pharmaceutical industry - business perspectives for it teams

PHARMACEUTICAL INDUSTRY Business Perspectives for IT

Teams

- Satheesh Kadiam

https://in.linkedin.com/in/satheeshkadiam


ABOUT AUTHOR

The author of this document has extensive experience working on enterprise IT forpharmaceutical industry.

This document draws heavily from the author’s experience, observations and reading.

Readers are invited to connect to the author on Linkedin by clicking on the below link:

The link is also on footer of all pages.





PHARMA CHALLENGES – IT CAN HELP

Pharma faces huge challenges.

IT can help.

To do that, IT teams need to understand pharma industry.

That is where this document comes in.



SCOPE

This document provides overview of pharmaceutical industry. It covers drugdevelopment, manufacturing, distribution, sales, procurement, supply chains andcompliance. It also discusses several characteristics of pharmaceutical industry that setit apart from other industries.

Since this is an overview document, advanced topics such as the below are out ofscope. Separate documents can be written if enough people are interested in thesetopics: Global pricing strategies of drugs

Challenges of patent cliffs and legal strategies to extend patent life

Impact of macroeconomic events such as Brexit on pharmaceutical industry

Recent legislation on drug safety in pharmaceutical supply chains and imperatives for IT

How technology such as big data analytics, RFID, IoT etc. can help pharma

And so on…



DISCLAIMER

This document is authored by an IT expert, not a drug production and distribution expert.

This document is for information of IT teams only. The author does not warrant that it is error-free and MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OR OFMERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, regardless of what is mentioned elsewhere in this document.



INTRODUCTION



PURPOSE OF PHARMACEUTICAL INDUSTRY

The pharmaceutical industry discovers, develops, produces, and markets drugs orpharmaceuticals for use as medications.

A drug is used to diagnose, cure, treat, or prevent disease.



HIGHLY REGULATED INDUSTRY

Pharma industry is highly regulated by regulatory agencies of governments

E.g.: FDA is regulatory agency in USA

Regulations are required to ensure safety and efficacy of drugs.

All drugs have to be approved by regulatory agencies.

Regulations also apply to all aspects that affect safety and efficacy of drugs

E.g.: production, procurement, quality control, distribution, IT systems, packaging,

tracking and tracing etc.



DRUG DEVELOPMENT

TOPICS

TARGET DISCOVERY

DRUG DISCOVERY AND DEVELOPMENT

PRECLINICAL TRIALS

IND PROCESS

CLINICAL TRIALS

GO TO MARKET

POST MARKET SAFETY MONITORING



DRUG DEVELOPMENT: TARGET DISCOVERY

Identify target for drugs such as

• Proteins in human body

• Proteins in body of disease-causing microorganisms

Confirm role of the target in disease



DRUG DEVELOPMENT: DISCOVERY AND DEVELOPMENT

Discovery:

• High throughput screening, computer based design to find molecular compounds that bind to target

• If the compound interacts with target in a way that may cure disease, it is called a ‘hit’

Development (Conduct experiments to understand):

• Absorption, distribution, metabolism and excretion of drug

• Benefits and mechanisms of action

• Best dosage and way to administer drug

• Toxicity

• Efficacy when compared to other drugs

• Interaction with other drugs



DRUG DEVELOPMENT: PRECLINICAL TRIALS

Preclinical trials in animals to determine

• Dosage

• Toxicity

• Whether it is safe to conduct clinical trials on human subjects

Treat animals ethically.

3Rs - Refine, Reduce and Replace animals where possible.



DRUG DEVELOPMENT: INVESTIGATIONAL NEW DRUG PROCESS

Next stage is to conduct clinical trials on human subjects. But before that, the drugdeveloper/sponsor must obtain approval from regulator to go ahead.

Drug developer/sponsor submits an Investigational New Drug (IND) application toregulators including below information:

• Animal study data and toxicity

• Clinical trial plans

• Information about investigator

IND submission will be reviewed by regulator.

If regulator is satisfied that there will be no unreasonable and significant risks tohuman subjects in clinical trials, it will give approval to start clinical trials.



