Tips for Risk Evaluation in Pharmaceutical Fill/Finish Sourcing
In this post we focus on the critical decision pharmaceutical companies face regarding their fill/finish needs: whether to rely on a single source or diversify with dual or multiple source manufacturing. As stated in an earlier blog post, the FDA has emphasized the importance of redundancy in manufacturing operations through its draft guidance, “Risk Management Plans to Mitigate the Potential for Drug Shortages.” (1), in May 2022. More recently, the FDA reported (2):
“Drug shortages continue to occur and at roughly the same levels since 2013.”
Report to Congress, FDA 2022
“In the past year, FDA has seen manufacturers in the United States and abroad continue to experience quality issues as well as struggle with capacity constraints”
Report to Congress, FDA 2022
The FDA has reiterated the importance of redundancy in the supply chain:
“Redundancy in the supply chain (as opposed to reliance on a single facility or geographic region) increases agility and potential solutions to alleviate shortages that occur due to regional or localized supply disruptions and that could ultimately create or exacerbate a drug shortage.”
Report to Congress, FDA 2022
Looking beyond the pharmaceutical industry, the electronics sector provides valuable lessons on the risks of single versus multiple sourcing. This was described in the post “Why Electronics Manufacturers Should Adopt a Multi-Source Strategy to Reduce Risk” (3) and in “The efficient and stable planning for interrupted supply chain with dual‐sourcing strategy: a robust optimization approach considering decision maker’s risk attitude” (4). In these examples, Philips adopted a multi-source strategy (3) and Nokia designed a quick fix using a backup supplier (4) while Ericson eliminated its backup suppliers to cut cost, which resulted in sizable loss that contributed to Ericsson’s decision to exit the mobile phone market (3)(4).
Risk Evaluation of Single-Source Manufacturing
Opting for a single-source supplier can streamline supplier management, foster stronger relationships, and potentially offer leverage in negotiations. The benefits of risk evaluation in pharmaceutical fill/finish single source manufacturing include:
- Lower Costs: Reduced expenses due to economies of scale and simplified logistics.
- Reduced Complexity: Easier oversight and management with fewer variables to control.
- Streamlined Diligence: Simplified processes for supplier audits and quality checks.
However, the failures in the pharmaceutical supply chain during the pandemic underscored the need for backup manufacturing capabilities. The FDA’s guidance (1) stresses the importance of alternative sources to ensure resilience. The risks of relying solely on a single aseptic fill/finish manufacturer include:
- Supply Disruptions: Any issue at the sole manufacturing site can halt production, leading to drug shortages.
- Costly Expedited Transfers: Urgent transfers to new sites can incur high costs and compromise product quality.
- Quality and Compliance Issues: Dependence on one site increases the risk of unexpected quality issues and failures, potentially triggering and regulatory actions.
- Shortages and Deprioritizations: Limited capacity can force prioritization of products, potentially leading to market shortages.
| Single Source Manufacturing | |
| Benefits | Risks |
| Lower cost
Reduced complexity Streamlined diligence |
Supply chain vulnerability
Costly expedited transfers Quality and compliance issues Shortages Depriorizations |
Table 1: Risk evaluation in pharmaceutical fill/finish –benefits and risks of single-source manufacturing.
Risk Evaluation of Dual-Source Manufacturing
Incorporating an additional supplier involves significant time and resources for auditing and approval. Additionally, transferring technology and conducting validation and engineering batches at an extra site incurs added costs. The five advantages of dual-sourcing listed below was described in more detail in a recent blog post. For risk evaluation in pharmaceutical fill/finish dual-source manufacturing, advantages can include:
- Supply Chain Resilience: Mitigates the risk of supply disruptions by having an alternative source.
- Increased Capacity and Scalability: Flexibility to scale production in response to market demands.
- Regulatory Compliance and Business Continuity: Enhanced ability to meet regulatory requirements and maintain continuous supply.
- Faster Commercial Readiness: Reduces time to market by diversifying production capabilities.
- Leveraging Competitive Advantages: By strategically selecting manufacturing partners with complementary strengths and capabilities, companies can tap into a broader range of expertise
Despite these benefits, dual-sourcing of aseptic fill/finish introduces its own challenges:
- Higher Costs: Significant investments in auditing, approval, technology transfer, and validation at multiple sites.
- Product Discrepancies: Potential for variations in product quality and consistency between different manufacturing sites.
- Process Variations: Differences in production approaches and quality control standards.
| Dual- and Multiple-Source Manufacturing | |
| Benefits | Risks |
| Supply chain resilience
Increased capacity Increased scalability Regulatory compliance Business continuity Faster commercial readiness Leveraging competitive advantages |
Higher cost
Product discrepancies Process variations |
Table 2: Risk evaluation in pharmaceutical fill/finish – benefits and risks of dual-source manufacturing.
Risk Evaluation in Pharmaceutical Fill/Finish – Summary
Risk evaluation in pharmaceutical fill/finish sourcing requires a comprehensive understanding of the benefits and challenges associated with each approach, as well as careful risk assessment and mitigation strategies. Pharmaceutical companies must decide between single or multiple sources for aseptic fill/finish needs, with each carrying distinct risks and benefits. While single sourcing simplifies management and fewer incurred costs, it also heightens vulnerability to supply disruptions and quality issues. Dual or multiple sourcing of aseptic fill/finish has critical advantages including scalability and resiliency but demands additional resources and costs for approval and technology transfer. Overall, the risks from single source aseptic fill/finish are profound with supply chain vulnerability, quality issues, and shortages creating severe consequences. Dual-sourcing pharmaceutical fill/finish is vital for resilience against supply chain failures, ensuring a more stable and reliable supply of pharmaceutical drug products.
Risk evaluation in pharmaceutical fill/finish sourcing requires a comprehensive understanding of the benefits and challenges associated with each approach, as well as careful risk assessment and mitigation strategies.
To learn more about the pros and cons of single or dual sourcing of aseptic fill/finish, please contact us.
Sources:
1) Risk Management Plans to Mitigate the Potential for Drug Shortages. Draft Guidance
https://www.fda.gov/media/158487/download
2) Drug Shortages CY 2022, Report to Congress (accessed June 4, 2024) pages 1, 2, 20
https://www.fda.gov/media/169302/download?attachment
3) Why Electronics Manufacturers Should Adopt a Multi-Source Strategy to Reduce Risk
https://intelligence.supplyframe.com/multi-source-strategy-reduce-risk/
4) The efficient and stable planning for interrupted supply chain with dual-sourcing strategy: a robust optimization approach considering decision maker’s risk attitude
https://www.sciencedirect.com/science/article/abs/pii/S0305048322001827
Definitions:
Drug Shortage: A drug shortage means a period when the demand or projected demand for a drug exceeds the supply of the drug.
CDMO: Contract Drug Manufacturing Organization
