SPECIAL REPORT

WWW.PHARMAMANUFACTURING.COM

Materials Safety and Analysis:

Portable GMP
Staying Lean, Compliant,
and Cost-Effective
Best Practices for Optimizing
Pharma Raw Material Inspection

Thermo Scientific TruScan

APRIL 2007
 Materials Inspection

Materials Safety and Analysis:

Staying Lean, Compliant, and
Cost-Effective
Best Practices for Optimizing Pharma Raw Material Inspection

Contents
3 How Lean is Pharmaceutical Manufacturing?
A 10-Year Progress Report

7 Impact of Inventory Turns On Speed, Quality, and
Costs

12 L
 eaning QC: Lonza Rolls Out Raman for Materials
Identification

15 T
 aking The Plunge To Harmonize Pharmaceutical
Regulations

19 R
 esidual Solvents and a Trace of Cooperation: FDA
Steps Toward Safety

19 V
 ideo: Field Inspections: Nigerian Regulators Find a
Solution for Drug Safety

19 Video: Rough and Tumble Raman and FTIR

Materials Analysis

20 Additional Resources

Pharmaceutical Manufacturing • www.pharmamanufacturing.com 2

 Materials Inspection
How Lean is Pharma?
So much is to be gained, yet it is hard to tell whether any drug
manufacturer has truly made progress over the last decade.
By Robert E. Spector, Principal, Tunnell Consulting
Lean Management represents one
of the most favored business improvement
programs today. Pioneered by Toyota in the
1950s, Lean focuses on eliminating waste in
new product development, manufacturing, and
distribution in order to cut lead times and in-
vestment, increase flexibility, and reduce costs.
Its objectives include using less human effort,
less inventory, less space, and less time to pro-
duce high-quality products as efficiently and
economically as possible while being highly
responsive to customer demand [1].
As described in a previous article [2] (see p.
7), although there is no universally accepted
measure of a company’s “Leanness”, inventory
turns are a reliable indicator. The trend of
inventory turns over time indicates how well a
company is progressing in terms of becoming
more Lean and improving its processes.
Over the last decade, Lean programs have
become popular in the drug industry, as
evidenced by the number of published case
studies and articles, and conferences devoted
to the topic. Unfortunately, the industry
as a whole has seen little overall progress,
as indicated by the lack of improvement in
inventory turns performance.
Figure 1 is a listing of some of the top drug
companies by 2009 revenue, and representing
brand, generic, and biopharmaceutical
categories. A total of 27 companies were
chosen (though not all are listed in Figure
1), consisting of nine biopharmaceutical, 13
brand and five generic. Annual inventory turns
data was obtained from Morningstar (www.
morningstar.com).
Historically, the pharmaceutical industry has
ranked at the very bottom in terms of the trend
of inventory turns [2]. The average inventory
turns of all the companies observed in this
study has essentially remained flat over both
the last five and 10 year periods (Figure 2). The
3
brand company average has trended downward
since 2001, but the overall change has been
not been significant. The biopharmaceutical
company average has shown a slight upward
trend, but it too is not significant. Finally, the
average for generic companies has shown an
upward trend over the last 10 years, although
during the last two years it has declined. It is
important to note that the inventory trend for a
single company is indicative but sometimes not
a fair and accurate gauge of excellence in Lean
management. Product recalls, mergers and
acquisitions, etc., as have been commonplace
in the industry over the last while, may skew
inventory performance for a few years. But
while this impacts the grading for a single
company, it washes out in the overall averages.
It is difficult to tell from the data whether
any pharmaceutical company has truly made
progress over the last decade. While there are
some companies that have shown improvement
over the last five years, there hasn’t been
a strong enough trend to draw definitive
conclusions.
Much to Gain
Pharmaceutical companies have a lot to gain
depending on their success in applying Lean.
For example, the U.S. electronics sector was
on its deathbed in the early 1980s, but now
has once again become the global leader with
the likes of IBM, Hewlett Packard, and Dell.
They regained this leadership in part through
application of Lean methods that originated
in Japan, plus adding to this arsenal of process
improvement tools with a western-grown
improvement methodology called design for
manufacturing and assembly (DFMA).
The inventory trends of the U.S. companies
are reflective of the Lean improvements that
have been made. In contrast, the long-range
trend lines of two out of three Japanese
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
 Materials Inspection

electronics companies have been flat or
heading downward [3].
As an example of what a successful Lean
program would look like, HP has successfully
applied Lean concepts and has displayed
significant improvement in inventory trends
over the last decade (Figure 3). From 2000 to
2009, inventory turns improved at an average
rate of 6.9%. HP’s upward trend translates
directly into growth of free cash flow at a
rate of 6.9% percent, with interest on the
cash compounded over the 10 year period
of lessening funds tied up in inventory. This
cash may be spent on product development,
equipment, pay increases, share buybacks,
dividends, etc.
When measuring the success of a Lean
program, if the company’s progress isn’t
accompanied by a significant upward trend
in inventory turns, Lean isn’t being applied
correctly.
An example of a leader that transformed
another industry is Wal-Mart (Figure 4). In
the 1990s, Wal-Mart was able to increase
inventory turns at an accelerating rate. From
2000 to 2009, inventory turns improved at an
average rate of 2.6% which translates directly
into free cash flow improvement of the same
rate. Wal-Mart was able to transform an entire
industry via their Lean improvement approach
and dictate the requirements to successfully
compete.
The practices of leading-edge companies
have shown the capability to transform