DRUG DEVELOPMENT: CLINICAL TRIALS

Clinical Trials – Phase 1• 20 to 100 healthy human subjects

• Several months

• To collect safety and dosage information

Clinical Trials – Phase 2 Several hundred human subjects with disease

Several months to two years

To collect efficacy and side effects information

Clinical Trials – Phase 3 300 to 3000 human subjects with disease

1 to 4 years

To collect efficacy information and monitor adverse reactions information



DRUG DEVELOPMENT: GO TO MARKET

Company files application with regulator for approval to market drug

It is called NDA (New Drug Application). It includes

• Data from all trials - Preclinical to Clinical Trial Phase 3

• Studies, data, analysis, results

• Proposed labelling

• Safety updates

• Drug abuse information

• Directions for use etc.

Regulator gives approval to go to market if it is satisfied with safety and efficacy of the drug.



DRUG DEVELOPMENT: POST-MARKET SAFETY MONITORING

True picture of a product’s safety actually evolves over time in market.

Regulator reviews reports of problems with drugs and

adds cautions to the dosage or usage information

Takes other measures for more serious issues

In some cases, regulator might require Clinical Trails Phase 4 to be conducted during the Post-Market Safety Monitoring



INTRODUCTION… CONTINUED

TOPICS

PATENTS

BRANDED DRUGS AND GENERICS

R&D AND PATENTS – IMPLICATIONS

MAJOR PLAYERS IN PHARMA INDUSTRY



PATENTS IN PHARMA

Patent:

A government authority or license conferring a right or title for a set period, especiallythe sole right to exclude others from making, using, or selling an invention.

Please note:

Patent holder of a drug has exclusive right to manufacture and sell it

Patent is valid for a limited time

Patent validity time typically lasts 20 years from the date of filing



BRANDED DRUGS AND GENERICS

Branded drug: A drug that is marketed under brand name of the pharma companythat developed it

Generics

After patent expires even the companies that didn’t invent the drug are permitted to make and sell it.These drugs are called generics

Generics are low cost

Branded drugs rapidly lose market once generics come to market

Some generics also use their own brand names



R&D AND PATENTS – IMPLICATIONS

R&D is risky, costly and time taking

• Out of 10,000 molecules that are ‘hits’ during drug discovery, only about 1 reaches market as drug

• It can take up to a couple of billions of US dollars to develop a drug

• It takes about 12 years to develop a drug

Implications of patents

Patent rights enable companies to charge high enough prices to recover high R&D costs

Patents are valid for a limited time - 20 years

Since R&D takes 12 years, effective life of patent is rendered much smaller



MAJOR PLAYERS IN PHARMA INDUSTRY

Large R&D based multinational companies

Large generic manufacturers

Local manufacturers in individual countries under

license or contract

Contract manufacturers

Drug discovery and biotechnology companies

Wholesalers

Retailers Major retail chains

Hospitals

Online or mail order



PHARMACEUTICAL MANUFACTURING

TOPICS

DRUG MANUFACTURING OVERVIEW

MANUFACTURING BIO CHEMICAL API

MANUFACTURING CHEMICAL API

MANUFACTURING BULK

PACKAGING

GOOD MANUFACTURING PRACTICES



WHAT MATERIALS GO INTO MAKING DRUGS

API Starting Material: Raw material, intermediate, or an API that is used in the production of anAPI

API (Active Pharmaceutical Ingredient): Material that gives a drug its medicinal properties

Excipients: Inactive ingredients added to drug to give it properties such as: better taste, slowdissolution, physical bulk etc.

Bulk: unpackaged drug such as tablets, capsules etc.

Packaging materials

Finished Packs: the labeled, packaged, final product

The terminology for these materials can be confusing. E.g.: 'API' is also called ‘Bulk Drug Substance'.

'Bulk' is also called ‘Formulated Drug Product'.



DRUG MANUFACTURING PROCESS - OVERVIEW

SECONDARY

MANUFACTURING

API

starting

materia

ls

Excipie

nts

Packa

ging

materi

als

Finished

Pack

PRIMARY

MANUFACTURINGPACKAGING

BulkAPI



DRUG MANUFACTURING PROCESS - OVERVIEW

API is a chemical that can be obtained by chemical or bio chemical synthesis

Bulk is obtained typically by mixing API with excipients and pressing the resultingmixture into tablet form

Packaging is typically blister packaging of tablets. Packaging includes labelling andmay include repackaging

Processes of API manufacturing, bulk manufacturing and packaging are entirelydifferent. This is one of the reasons why they are typically carried out in separateplants

Any part of manufacturing can be outsourced to contract organizations. Rawmaterials or semi-finished goods at any stage of manufacturing can be purchased.For example, no company manufactures all API it needs and procures the same fromoutside vendors.



