoy the same double-digit profit margins as brand-name pharmaceutical companies without the large investment in development. Given this business

model, what would possess a generic firm to contemplate a leading-edge approach such as Qbd as a platform for its product development?

For both types of companies, the challenges facing the business process are actually very similar, but are presented in very different timeframes. Thus, the Qbd opportunity can be distilled to a few simple questions. Is there a strategic advantage to developing a robust regulatory filing as quickly as possible? And if the stability and robustness of a process can

be established at the product design stage, is there a tangible business advantage? I believe the answer is yes to both questions.

ThE QbD OPPORTUNITy despite the temptation to pursue business as usual, the generic industry has sought to implement operational excellence philosophies such as Lean manufacturing to speed TTM and increase profit. other, more intensive approaches such as Six Sigma have struggled to gain a foothold, perhaps due to the more rigorous nature of the methodology and to the protracted time and difficulty in measuring its benefits. This reluctance may speak to the core issue

separating brand from generic. beyond clinical efficacy and safety, brand-name pharmaceutical companies primarily focus upon Time to Market (TTM) and ongoing Cost of poor Quality (CopQ). The two metrics have an enormous impact on the near-term and long-term profitability of a new therapy. These considerations are no different for the generic industry.

The typical product development roadmap for a generic drug is shown above.



26


The timing is generalized, but the contrast between TTM for a generic drug approval and brand timeline of 10 years on average is noteworthy.

CREATING ThE QbD FRAMEwORk The challenge facing r&d is the time allotted for development and characteri-zation. To address this issue, a structured framework is required with clearly defined metrics and deliverables to minimize the risk of downstream failure. A proposed framework is shown here.

The framework consists of five phases that serve as stage gates or process review points within the development process. each stage gate is intended to ensure that the elements required to minimize risk and smooth the transition to commercial manufacturing are ad-dressed adequately within the product development lifecycle. The framework is

intended to address the core principles of Qbd that we define as process Un-derstanding, process predictability and process/product Measurement. These three principles map directly to the four core principles of Qbd: product design, process design, process performance and product performance.

PhASE 1: PRODUCT SElECTION This phase addresses criteria used for product selection. In addition to the pri-mary principles associated with portfolio

management, this phase proposes to add a compo-nent known as Site Capability Analysis (SCA). This ensures that the product de-sign is compatible with internal or qualified Contract Manufacturing or-ganizations (CMo) capabilities, prior to the go/no-go decision. This is not to say that this

consideration would outweigh the business opportunity of pursuing a new product, but it is one way to recognize that deviating from an organization’s core capabilities will result in increased CopQ downstream and potential standard cost as well. As part of this exercise a product design Specification (pdS) should be developed summarizing the product’s key attributes. Some product



27


design elements, such as dosage form, strength, route of administration, identity, assay and content uniformity are expected to be constant during development. This is because there are regulatory requirements that must be the same as the reference list-ed drug or meet compendia standards. The pdS should include elements such as the recommended container-closure system if this is known, and information about phar-macokinetics and bioequivalence.

Any product risk analysis should be devel-oped from a clinical perspective. This will frame the downstream process risk analy-sis and be the foundation for the process predictability and validation argument. Finally, a high-level project timeline should be developed for the program including anticipated regulatory approval. This can be used as one of the criteria for program performance at the end of the project.

PhASE 2: DEvElOPMENT AND ChARACTERIzATION The first five sections of an AndA are the same as a non-disclosure Agreement (ndA). However, typically the level of un-derstanding established in a generic devel-opment exercise pales in comparison to the innovator. This phase represents the largest opportunity for increasing overall business performance. To drive to better process understanding, a platform approach should be adopted for product development. by this I mean, most firms can lump their man-ufacturing expertise into broad categories, such as immediate release tablets, modified release tablets, modified release pellets in

capsules, transdermal, liquids, creams and ointments or aseptic. each product devel-opment represents a sum of unique knowl-edge gained in terms of process behavior and capability.