Annual Total Inventory Turns

Company 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
J&J 3.0 3.3 3.3 3.5 3.7 3.6 3.4 3.6 3.6 3.6
Pfizer 2.3 1.9 1.5 2.3 1.2 1.3 1.3 2.0 1.7 1.1
Roche 1.4 1.5 1.5 1.6 1.5 1.9 2.0 2.4 2.3 2.6
GSK 2.1 2.2 2.2 2.2 2.0 2.2 2.2 1.9 1.8 1.8
Novartis 1.9 1.9 2.0 1.9 1.9 2.4 2.5 2.2 2.0 2.1
Sanofi-Aventis 1.9 1.6 1.7 1.9 2.0 2.2 2.3 2.2 1.6 2.0
AstraZeneca 1.6 2.0 1.8 1.6 1.7 2.1 2.5 2.9 3.5 3.4
Bayer 2.81 2.77 2.88 2.8 2.9 2.6 2.6 2.6 2.6 2.3
Abbott 3.85 3.92 3.66 3.7 3.3 4.1 3.7 4.0 4.4 4.4
Merck 7.7 8.8 9.5 1.5 2.2 2.9 3.5 3.4 2.7 1.74
Eli Lilly 2.3 2.2 1.7 1.6 1.5 1.7 1.7 1.8 1.8 1.6
BMS 2.4 3.4 4.2 4.8 3.5 3.1 2.9 2.9 3.3 3.23
Amgen 1.7 1.3 1.6 2.1 2.2 1.9 1.3 1.3 1.1 1.0
Teva 2.5 2.3 2.1 2.0 2.2 2.3 2.8 2.1 1.8 1.94
Genzyme 1.94 2.13 1.83 1.9 2.1 2.1 2.2 2.3 5.5 2.6

Averages
(27 Companies)
Overall Average 2.36 2.68 2.60 2.48 2.31 2.38 2.43 2.56 2.67 2.33
Brand Average 2.52 3.11 2.96 2.62 2.35 2.31 2.40 2.32 2.62 2.11
Bio Average 2.32 2.34 2.28 2.39 2.24 2.49 2.50 2.64 2.61 2.59
Generic Average 1.80 2.10 2.26 2.23 2.33 2.40 2.40 3.15 2.95 2.47
Data for all figures courtesy of Morningstar

Figure 1. Inventory Turns of Top Drug Manufacturers

Pharmaceutical Manufacturing • www.pharmamanufacturing.com 4

 Materials Inspection

Average Pharma Inventory Turns—2000-2009

Average Pharma Inventory Turns—2000-2009
3.5 Average Pharma Inventory Turns—2000-2009
3.5 industries, such as the
3.5
3.0 electronics example
3.0
3.0
2.5 above. It’s clear that
2.5
pharmaceutical
Inventory Turns

2.5
Inventory Turns

2.0
companies have a lot to
Inventory Turns

2.0
2.0
1.5 gain depending on how
1.5
1.5 well they implement Lean
1.0
1.0 management.
1.0
0.5
0.5
0.5 The Task
0.00
0.00 for Pharma
0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Why hasn’t there been
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
■ Overall Average ■ Brand Average ■ Bio Average ■ Generic Average significant overall im-
■ Overall Average ■ Brand Average ■ Bio Average ■ Generic Average
■ Overall Average ■ Brand Average ■ Bio Average ■ Generic Average provement in the pharma-
Figure 2. Pharma Inventory Turns—Ten Year Averages
ceutical industry? First,
implementations have
14 been isolated to what can
14
14 be called “pockets of ex-
12 cellence” that are typically
12
12 showcased in magazine
10
10 articles and at conferenc-
10
8 es. Unfortunately many
8
8 of these companies have
6
6
not been able to consis-
6 tently apply these concepts
4
4 across the entire organiza-
4
2 tion.
2 Second, the majority
2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 of Lean implementations
2000 2001 2002 2003 ■ Turns
2004 2005 2006 2007 2008 2009
■ Turns have been focused on
■ Turns
Figure 3. HP Ten Year Inventory Turns Trend improving manufacturing
operations, without
an accompanying
focus on the rest
Figureof
4. Wal-Mart Ten Year Inventory Turns Trend
10
10 the supply chain,Figure
such 4. Wal-Mart Ten Year Inventory Turns Trend
Figure 4. Wal-Mart Ten Year Inventory Turns Tre
10 10 9.5 9 8.5 8 7.5 7 6.5 6
9.5 as procurement and
Turns10109.59.59 98.58.58 87.57.57 76.56.56 6
9.5
9.5 2000Turns
distribution. Without2001
Turns 2002 2003 2004 2005 2006 2007 2008 20
9 2000 2001 2002 2003 2004 2005 2006 2007 200
9 focusing on the entire2000 2001 2002 2003 2004 2005 2006 2007 2
9
8.5 supply chain benefits
8.5
8.5 will be limited; long lead
8
8
8
times and high inventories
7.5
7.5
within external logistics
7.5 pipelines tend to cancel
7
7 out the greatest Lean 60
7 60
6.5 successes in operations. 60
6.5
6.5
6 Finally, many Lean
6
62000 2001 2002 2003 2004 2005 2006 2007 2008 2009
implementations have
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 failed for various reasons,
2000 2001 2002 2003 ■ Turns
2004 2005 2006 2007 2008 2009
Figure 4. Wal-Mart Ten Year Inventory Turns Trend
■ Turns
■ Turns FONTS: Frutiger 7 pt
FONTS: Frutiger 7 pt
FONTS: Frutiger 7 pt
Body:
5 Body:
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
Frutiger 57 Condensed
Body:
Frutiger 57 Condensed
Frutiger 57 Condensed
Headers/X&Y Axis:
Headers/X&Y
Frutiger Axis:
67 Bold Condensed
Headers/X&Y
Frutiger 67 BoldAxis:
Condensed
Frutiger 67 Bold Condensed
 Materials Inspection

including and/or are have not About the Author teams in multiple industries and
been sustainable—common Robert Spector is a Principal with sectors, focusing on maximizing
problems across all industries Tunnell Consulting. He is a certified business results through strategic
due to lack of leadership Enterprise Lean/Six Sigma (EL/ and tactical improvements utilizing
commitment, excessive cost SS) Black Belt practitioner with 17+ Lean, Six Sigma, and Theory of
reduction focus, improper years of management consulting Constraints tools and techniques.
project selection and experience serving both manufac-
suboptimal execution [4]. turing and service industry clients.
The pharmaceutical He has successfully led projects and
industry has the
advantage of being
years behind other
industries such as
electronics and retail in
terms of Lean maturity.
By assimilating the
lessons learned from
other industries
pharmaceutical
companies can
improve inventory
turns performance
and achieve the full
benefits from Lean
management.