MANUFACTURING BIO CHEMICAL API

TOPICS

FERMENTATION

HARVESTING

RECOVERY

PURIFICATION



API MANUFACTURING: BIOCHEMICAL

Cells such as Bacteria, fungi or specific cells from mammals, plants or insects canmake chemicals.

These biologically obtained chemicals, or bio chemicals form API

Bio chemicals are produced by cells using the following mechanisms:

Bio chemicals produced by cells naturally

Bio chemicals produced by genetically modified cells

Bio chemicals in metabolic waste product of cells



BIOCHEMICAL API MANUFACTURING PROCESS

Fig: Biochemical API manufacturing process – biochemical synthesis

Cells multiply and produce bio chemicals during fermentation.

The bio chemicals are separated and purified during harvesting, recovery and purification.

FERMENTATION HARVESTING RECOVERY PURIFICATION



BIOCHEMICAL API: FERMENTATION IN BIO REACTOR EXPLAINED

Fermentation of cells happens in equipment called bio reactor or fermenter

Bio reactor needs cells, nutritious growth medium for cells to multiply

Bio reactor may need additional ingredients to aid cell growth

Bio Reactor has

Ports for pumping/adding ingredients

Ports for drawing samples for process control

Sensors and meters for temperature, pressure etc.

Ports for Pumping out output product



BIOCHEMICAL API: FERMENTATION PROCESS

BIO REACTOR PROCESS

- Mix ingredients evenly

- Cells grow and multiply

CELLS MULTIPLY IN

GROWTH MEDIUM IN

SHAKER FLASK

CELLS MULTIPLY IN

GROWTH MEDIUM IN

BIGGER CONTAINER

SET UP:

CLEANING AND SANITIZING EQUIPMENT

STERILIZING EQUIPMENT

PROCESS CONTROL SOFTWARE LOADED AND VERIFIED

CHECK ALL VALVES, CAPS, LINES

TIGHTEN HOSES AND CHECK FOR LEAKS

ADD

COMPONENTS TO

BIO REACTOR

- Pump cells from

container

- Pump growth

media

- Add stabilizers,

antibiotics,

antifoaming

agents etc.

BIO REACTOR

PROCESS

MONITORING

- Meters for

measuring

glucose, ph.,

pressure,

temperature

- Periodic

samples for

process control

OUTPUT OF FERMENTATION:

Broth is pumped into broth tank



BIOCHEMICAL API: SEPARATION/RECOVERY EXPLAINED

Equipment used:

Centrifuge: It uses centrifugal action to separate mixture of solid and liquid

Homogenizer: this contains orifices smaller than cells. when cells pass through these orifices under highpressure, body of cells are ruptured

Micro filter: filter very tiny remaining solids from liquid

Materials

Broth from fermentation contains cells which are solids and spent medium which is liquid

Bio chemical is contained in body of the cell in example process described here.



BIOCHEMICAL API: SEPARATION/RECOVERY: PROCESS

SET UP:

Area cleaned and disinfected

Equipment sanitized

Any updates to process control software verified

BROTH TANK

BROUGHT TO

RECOVERY AREA.

BROTH PUMPED INTO

CENTRIFUGE

CENTRIFUGE

EXTRACTS CELL PASTE

WHICH IS SOLID AND

DISCARDS SPENT

MEDIUM WHICH IS

LIQUID

CELL PASTE IS

WASHED WITH

WATER. CENTRIFUGE

EXTRACTS CELL PASTE

FROM WATER

CELL IS DISRUPTED

USING

HOMOGENIZER

RESULT IS MIXTURE OF

SOLID CELL DEBRIS

AND LIQUID CELL

CONTENTS (LYSATE)

CENTRIFUGE

EXTRACTS LYSATE

REMAINING CELL

DEBRIS IS FILTERED

OUT USING MICRO

FILTER

RESULT IS CLARIFIED

LYSATE.