Similarly, the formulation knowledge gained from key excipient, binder and other functional excipient elements can serve as powerful starting point for all development activity. This platform approach allows all new programs to benefit from past devel-opment activity knowledge.

before beginning product design and process design activities, the product risk analysis from phase 1 should be used to compartmentalize risk in terms of the development choices made. If there is an In-Vitro-In-Vivo Correlation provided by the innovator, this can be used to steer the product design and characterization activ-ity. As the formulation activity progresses, it is critical that all excipients be charac-terized along with the ApI so the baseline component variability is understood. The ApI’s fundamental characteristics such as solubility, melt point, polymorphism, particle size distribution, bulk density and glass transition temperature should be captured as part of the development dossier. The same corresponding metrics should be applied to excipients being evaluated as part of the product design process.

A process risk analysis, such as a Failure Mode and effects Analysis (FMeA), should be developed at this point with commercial equipment in mind. This will highlight key



28


commercial considerations, such as envi-ronmental variables, storage conditions, etc., to be evaluated quickly and effectively at small scale.

Finally, a Measurement Sensitivity Analysis (MSA) should be used on all in-process and release tests used to steer and measure the process stability and product performance. This will ensure that the measurement tools being used to evaluate the process have the resolution to tell good from bad.

PhASE 3: SITE/SElECTION/PROCESS DESIGN/TECh TRANSFER This phase is often one of the weakest be-cause of the lack of process understanding during the development phase. However, after phase 2 is completed, the equipment suitability decision as part of a site selec-tion process should be much more robust. For example, if development work was performed in a 16-quart pK mixer and com-mercial production will take place in a 60-cubic-foot Gemco slant cone mixer, the critical process parameters (Cpp) that drive mixing homogeneity should be better understood if the phase development activity identified the Cpps that drive mixing efficiency and product content uniformity. This will allow the tech transfer process design to measure and compare process stability more effectively.

A commercial process FMeA should be repeated before initiating process design studies to ensure the critical to quality elements can be demonstrated at the commercial scale. The MSA should also

be repeated after the method transfer of any in-process and release test methods. Using the phase 2 data, the process design should be able to establish a process capability metric before beginning the process tech transfer exercise that has a high probability of demonstrating process predictability.

once these are completed, the process design exercise will be much simpler and have a maximum possibility for success.

PhASE 4: REGUlATORy FIlING Having characterized the process and product performance, the limits filed within the AndA and the batch record should represent a robust design space and control space which should not constrain the organization from setting performance metrics for the organization, process and product.

PhASE 5: PROCESS/PRODUCT MEASUREMENT process measurement will be a direct out-put from the structured development and process design activity. Monitoring and tracking the true Cpp in addition to the products performance will allow the orga-nization to intervene easily if the process begins to drift. More importantly, because of the detailed product design approach, the factors that drive the process drift will be understood, allowing a more focused investigation corrective action exercise. Finally, the business can use the organi-zations’ performance at each stage gate as a continuous improvement driver for



29

http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/UCM286595.pdf


improved business performance, including metrics such as CopQ, right the First Time, and compliance measurements such as the number of deviations and Corrective and preventive Actions (CApA) generated by each product.

kNOwlEDGE MANAGEMENT The common element that will catalyze the greatest benefit throughout the development lifecycle is knowledge management. estab-lishing a structure which requires routine evaluation of past products and processes that are relevant to the product under devel-opment will simplify the development choices made. This can limit the risk profile of new products to those components and unit operations that are unique to the product.

CONClUSION For generics, the framework described may seem burdensome at first, but there are several elements that facilitate a faster TTM. Following a structured framework with clear-ly defined metrics at each stage gate will reduce any confusion and variability in the product development process. Integrating risk assessment tools is quick and will high-light opportunities that can easily be ad-dressed cheaply early in the process. estab-lishing a knowledge management framework will move the organization to a broader and more comprehensive understanding of prod-uct and process design, breaking down the silo mentality that is rampant in most phar-maceutical companies. This change presents the biggest benefit for generic companies as it drives the organization toward a platform mentality that will simplify the development

and commercial scale-up process. Finally, the structured approach allows the organi-zation to measure and focus its continuous improvement activities upon those elements that have the largest potential to increase and sustain business performance.


This is an example of a pharmaceutical development report for a

generic modified release product illustrating how ANDA applicants

can move toward implementation of Quality by Design (QbD).

The purpose of the example is to illustrate the types of pharmaceutical

development studies ANDA applicants may use as they implement QbD

in their development process and to promote discussion on how

OGD would use this information in review.

CLICK HERE

Quality by Design for ANDAs:

http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/UCM286595.pdf


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