Remain Compliant
References
1. Spector, R. How Con-
straints Management
Enhances Lean and Six
Sigma. Supply Chain
Management Review,
January/February 2006.
2. Spector, R. The Impact of
Inventory Turns on Speed,
Quality, and Costs. Phar-
maceutical Manufactur-
ing, June 2009.
3. Schonberger, R. Best Prac-
tices in Lean Six Sigma
Process Improvement—A
Deeper Look. Wiley &
Sons, 2008.
4. Spector, R. West, M. The
Art of Lean Program
Thermo Scientific TruScan
Management. Supply
Chain Management Re-
view, September 2006.

Pharmaceutical Manufacturing • www.pharmamanufacturing.com 6

 Materials Inspection

Impact of Inventory Turns

on Speed, Quality, and Cost
By creating low inventory environments, pharma can establish the
“Leanness” that it sorely lacks.

By Robert E. Spector, Principal, Tunnell Consulting

Lean Management represents one of enhance competitiveness in speed, quality and

the most favored business improvement pro-
grams today. Pioneered by Toyota in the 1950s,
Lean aims to eliminate waste in every area of
the business, including customer relations,
product design, supplier networks, and factory
management. Its objectives include using less
human effort, less inventory, less space, and
less time to produce high-quality products as
efficiently and economically as possible while
being highly responsive to customer demand
[1].
Although there is no universally accepted
measure of a company’s “Leanness,” inventory
turns are a reliable indicator. The trend of
inventory turns over time indicates how well a
company is progressing in terms of becoming
more Lean and improving its processes.
How does the pharmaceutical industry rank
on this measure compared to other industries?
Unfortunately, at the very bottom. But by
adopting Lean principles, Pharma companies
can increase inventory turns and not only
achieve significant financial benefits but also
costs.
Inventory Turns as a
Measure of Leanness
Inventory turnover—defined as the cost
of sales (also known as cost of goods sold)
divided by the average inventory level over
some time period—is a convenient proxy
measure of Leanness.
Recall that the goal of Lean is to achieve
improvements in the competitive edge
elements of speed, quality and cost. Lower
levels of inventory directly correlate to
improvement in these competitive edge
factors, as we will show. That’s why Japanese
manufacturers focus intently on reducing
inventory, sometimes characterizing
inventory as “evil.” Similarly, noted Lean
experts such as Richard Schonberger view
inventory as a catch basin for a multitude of
business ills.
Inventory turns also straightforwardly
correlate with the bottom-line measure

Figure
Figure1.1.High
HighInventory
InventoryEnvironment
Environment Figure
Figure2.2.Low
LowInventory
InventoryEnvironment
Environment

27,000
27,000minutes
minutes(450
(450hrs)
hrs)for
fortotal
totalorder
order Order Order
Order1,000
1,000Units
Units
Order1,000
1,000Units
Units
13,500
13,500minutes
minutes(225
(225hrs)
hrs)for
fortotal
totalorder
order
CC CC
55Mins/U
Mins/U 55Mins/U
Mins/U
Inventory
Inventory

BB BB
12
12Mins/U
Mins/U 12
12Mins/U
Mins/U

Inventory
Inventory
Average
AverageInventory
Inventory

AA AA
Average
Average
10
10Mins/U
Mins/U Inventory
Inventory 10
10Mins/U
Mins/U

Mins
Mins 10,000
10,000 20,000
20,000 30,000 Time
30,000 Time Mins
Mins 10,000
10,000 Time
Time