IT IS COLLECTED INTO A

TRANSFER VESSEL. THAT IS

TAKEN FOR FURTHER

PURIFICATION



BIOCHEMICAL API: PURIFICATION EXPLAINED

Column chromatography equipment, typically housed on mobile skid, has thefollowing:

Supply hose to feed clarified lysate to the column

Pre-filter to remove remaining particles

Column with beads for purification by

Size exclusion, ion-exchange chromatography, Hydrophobic interaction chromatography

Auto-switching valves for directing processed solution (waste/product)

Pumps to move clarified lysate through the process

Tangential flow filter with horizontal ultra-filtration membrane

Flow across the filter separates solution into permeate and retentate



BIOCHEMICAL API: PURIFICATION PROCESS

Set up

Clean, disinfect, organize purification area.

Remove any unnecessary equipment or materials

Clean, sanitize and setup equipment as per SOP.

Gather materials

TRANSFER TANK

BROUGHT TO

PURIFICATION AREA.

CLARIFIED LYSATE

PUMPED INTO

CHROMATOGRAPHY

EQUIPMENT

CLARIFIED LYSATE

PASSES THROUGH

PREFILTER

PURIFICATION BY

COLUMN

CHROMATOGRAPHY.

(BUFFER SOLUTION

ADDED AS REQUIRED.)

RESULTING ELUATE

PUMPED INTO TFF

FILTER

MATERIALS ADDED TO

ELUATE TO AID

FILTERING – E.G.-

SALTS, BUFFER

SOLUTION ETC.

FINAL FILTRATION

RESULT IS BIOCHEMICAL

API.

API IS PACKED INTO

BOTTLES

OR

FREEZE DRIED AND PACKED

INTO BAGS



MANUFACTURING CHEMICAL API

TOPICS

CHEMICAL REACTIONS

PURIFICATION



CHEMICAL API MANUFACTURING PROCESS

Fig: Chemical API manufacturing process – chemical synthesis

Series of chemical reactions are carried out on organic/inorganic chemicals

The result of reactions is purified using techniques such as extraction, filtration,crystallization

The above diagram is highly simplified. The series of chemical reactions is typically amulti-step process

CHEMICAL

REACTIONSPURIFICATION



CHEMICAL API: CHEMICAL REACTIONS IN REACTOR

Chemical reactions happen under controlled temperature and pressure in chemicalreactor

API starting materials such as reactants and catalysts required to make API, are inputto reactor.

Chemical reactor is reinforced pressure vessel with stainless steel, glass or metalalloy linings

Chemical reactor has Inlet valves

Outlet valves

Agitator for mixing

Sensors and meters



CHEMICAL API: PURIFICATION

Filtration

Decantation

Centrifuge may be used to remove solids from solutions



MANUFACTURING BULK

TOPICS

GRANULATION

TABLETING

COATING



BULK MANUFACTURING: ALSO KNOWN AS FORMULATION

Most common form of bulk is tablet. Others are syrup, injectable, orally disintegratingstrip etc.

Bulk is made using API and excipients.

Tablets are made by

Granulation of API and excipient mix.

Tableting



BULK: MANUFACTURING OF TABLETS

FIG: bulk: manufacturing of tablets

GRANULATION TABLETING COATING



BULK: MANUFACTURING OF TABLETS

The API and excipients must mix well into a powder

API and excipients mix must be granulized

Most common form of granulation is wet granulation

Tablet press compresses the granulized mix into tablets and ejects them



BULK: WET GRANULATION

The machine used to blend powders and add liquid is called granulator

The API and excipients weighed and blended together.

Liquid binding solution is added to blend while tumbling. This makes blended materials bind together

Then liquid is removed by drying the blend

Milling is done in Miller machine to enhance drying

Final blending is done in blender.



BULK: WET GRANULATION

Fig: Unit operations in granulation

PREBLENDING

LIQUID

BINDER

ADDITION

DRYING MILLINGFINAL

BLENDING



BULK: TABLETING

Tableting is performed in tablet press

Granules flow into molds that are in the shape of tablets

They are compressed into tablets and ejected from the tablet press

COMPRESSION EJECTION



BULK: COATING

FIG: COATING

Coating is performed in coating system.

