Offshoring pharma manufacturing increases risk, says study
pharmafile | September 12, 2011 | News story | Manufacturing and Production |Â Â Puerto Rico, contract manufacturing, pharma manufacturing newsÂ
Drugs produced in offshore manufacturing plants – even those run by US manufacturers – pose a greater quality risk than those prepared on the US mainland, according to a new study.
The results suggest that companies who manufacture offshore to cut costs may be placing themselves at risk of reputation-damaging and costly quality issues.
Researchers at Ohio State University’s Fisher College of Business found that drugs produced in Puerto Rican plants owned and operated by US pharmaceutical firms were more likely to have quality problems than those produced by the same firm in a matched plant in the USA.
Puerto Rico was long considered a safer offshoring location than other countries because of its proximity to the USA and oversight by the FDA, but has suffered a series of blows to its reputation in recent years. For example, GlaxoSmithKline was fined $750 million for troubles at its Cidra plant in Puerto Rico last year, and the researchers point out that this sum “may be dwarfed by the adverse press”.
“The results show how difficult it is to transfer world-class quality control to an offshore plant, even under the best of conditions,” commented John Gray, lead author of the study which is published in the Journal of Operations Management.
The team examined 30 pairs of regulated manufacturing plants in the USA and Puerto Rico, matched by the parent company and type of product manufactured there. The survey included both prescription and over-the-counter medicine-producing plants, and included an analysis of inspection reports issued by the FDA and citations for Good Manufacturing Practice (GMP) non-compliance.
The FDA reports were given a score by four independent experts in an attempt to quantify the level of quality risk at each facility. They found a “slightly greater” but statistically-significant increase in risk for the Puerto Rican plants.
“We believe the quality differences we found in Puerto Rican plants were driven by challenges in transferring knowledge from headquarters to the plant, due to cultural differences, primarily differences in language and values,” noted Gray.
The analysis found that quality was not related to the distance between the plant and the company headquarters, the education of the local population near the plant, or the number of similar drug manufacturing plants in the area.
The authors point out there is still a very low probability that consumers would be exposed to poorly-made medicines from Puerto Rico, and the findings have little impact for the general public.
“It is a small practical difference for consumers. But for companies, even a slightly higher probability of a quality error can be a substantial problem,” according to Gray.
Given that the study was confined to Puerto Rican plants it may be that the findings cannot be extrapolated to other offshoring locations, but they contend that if cultural differences are the primary reasons for the differences in quality risk found here, the risks may actually be lower in Puerto Rico than they would be elsewhere.
Phil Taylor
Related Content
Devastation to Puerto Rico threatens global medicine supply
The destructive forces of Hurricane Maria have caused untold damage to the island nation, with …
Contact manufacturing ‘is changing the industry’, report finds
The global market for pharma and biopharma contract manufacturing is expected to reach more than …
AbbVie invests $30 million to expand in Puerto Rico
AbbVie is investing $30 million to expand one of its sites in Puerto Rico, and …