7 Pharmaceutical Manufacturing • www.pharmamanufacturing.com


of business success: cash flows. Reduced
inventories mean more cash in the bank,
freeing up cash that can be used for other
purposes. However, reduced inventories are
beneficial only if the reduction derives from
process improvement—the core of Lean. If a
company cuts inventories without improving
processes, then stock-outs and lost customers
will far outweigh any benefits of increased
cash flows.
In addition, inventory is a standard
financial metric and is readily comparable
company-to-company, as well as over time
within a business. It is also highly visible.
Walk around a facility characterized by high
levels of inventory and you can conclude that
the facility is fat, not Lean.
The Impact on Speed
The impact of inventory on speed, quality,
and costs becomes clear when a high inven-
tory manufacturing environment is contrasted
with a low inventory environment. Although
there is no absolute measure, comparisons
with competitors can help determine whether
a company is a high inventory or low inventory
operation.
Suppose, for example, a company has an
order for 1,000 units which are manufactured
in a three-step production process that is run
over two shifts, 16 hours a day, five days a week
for a total of 80 working hours per week. In
a traditional high inventory manufacturing
environment (Figure 1), the material might
be released from stores, processed and moved
through the plant in a single batch of 1,000
units. That is, each operation completes
work on the entire batch before any material
is moved to the next operation. Each step
processes and transforms the input materials
incrementally.
In this high inventory example, almost six
weeks are required to complete the order.
Compare that to the results from a low
inventory manufacturing example (Figure 2) in
which Lean principles such as setup reduction,
flow layouts and pull production have been
applied in order to reduce the batch size all the
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
Materials Inspection
way through production. There is no longer
any waiting until each operation is completed
for the entire order before moving it to the
next operation. Material is moved between
operations in batch sizes of 100 units, allowing
several operations to work on the same
production order simultaneously.
In any production process the slowest
operation acts as the constraint to the system
and sets the throughput rate for the entire
process. In this example, that constraint is
the second operation, with a throughput rate
of 12 minutes per unit. Releasing material
at a rate faster than the slowest operation
will only cause build-up of inventory in the
system. So an additional change must be made:
release material into the system only to keep
the constraint busy versus that of the high
inventory environment in which the entire
order is released to the first operation.
As a result of these changes, the work-
in-process inventory level is much lower
and the order is completed in half the time.
This phenomenon is also demonstrated by
Little’s Law, which shows that lead times
are directly proportional to the amount of
work-in-progress, i.e., inventory. Production
lead times and work-in-progress inventory
are mirror images of each other: reducing
work-in-progress inventory proportionally
reduces lead times. Therefore, if a product can
be produced in less time, then capacity has,
effectively, been increased—that is, the number
of units processed per unit time increases. For
both generic and brand drug manufacturers,
the ability to ramp up quickly to meet surges
in market demand confers a significant
competitive advantage.
The Impact on the Cost of Quality
To understand the impact of inventory on
quality costs, suppose that an out-of-speci-
fication (OOS) condition occurs at the first
operation in our example. Unless in-process
inspection is performed, this condition will be
caught only after the entire lot is processed at
that operation, possibly resulting in the entire
order being scrapped. In this high inventory
8
 Materials Inspection
environment the damage will have occurred
at least two weeks (as the first operation will
take 10,000 minutes to complete) before it is
detected, making it very difficult to determine
what caused the OOS and leading to longer
investigations. Also, the plant will be forced
to expedite additional units because the order
will now be very late. Under this pressure,
management would likely devote its efforts to
expediting rather than finding and resolving
the problem.
In the low inventory environment, even if
QC is not performed until the last operation
is completed, and the damage is not detected
until that point, the product is still being
produced at the first operation. It is therefore
much easier to determine the cause of the
problem without being under pressure to
expedite. Because the problem has been
detected before the entire order has been
produced incorrectly, fewer replacement units
are required and they can be produced much
more quickly than in the high inventory
environment—and without resorting to
expediting. Management also has the time and
ability to eliminate the cause of the problem,
perhaps permanently.
The Impact on Costs
Higher inventories result in greater material
costs, operating expenses and capital expendi-
tures. Recall that quality issues have a greater
impact on a high inventory facility versus one
with lower inventories. In the example here,
an entire production order might have to be
scrapped, increasing material costs. With
shorter lead times than the competition, the
lower inventory manufacturer also benefits
from a more accurate forecast. For example,
with seasonal drugs such as flu vaccines, the
higher inventory manufacturer will have to be-
gin production earlier than the lower inventory
manufacturer. The longer the forecast horizon
becomes, the more dramatically forecast ac-
curacy decreases. Because the lower inventory
manufacturer can start later, it will have a more
accurate forecast and will be less likely to build
excess inventory that may not be sold.
9
Further, the higher inventory environment
will take longer to process an order than
will its competitors. Faced with increased
customer demands for faster response time,
the higher inventory facility will have no
choice but to increase production, either
by adding additional shifts or overtime.
With lesser operating expenses, the lower
inventory competitor has a lower break-even
point, giving the company more f lexibility
in pricing.
Even increasing the number of shifts or
adding overtime may be insufficient. The
high inventory facility may not have enough
machines or labor to accommodate the
load within the available time. As a result,
this company may have to invest in more
equipment. With less effective capacity than
the lower inventory competitor, the higher
inventory manufacturer will also have to invest
in new facilities sooner.
Clearly, in the lower inventory environment
the investment in equipment, facilities, and
inventory is much less than that of the higher
inventory environment. Consequently, the
return on investment is much higher.
Where Pharma Ranks in
Measurable “Leanness”
Since 1994, Richard Schonberger has been
collecting inventory-turnover data in a
long-range study of how companies are
progressing with the Lean/process improve-
ment agenda. His study groups about 1,200
companies into 33 industrial sectors. Table
1 lists the 33 industries in rank order, best
to worst by long-term trend [2]. To assess a
company’s performance, its inventory turns
were graphically plotted year by year. A
scoring system reduced this visual assess-
ment of trends to numbers which point to
long-term Lean progress.
Pharmaceutical companies rank at
the very bottom. Of 66 pharmaceutical
companies in the Lean database, only two
merit a top grade of “A,” Johnson & Johnson
and Japan-based Taisho. In fact, according
to Schonberger’s research, the average
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
 Materials Inspection

score for pharmaceuticals pharmaceutical manufac- create a Value Stream map

has been going down since turer, facing cost challenges of the production process.
2002. at one of its plants, engaged Improvement opportunities
Why has Pharma ranked consultants to help drive were identified and non-value
so poorly? When profit improvements using several added activities were identi-
margins were at historic different improvement ap- fied and either eliminated or
highs, little attention proaches including Lean. The minimized. Of critical impor-
was paid to operational consultants and client team tance was the implementa-
efficiency and production members worked together to tion of a pull system, which
costs. The focus of
money and resources
in Pharma has
traditionally been
on R&D rather than
operations. The
little attention that
operations did get was
focused on compliance
rather than process
improvement [3]. The
standard practice of
ensuring that more
than enough of each
product was available
to meet customer
needs coupled with

CoSt eFFeCtiVe RmiD

a lack of attention
to operational
efficiencies has led to
excessive inventories.
Further, the sales and
market-share strategy
of pushing more and
more inventory into
the pipelines has also
driven up inventories.

What Pharma Can

Do to Improve
Inventory Turns
A common objection
to applying Lean in
pharma is “that may
work for automotive, Thermo Scientific TruScan
but we’re different.” But
consider how a real-
world case study refutes
the objection. A global

Pharmaceutical Manufacturing • www.pharmamanufacturing.com 10

 Materials Inspection

Table 1. Lean/Process Improvement by Industry [2]

Industries Ranked
• Scrap-in-tablet
Rank Inventory Turnover Score compression was reduced
by Industrial Sector
by 14%, resulting in more
1 Petroleum 0.93
than $1 million savings in
2 Paper-converted products 0.89 raw material costs.
3 Distribution—wholesale 0.86 • The conversion cost per
4 Semiconductors 0.79 unit was reduced by 22%.
5 Electronics 0.77 • Direct labor productivity
increased by almost 40%.
6 Telecom 0.76
As in the example here,
7 Paper 0.72 lower work-in-progress
8 Metal-working/machining 0.71 inventories correlate directly
9 Plastic/rubber/glass/ceramic 0.69 to reduced production lead
10 Major appliances 0.67 times, improved quality
and lower costs. Clearly,
11 Pump/hydraulic/pressure 0.66
Lean principles are as
12 Vehicular components 0.66 applicable in pharmaceutical
13 Sheet metal 0.66 manufacturing environments
14 Machinery 0.64 as they are in automotive
15 Electric 0.61 and other industries where
they have produced similarly
16 Instruments/test equipment 0.61
impressive results.
17 Aerospace/defense 0.59
18 Personal-care products 0.59 About the Author
19 Wood (lumber)/paper 0.58 Robert Spector is a principal for
20 Apparel/sewn products 0.56 Tunnell Consulting. He has more
than 17 years of management
21 Liquids/gases/powders/grains 0.54
consulting experience with a proven
22 Medical devices 0.53 track record in Lean / Six Sigma,
23 Retail 0.53 operations excellence, supply chain
24 Food/beverage/tobacco 0.53 strategy, business process design, and
25 Furniture 0.52 information systems.