LOAD TABLETSTUMBLE TABLETS

IN WARM AIRSPRAY COATING

COLLECT DUST

IN COLLECTION

BIN



MANUFACTURING - PACKAGING



PHARMACEUTICAL PACKAGING

Two types of packaging

Primary packaging

Secondary packaging

Characteristics of packaging

Protect tablets

Take care - Packaging materials should not react with tablets

Highly regulated - Mention approved usages, serial numbers, proper dosage, instructions, warnings,expiry date etc.



PACKAGING: BLISTER PACKAGING

Fig: Blister Packaging of Tablets: (see fig from right to left)



PACKAGING: BLISTER PACKAGING

Blisters are formed on a sheet of forming web, using heat

Tablets are loaded into blisters

Lidding sheet is sealed on top

Blister packs are cut off



GOOD MANUFACTURING PRACTICES



GMP: GOOD MANUFACTURING PRACTICES

Basically the government regulatory agency should be convinced that themanufacturing process guarantees safety and efficacy of drugs.

A GMP is a system for ensuring that products are consistently produced andcontrolled according to quality standards.



GMP: GOOD MANUFACTURING PRACTICES

GMP covers all aspects of production:

Starting materials

Premises and equipment

Training

Personal hygiene of staff

GMP works by:

Detailed, written procedures for each process that could affect the quality of the finished product.

Systems to provide documented proof that correct procedures are consistently followed

at each step in the manufacturing process

every time a product is made



PHARMACEUTICAL DISTRIBUTION

TOPICS

LOCATIONS

LOW COST LOCATIONS

CMOs AND OTHER VENDORS

3PL



PHARMACEUTICAL DISTRIBUTION: LOCATIONS

The locations between which goods physically flow are selected based on factorssuch as proximity to end sales market, labor cost, taxation etc.

Domestic outsourcing, nearshoring or offshoring are possible.

A company may buy from its own subsidiary for optimizing taxes.

Generally financial flows and stock flows are maintained same.



PHARMACEUTICAL DISTRIBUTION: LOCATIONS

Most of world’s API sourced mostly from India and China

Packaging or repackaging is typically done in location near the end sales market



PHARMACEUTICAL DISTRIBUTION : LOCATIONS

Contract manufacturing is common in pharma. Contract Manufacturing Organizations(CMOs) can make API or Bulk or Packaging or Repackaging for Big Pharmacompanies

Contract manufacturing can be done by third parties in same country, nearshore or inlow cost locations such as China. Total costs such as taxation, transportation, regulatory and supply risk and supply disruptions have to

be considered

Manufacturing locations of all contract manufacturers should be approved byregulators

Likewise, all other vendors should be approved by regulators

Marketing authorization holder is responsible for any quality lapses of vendorsincluding contract manufacturers



PHARMACEUTICAL DISTRIBUTION : 3PL

Pharma companies may utilize services of 3PL for

Transporting

Freight Forwarding

Storing stock in 3PL owned DCs

Managing company’s own distribution centers



DRUG SAFETY IN PHARMACEUTICAL SUPPLY CHAIN



DRUG SAFETY IN SUPPLY CHAIN

Counterfeits can enter supply chain in following ways:

Adulteration

API or excipients Reduced, substituted or omitted

Drugs not manufactured as per GMP

Drugs manufactured at unapproved plants

Genuine products with altered labels

The problem is compounded with packaging and printing technologies that can makepacks and labels nearly identical to original.




Motives for threats to integrity of supply chain:

Monetary gain – profit from selling counterfeits

Terrorism – use profits from selling counterfeits to fund terror activities

Theft – steal regulated drugs and divert them for substance abuse




Some recent trends to ensure safe drug distribution:

Serialization

Authentication

Chain of custody software solutions

RFID tags: To identify genuine products and spot counterfeits



PHARMACEUTICAL SALES AND MARKETING

HOW PHARMA COMPANIES INFLUENCE SALES

HOW PAYERS INFLUENCE SALES

HOW PROVIDERS INFLUENCE SALES




Pharma companies influence demand by

Detailing by pharma sales reps

Meaning promotion by sales reps in offices of doctors, and hospitals

Detailing is regulated

Managed care

Direct-To-Consumer campaigns

Advertising in medical journals




Pharmaceutical companies provide the below to healthcare providers

•Pharmaceutical marketing information

• Educate healthcare providers about new drugs, risks and benefits

• Reliable, valuable information

•Samples

• To help begin treatment sooner

• To help find right medicine

•Gifts to healthcare providers

• Care taken to ensure that gifts do not, and do not appear to, induce healthcare providers