26 Basic metal processing 0.52

References
27 Motors & engines 0.52 1. Spector, R. How Constraints Man-
28 Wire & cable 0.50 agement Enhances Lean and Six
29 Autos, light trucks, bikes 0.50 Sigma. Supply Chain Mgt. Review,
30 Chemicals 0.36 Jan./Feb. 2006.
2. Schonberger, R. Best Practices in
31 Heavy industrial vehicles 0.35
Lean Six Sigma Process Improve-
32 Textiles/sewn products 0.28 ment. Wiley, 2008.
33 Pharmaceuticals 0.02 3. Ibid

resulted in lower inventories Among the results:

and reduced variability in the
production process. Other
Lean techniques such as set-up
reduction were also applied.
•W
 ork-in-progress
inventory was reduced by
35%, while production lead
time was reduced by 56%.

11  Pharmaceutical Manufacturing • www.pharmamanufacturing.com


Leaning QC: Lonza Rolls
Out Raman for Materials ID
After evaluating technologies, Lonza Biologics is implementing a
Raman-based raw materials identification process.
By paul thomas, senior editor
As part of an effort to Lean its raw material
QC process, Lonza Biologics’ Portsmouth,
New Hampshire facility evaluated several new
spectroscopic technologies—Raman, NIR,
and FTIR handheld or portable devices—for
rapidly verifying incoming raw materials. The
manufacturer sought to shave significant time
off its compendial, lab-based sampling and
analysis of materials, without sacrificing ID
accuracy and specificity.
Ultimately, Lonza selected handheld Raman
devices (TruScan, marketed by Thermo Fisher
Scientific) to roll out in Portsmouth, and to
extend this implementation worldwide to all of
its biologics facilities.
A key factor was the need to have a more
transparent supply chain and harmonized
processes, says senior QC manager for
raw materials, Derek Hubley. Increasingly,
customers prefer materials testing and
specifications to be consistent from one site to
the next, he says. We spoke with Hubley about
the project.
PhM: Was raw material ID an obvious candi-
date to be leaned, and if so, why?
D.H.: Both sampling and testing are the
lengthiest activities in the raw material receipt
to release process. So, streamlining this por-
tion was obvious. By decreasing the sampling
and testing of raw materials, the supply chain
process becomes more flexible—ultimately, al-
lowing for a significant reduction in inventory
carrying costs and raw material lead times.
PhM: Why were inventory carrying costs a
problem?
D.H.: Basically, everything has a lead time as-
sociated—ordering, sampling, testing, and re-
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
Materials Inspection
lease are all part of the chain of events. So, de-
creasing the sampling and testing times would
result in a decrease in the inventory required
for the processes. For example, if we apply a
three-week lead time from the vendor and a
three-week lead time for sampling and testing,
we would need to keep six weeks of materials
on-site to support the processes. Using our new
method, we can keep the three-week lead time
from the vendor, but decrease the sampling
and testing time to one week. This results in
the need to carry only four weeks of materials
on-site to support the manufacturing process-
es. In this case, the inventory carrying is cut
by two weeks, and in the case of high-dollar
materials this can be a tremendous savings on
the total inventory carrying cost.
PhM: For accuracy and sensitivity, you
found Raman and NIR to outperform FTIR
for various materials. Can you explain this
difference?
D.H.: The main reason Raman and NIR
showed better accuracy was the design of the
study. The study was designed to eliminate the
need for sampling raw materials for iden-
tification testing. Therefore, the Raman and
NIR could scan through packaging resulting
in greater accuracy and sensitivity. The final
conclusion of the study showed the Raman
having the greatest accuracy and sensitivity and
this was because of its ability to scan through
multiple container types.
An exercise showing the types of materials
that were active using the three technologies
showed most materials were active with all
three technologies. However, this would be if
the analysis was done in direct contact with the
material. There were a handful of materials that
were active with Raman and NIR, but not FTIR.
12
 Materials Inspection
PhM: What surprises did
you encounter in terms of
how any of the technologies
handled specific materials
(salts, sugars, solvents, etc.)?
D.H.: I guess the biggest sur-
prise was the ability of both
Raman and NIR to distin-
StReamline
mateRial VeRiFiCation
Thermo Scientific TruScan
13 
guish between hydrate forms
of materials such as dextrose,
sodium phosphate monobasic
XH2O, and sodium phosphate
dibasic XH2O. All other ma-
terials functioned as expected
based on the activity of the
materials in the facility based
on literature review.
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
PhM: One of the parameters
that you evaluated was the
ability to create reference
scans. Were all three technol-
ogies capable in this regard?
D.H.: Yes, all three technolo-
gies had the ability to create
reference scans. Both Ra-
man and FTIR only
required one lot of
material to create the
reference scan. FTIR
required direct con-
tact with the material,
which we wanted to
avoid, as the ulti-
mate goal is to limit
the contact with the
material. The Raman
reference scan could
be created using a
single lot of material.
However, to make it
robust, the reference
scan was created in
each of the differ-
ent container types
in which the mate-
rial could have been
received into the fa-
cility. For example, a
reference of an amino
acid (dry powder) was
created in a poly bag,
glass container, and
a HDPE bottle; and
the reference scan of
Polysorbate (liquid)
was created in a
clear glass container
and an amber glass
container. As for NIR,
although the capabil-
ity is there, it was not
evaluated during this
study. This is because
it takes more than one
 Materials Inspection

lot of material to obtain a
robust library.
PhM: Your ultimate goal is
to process incoming materi-
als with no sampling, but
are there still some materials
you’re testing via traditional
sampling?
technology is being rolled out
to the biopharmaceutical divi-
sions. The materials across the
facilities are common, making
the harmonization efforts
less challenging. In addition,
these facilities have begun
harmonizing specifications
and testing procedures so the
challenges were expected.
Thus far, we have approxi-
mately 10 harmonized raw
material specifications, which
are shared between sites in the
biopharmaceutical division,
and have deployed the Raman
units to five sites.

D.H.: Yes, there are still

some materials that
would require sam-
pling. This is ultimately
based on where the The Power of Raman in
the Palm of Your Hand
material is used in the
process or if there is a
critical attribute that
needs to be analyzed
for each shipment. For
instance, microbial
safety testing would
always need to be per-
formed if the material
is capable of support-
ing microbial growth.
Also, excipients require
more testing even if the
material is qualified for
a reduced testing strat-
egy. Excipients require
100% container ID, so
the time saved by not
needing to sample 100%
of the containers is sig-
nificant; the remaining
attribute testing would
be performed using the
number of containers
required per our statis-
tical sampling plan.

PhM: To what extent

has harmonization
across sites been real-
Thermo Scientific TruScan
ized?

D.H.: Currently the

Pharmaceutical Manufacturing • www.pharmamanufacturing.com 14

 Materials Inspection
Taking The Plunge to Harmonize
Pharmaceutical Regulations
Within the past five years, more of the world’s regulatory agencies
and pharmacopeias have gotten on the same wavelength.
By Agnes Shanley, Editor in Chief
International standards tend
to proceed at a glacial pace, especially when
anything complex is involved, but efforts to
streamline global pharmaceutical regulations are
stepping up. Mandated by the increasingly global
nature of drug manufacturing, harmonization
can only help the industry improve efficiency, but
its ultimate goal is to ensure that more people in
the world have access to the medicines they need.
Some may complain that this goal is still a
long way off. Filing clinical documentation for a
new drug can be 15%-20% of the costs of trials
running in the hundreds of millions of dollars.
Meanwhile, the costs of supporting multiple
and redundant agency plant inspections are
high, running to $130,000 to $400,000 per day
and 1,000 to 2,500 person hours per inspection.
Citing these figures and data from a survey by
EFPIA (you’ll find it on PharmaManufacturing.
com), John O’Connor, senior director of corporate
inspection management of Genentech, reiterated
the need for increased harmonization of plant
inspections at BIO 2009 last May. “These
resources aren’t being directed toward other
quality efforts,” he said.
However, most observers agree that the past
decade, and the last five years in particular,
have seen great progress in harmonizing R&D
and clinical requirements, as well as overall
regulations for finished drug products, active
ingredients and excipients.
The guiding force for much of this work has
been ICH, the International Conference on
Harmonization of Technical Requirements for
Registration of Pharmaceuticals for Human
Use. Next month marks the twenty-first year
of the group’s mission: to eliminate redundant
paperwork, and streamline the costly and
difficult process of developing and making
pharmaceuticals around the world.
15
ICH is far from the only group working on
harmonization. Pharmacopeias have their own
projects and collaborations going on, including
USP’s Pharmacopeial Discussion Group (PDG),
which started just a few years before ICH was
established.
The World Health Organization is also working
on harmonization, as are the Pan American
Network on Drug Regulatory Harmonization
(PANDRH), various national groups focused on
active pharmaceutical ingredients, and IPEC,
which concentrates on pharmaceutical excipients.
However, ICH, which is made up of regulatory
bodies, pharmacopeias and drug industry
members from the U.S., EU and Japan, provided
a framework and focus for a project that might
otherwise have been too diffuse and difficult. So
far, it can claim substantial gains.
Big Picture Improvements
The U.S. and Europe have come a long way toward
harmonizing their regulatory requirements, says
Mukesh Kumar, PhD, RAC, senior director of
regulatory affairs and quality assurance for Ama-
rex Clinical Research (Germantown, Maryland).
“They’re following ICH guidelines on quality,
and, by using the common technical document
format, they’ve standardized on how an applica-
tion is submitted,” he says. “They now offer a joint
application for orphan drugs.”
Even Japan, which, despite its ICH membership,
had seemed to be on its own track five years ago,
continues to demonstrate its commitment to
harmonization (Box, p. 16). When I contacted
USP for this article, Nobuo Uemura, a senior staff
member at Japan’s Pharmaceuticals and Medical
Devices Agency MHLW/PMDA, had just arrived
in Rockville, Maryland to begin a 15-month stint
working at USP offices, a visible sign of JP’s and
USP’s interests in closer collaboration.
Pharmaceutical Manufacturing • www.pharmamanufacturing.com