• Legal requirements and ethical standards




Actions of payers also influence demand:

Examples of payers: insurance companies, Pharma Benefit Managers (PBMs)

Typical actions of payers that influence demand:

•Counterdetailing: Involves advising doctors of cheaper alternative• Generics

• Therapeutic alternatives

•Sending letters to doctors

•Giving financial incentives to doctors to prescribe cheaper drugs

•Formulary design and utilization management




The below factors influence the drug prescribing decisions of doctors:

• Doctor’s knowledge and experience

• Patient’s unique situation

• Information from medical journals

• Inputs from colleagues and peers

• Patient’s financial situation

• Actions taken by pharma companies and payers, as discussed earlier

• and so on




Uncertainty of demands caused by:

Risk in pipeline drugs

Competition for patented drugs

Patent cliffs

Uncertainty in patent life extension strategies

Pricing pressures




Demand sensing challenges

Point of Sale data is not readily available

Purchased data from 3rd parties on filled prescription has a time lag of at least two weeks




Diversification of distribution channels increasing complexity of demand forecasting

Wholesalers, mail order, chain warehouses, stores, secondary wholesalers, specialty wholesalers,hospitals and clinics – all providing demand data with varying degrees of completeness, timeliness andaccuracy

Consolidation of customer base decreasing complexity of demand forecasting

3 largest wholesalers account for 90% of US pharma distribution



FACTORS INFLUENCING PHARMA INDUSTRY




R&D challenges on the rise

Huge drug discovery costs

Really long lead time in drug discovery and development

Declining R&D productivity

Product lifecycle is long. However

Effective patent life is short

Competition-free patent life is even shorter

Onslaught of cheap generics

Therapeutic alternatives




While regulation is really important to ensure drug safety and efficacy, it also throwsa host of challenges for pharma industry:

It slows down decision making

It introduces compliance risk into supply chains

Marketing Authorization Holder is responsible for noncompliance by suppliers

Getting dreaded warning letters from FDA seriously jeopardizes not only share prices, but also supply chains

Regulatory agencies have powers to close down entire plant if found non-compliant

It makes standardized operations, documentation and auditing really important

Innovation in manufacturing is fraught with regulatory risk and in many cases need regulatoryapproval

It adds additional costs




Flexibility is not easy

Because of audits, approvals, concerns about safety and efficacy of drugs, activities such as below areslow and laborious:

Constructing new facility

Changing formulations

Inducting new vendors

Expanding to new geographies etc.

This affects agility and profitability of companies. For example, in case one raw material supplier doesnot supply required materials, switching to new supplier is not easy




Pharma companies growing by mergers and acquisitions

That influences demand, supply, economies of scale, opportunities for new synergies on the positiveside

It has associated complexities, risks and uncertainties on the negative side




Pharmaceutical companies hold high inventory levels because:

R&D costs are huge compared to manufacturing costs

Patent period is limited to recover R&D costs

Need to maintain high customer service levels. Reasons being:

Steady supply essential for life saving drugs

Regulatory pressures to maintain steady supply

Penalties for supply disruptions




Products have long lead times and limited shelf life

Temperature and humidity levels have to be carefully controlled during storage,transportation etc.

Order filling accuracy has to be close to 100 percent. Especially expired drugs,components or intermediate products should be timely identified, segregated anddiscarded; not an easy task in huge warehouses

Warehouses should follow First Expiry First Out (FEFO) sequencing to improveutilization of stocks




API manufacturing has the following challenges

High cost

Long cycle times

API is manufactured in campaign manufacturing mode to:

Reduce set up costs

Reduce downtime costs

The challenges in API pose below risks pharma

Poor end to end responsiveness of pharma supply chains

Vulnerability to bullwhip effect



CONCLUSION



CONCLUSION

Pharma faces huge challenges.

IT can help.

To do that IT teams need to understand pharma industry.

That is where this document comes in.



pharmaceutical industry - business perspectives for it teams

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