Perhaps the most tangible 21st century symbol
of progress is the electronic common technical
document (eCTD), which a growing number of
companies are now using for their IND’s, NDA’s,
ANDA’s, BLA’s, and DMF’s. Dr. Kumar jokes
about the days when documentation for a new
drug had to be delivered to FDA by truck.
Thinking globally, acting locally
But harmonization today is only an outgrowth
of the reality that pharmaceutical regulation has
become an increasingly global affair, since most
of the new drug master files being submitted are
from India, and most API’s are being manufac-
tured in India or China. Two years ago, both
FDA and the U.S. Pharmacopeia began moving
offshore, and since have set up satellite branches
in China, India, and Latin America.
USP was the first to move offshore, which
allowed it to advise FDA when the Agency
established foreign bases as part of its Beyond our
Borders program, says Susan de Mars, USP’s chief
documentary standards officer. As FDA and USP
work together to update compendial test methods,
having an offshore presence only increased USP’s
collaboration with FDA, while strengthening
its local connections with regulators, industries
and pharmacopeias, de Mars says. “It’s part of
our efforts to work outside of ICH regions, and
areas that are part of our PDG, particularly with
countries that have constrained resources,” de
Mars says.
Pharmacopeial Progress
USP’s PDG has made good progress, says de Mars,
and so far has finished harmonizing 27 out of the
34 general chapters that were part of its original
Work Plan, and 40 of 63 excipient monographs.
However, she concedes, it’s still “a slow and
laborious process,” and the PDG only covers 15%
of excipient monographs and 20% of the general
chapters within the USP.
However, efforts are also moving forward
with finished drug substances, which are
outside the scope of PDG. In one pilot, USP and
the European Pharmacopeia (EP) are jointly
developing harmonized monographs as well as
reference standards for two drug substances.
This time around, the work will be done from the
beginning, instead of harmonizing retroactively,
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
Materials Inspection
as was necessary with PDG.
Pharmacopeial harmonization really began to
take off 10 years ago, when USP decided to focus
on harmonization by attribute. “We decided
to look at the main tests and monographs—for
instance, assays and identity tests—and focus
efforts on harmonizing where we can agree,
always understanding there will be some cases .
. . where it won’t be possible,” says Kevin Moore,
senior scientific liaison for USP.
Over that time, there has been good alignment
across USP, EP and JP, although de Mars concedes
that Japan has special challenges, since it publishes
less frequently, has fewer staff members and must
translate everything into English, and then back
into Japanese again.
Update on Japan
For many years access in Japan to drugs approved for use
in the U.S. and Europe lagged by at least four years. In
2007, when only 28 of the world’s 88 best-selling drugs
were available to the Japanese market, Akira Miyajima,
head of the Japanese Pharmaceuticals and Medical De-
vices Agency, said he planned to bring Japan’s new drug
approvals inline with those of the U.S. and Europe by
2012, and to cut approval times by 2.5 years. The Agency
was to hire 240 new reviewers at the time.
Japan’s regulatory environment is changing, due to a
change in government leadership, according to Masaru
Kitamuru, who commented in February’s edition of Who’s
Who Legal Life Sciences Roundtable. Regulators are work-
ing to expedite clinical trials and drug approvals, adding
more requirements for post-marketing surveillance, he
says. Japan has also set guidelines for approving biosimi-
lar products, he says, expecting downward cost presures
and promotion of generics.
Major changes have been seen in the amendment of
the Pharmaceutical Affairs Law, which took effect last
June, says Satoru Nagasaka, a partner with TMI Associ-
ates. A key change has been implementing risk-based
standards for information to the public. The law now cat-
egorizes nonprescription drugs depending on their risks:
Type 1 drugs, which are of particularly high risk (e.g., H2
blocker); Type 2 drugs, which are of relatively high risk,
such as cold medicine; and Type 3 drugs, which are of
relatively low risk, such as vitamin pills. Each drug’s level
of risk must now be indicated on the outside of the box,
and regulations on labels and point of sale have been
changed.
16
 Materials Inspection
This year, USP will decide whether or not to
expand PDG. Still outstanding, Moore says, are
chapters on the uniformity of content, mass, and
on instrumental methodology of color. “We hope
to have a good amount of progress over the next
year by the time we next meet in June,” he says.
API’s and Excipients
Variable active ingredient and excipient qual-
ity are key quality issues being addressed on all
harmonization fronts. USP plans to have a mono-
graph for any excipient listed in FDA’s inactive
ingredients database, Moore says, but progress
is challenged by the diverse approaches used to
China Bridges the Gap
China has been observing ICH activity closely and has
also been working to bring its quality systems and
regulatory standards more in line with those of Europe
and the U.S. Bikash Chatterjee of Pharmatech Associates
notes changes in its approaches to GMP, in this excerpt
from a PharmaManufacturing.com editorial:
In January 2010 the SFDA, China’s regulatory authori-
ty, attempted to close the gap between its practices and
quality and regulatory standards in the U.S. and Europe
with GMP 10. Updating GMP 8, which had been issued
in 2008, it borrows heavily from European guidance for
finished drug products. SFDA is soliciting comments,
both from within and without China. It is significant
because it emphasizes the quality management system,
specifically on the need for Deviation Control, Corrective
Action and Preventative Action (CAPA) systems and a
Product Quality Review (PQR) system.
In addition to the GMP 10 guidance, the SFDA has also
created an annex to the main guidance which specifies
the requirements for sterile API, sterile manufactur-
ing and terminally sterilized product. What is interest-
ing about this document is the specific requirements
called for concerning facility design and environmental
conditions. To date, the GMP guidances have relied on
a general discussion of the end result, e.g.: “Article 6,
Annex 1; The Manufacture of products should be carried
out in clean areas, entry to which should be carried out
through airlocks for personnel and/or equipment and
materials.” This has allowed each inspector to interpret
the requirements as they saw fit for each manufacturer.
17 
regulate them, globally. One initiative at USP has
been an international working group established
for good distribution practices.
The European Directorate for the Quality
of Medicines & HealthCare (EDQM) has
established bilateral confidentiality agreements
with FDA and Australia’s Therapeutic Goods
Administration (TGA) to share confidential
inspection information related to API’s and
excipients, and a pilot project for harmonizing
inspections was launched last year.
A number of routes are being considered—
either applying GMP’s to excipients or
establishing a voluntary program where plants
would be inspected by accredited inspectors
from third-party certified companies. FDA has
recently launched a pilot third-party inspection
program for medical devices.
“We still believe that self-regulation for
excipients is the preferred pathway, but we
need to provide best practices and guidance,”
says Janeen Skutnik, Chair of IPEC Americas,
and Vice Chair of the IPEC Federation. IPEC
aims to do this by establishing standards and
best practices in the form of guidances. This
approach, she says, allows users to take care of
the basic GMP’s, and leaves a company’s Audit
teams to focus on the individualized needs of
their use of that excipient. It also allows them to
focus more time on relationship management
and monitoring.
IPEC Americas has been actively converting
IPEC’s GMP’s (not required for manufacturers)
into an ANSI standard that would provideallow
regulators to refer to a universally recognized
benchmark, Skutnik says. The group is also
working on guidance documents for Pedigree,
GMP’s, GDP’s, Excipient Qualification, and
Quality Agreements, and guides for Audits,
Significant Changes and Certificates of Analysis.
IPEC Americas is meeting with FDA and
USP to ensure consistency of standards and
monographs, Skutnik adds. From the FDA
perspective, they are engaged in the ANSI project
to convert the IPEC-PQG GMP guide into an
ANSI guide. (This work is supported by OMB
Circular A-119). “The formal ANSI teams are
being assembled and we expect to complete the
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
 Materials Inspection

drafts this year,” she says.
Additionally, International
Pharmaceutical Excipients
Auditing (IPEA) has applied
to ANSI to become accredited.
Skutnik expects IPEA to
receive accreditation soon, so
that it could handle third-
party audits.
niched cancer therapies.
There will always be differ-
ences, too, in such things as
plant inspection practices.
EFPIA’s survey noted regional
flavors, with FDA focusing on
deviations and investigations,
buildings and facilities, valida-
tion and equipment cleaning
and maintenance. The EU
focused on room classifications
and cleanliness, maintenance,
laboratory controls and qual-
ity agreements, while Japan’s
inspectors emphasized raw
material and facility cleanliness
and product appearance.

Managing Risk
Harmonization doesn’t
mean replication. There
will always remain differ-
ences across regulatory
agencies. For instance,
Portable GMP
one can either go the
centralized route for
introducing a new drug
in Europe (via EC) or via
each regional authority.
In addition, drug approv-
als are “phased” in Eu-
rope, where manufactur-
ers must get reapproved,
based on safety.
FDA’s Risk Evaluation
and Mitigation
Strategy, part of the
FDA Amendments
Act of 2007, effectively
harmonizes practices,
closing the gap between
the EU (which requires
postmarketing safety
data) and U.S. (which
hasn’t), by asking
manufacturers to collect
patient safety data. So
far, Kumar says, one
drug approved by FDA
has already undergone
REMS. Depending on
the drug involved, the
costs can be high, he says,
Thermo Scientific TruScan
running from $50-$100
million for a psychotropic
drug but much less for

Pharmaceutical Manufacturing • www.pharmamanufacturing.com 18

 Materials Inspection

Residual Solvents and

a Trace of Cooperation
The new guidelines are evidence of multinational
law enforcement at its best.

By emil w. ciurczak, contributing editor

The latest FDA Guidance on residual
solvents is interesting on several levels. On the
plus side, this cooperation between the FDA,
USP, and ICH is an excellent example of multi-
national law enforcement and one set of rules
for everybody. In the age of outsourcing and
companies that are engaged in producing and
selling in many countries (and continents), the
country-to-country regulations that tended to
restrict free trade are slowly disappearing.
In fact, with respect to inter-agency
cooperation, the FDA Guidance even
states, “This guidance is intended to assist
manufacturers in responding to the issuance
of the United States Pharmacopeia (USP)
requirement for the control of residual solvents
in drug products marketed in the United
States.” Two major product categories are:
1. Compendial drug products that are not
marketed under an approved NDA or ANDA
can comply with USP General Chapter <467>
“Residual Solvents” and the Federal Food,
Drug, and Cosmetic Act (a.k.a., “the Act”).
2. Holders of NDAs or ANDAs for
compendial drug products should report
changes in chemistry, manufacturing, and
controls specifications to FDA to comply with
General Chapter <467> and 21 CFR 314.70.
The residual solvents are given in three
categories by the ICH Q3C Guidance: Class
1, Solvents to be avoided, Class 2, Solvents to
be limited, and Class 3, Solvents with low toxic
potential. These categories are based on health
experimental hazards.
Classification of Residual
Solvents by Risk Assessment
(as per ICH Q3C)
The term “tolerable daily intake” (TDI) is used
by the International Program on Chemical
Safety (IPCS) to describe exposure limits of
toxic chemicals and “acceptable daily intake”

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Information
(ADI) is used by the World Health Organiza-
tion (WHO) and other national and interna-
tional health authorities and institutes. The
new term “permitted daily exposure” (PDE) is
defined in the present guideline as a pharma-
ceutically acceptable intake of residual solvents
to avoid confusion of differing values for ADI’s
of the same substance.
Residual solvents assessed in this guideline
are listed in Appendix 1 (Q3C) by common
names and structures. They were evaluated for
their possible risk to human health and placed
into one of three classes as follows:
Class 1 solvents: Solvents to be avoided.
These are known human carcinogens,
strongly suspected human carcinogens,
and environmental hazards. As examples
we have Benzene (2ppm Carcinogen),
Carbon tetrachloride (4ppm Toxic and
environmental hazard), 1,2-Dichloroethane
(5ppm Toxic), 1,1-Dichloroethene (8ppm
Toxic), 1,1,1-Trichloroethane (1500ppm
Environmental hazard).
Class 2 solvents: Solvents to be limited.
Non-genotoxic animal carcinogens or possible
causative agents of other irreversible toxicity
such as neurotoxicity or teratogenicity.
Solvents suspected of other significant but
reversible toxicities; for instance, acetonitrile
and methanol.
Pharmaceutical Manufacturing • www.pharmamanufacturing.com
Materials Inspection
Class 3 solvents: Solvents with low toxic
potential. Solvents with low toxic potential
to man; no health-based exposure limit is
needed. Class 3 solvents have PDEs of 50 mg or
more per day. Some common solvents include
Acetic acid, Heptane, Acetone Isobutyl acetate,
Anisole, Isopropyl acetate, 1-Butanol Methyl
acetate.
These are the positive points of the
cooperation among agencies. The best way to
address the downside is to refer to Yogi Berra.
Once, when receiving an award (MVP?),
he was quoted as saying, “I want to thank
everyone who made this award necessary.”
To paraphrase Yogi, the industry would like
to thank all the countries who made this
Guidance necessary.
As has been seen in recent instances (i.e.,
DEG in toothpaste, melamine in gluten, OSC
in heparin), API’s and excipients now need
better and more specific analytical methods
to determine purity. Since more products
are also being made in these countries that
supplied tainted raw materials, newer and
more sensitive methods, along with stricter
limits, are needed. The Guidance from FDA is
another step in the safety of the supply chain
and should be lauded.
20