Posted: May 25th, 2022
Quality Management in Pharma
Comparing Pharmaceutical Companies’ Quality Management Processes
Comparing the quality management processes of global vs. domestic pharmaceutical organizations yield significantly different results. The two companies included in this analysis include Johnson & Johnson, a global leader in the pharmaceutical industry and Mylan, a domestic producer of generic drugs. Supplier quality management strategies of each follow a comparable framework that includes reverse logistics which enables traceability (Kumar, Dieveney, Dieveney, 2009). Both companies are also continually evaluated by the Food & Drug Administration, which has the approval of the federal government to launch onsite audits, unannounced, any day of the year (Murray, McAdam, 2007). Quality management and compliance are critical for risk reduction, not just from a governance standpoint but from an operating expense reduction one as well (Fiscus, 2009). The process of traceability, which is critical for quality management and compliance, is compared between these two firms.
The following diagram provides a process-based analysis of traceability. The functional areas of an organization are listed as rows, with the traceability process defined by specific steps. Figure 1, Traceability Process Workflow, illustrates how collaborative and integrated the entire traceability process is within a pharmaceutical producer. This level of integration is critical from a process standpoint as government-defined quality standards require traceability throughout any pharmaceutical organizations’ supply chain (Murray, McAdam, 2007).
These process steps vary in terms of their depth and global scalability by the two companies included in this analysis. For Johnson & Johnson, the need for managing global traceability and recalls is critical, and as a result their distributed supply chain management systems and manufacturing centers have upstream traceability procedures defined while Mylan does not. Upstream traceability for Mylan is not necessary as they are a generic drug manufacturer and rely on a direct sales force. Johnson & Johnson also has automated the supplier batch traceability function and is piloting the use of Radio Frequency Identification (RFID) to more efficiently manage their supply chains (Hook, 2010). Mylan is not planning on adopting RFID for warehouse management, and is instead concentrating on regulatory compliance and reverse logistics. Mylan is also defining supplier quality management metrics of performance and has invested heavily in supplier audits and Six Sigma quality management.
Figure 1: Traceability Process Workflow
Sources: (Connolly, 2007) (Hook, 2010) (SAP Practice on Life Sciences Supply Chains)
Mylan sees themselves as a process goods producer in the pharmaceutical industry while Johnson & Johnson has a more diverse series of products and divisions, with 57% of total revenues in the last fiscal year from pharmaceuticals. Due to this difference in their business models, raw materials and components supplier auditing, a key functional areas of the traceability process, is much more diverse and requires even greater auditing than the comparable process within Mylan. Johnson & Johnson must also be very vigilant regarding how quality impacts their corporate and product brands while Mylan is often labeled as a generic drug by distribution outlets including grocery and mass merchandiser chains. Quality as a product differentiator must be an explicit goal in defining audit objectives in highly regulated industries if manufacturers are to retain and grow the trust of their suppliers and distribution channels (Schnoll, 2008).
How Traceability Contributes to Great Competitiveness
Traceability is essential for both companies to be in compliance to domestic and global pharmaceutical standards and laws, yet this is just the baseline from which both companies analyzed here begin from. For traceability to be effective in contributing to greater competitiveness, the process shown in Figure 1 must be seen as always being improved. The tangential processes that are related to traceability, from reverse logistics and supply chain management to pricing and brand management, all have a major impact on each company’s ability to maintain its pricing structure and business model. In effect this process is pivotal to each company attaining its strategic goals. Traceability also connotes accountability and responsibility, both of which are critical if a bad lot of ingredients are delivered. In the unfortunate event of this occurring the speed of response in tracking the source of the materials to isolating which products and the distributors stocking them are affected is critical. To not have this ability would seriously cripple the reputations and trust of companied who don’t have answers to these tough questions when they arise during a product recall.
Quality Management and Market Position
Form Mylan, their quality management strategies, systems and processes are their brand; their quality is their reputation. As a generic drug producers, thee trust grocery chains and mass merchandisers have in them is in effect their marketing. Quality management is the best possible strategy for them to adopt to protect their reputation and keep earning trust, even if they are sold inc4redients that somehow make it through inbound inspection and supplier quality audits.
From Johnson & Johnson, their global brand is worth literally billions of dollars. The financial health and stability of their entire company is based on the reputation they have for trustworthiness, transparency and quality. In the pharmaceutical industry it would be impossible for the Gulf of Mexico oil spill to occur. And for that reason alone, quality management deserves much attention and focus strategically in organizations serving the public with medications.
Christine Connolly. (2007). Sensor trends in processing and packaging of foods and pharmaceuticals. Sensor Review, 27(2), 103.
Peter Enderwick (2009). Avoiding quality fade in Chinese global supply chains: Designing appropriate governance structures. Business Process Management Journal, 15(6), 876-894.
Fiscus, P. (2009). Global Risks for Drug Manufacturers. Risk Management, 56(3), 50-54,3.
Hook, B. (2010, March). Traceability and Scalability: A New Era in Healthcare Logistics Supply Chain Europe, 19(2), 18-19.
Sameer Kumar, Erin Dieveney, & Aaron Dieveney. (2009). Reverse logistic process control measures for the pharmaceutical industry supply chain. International Journal of Productivity and Performance Management, 58(2), 188-204.
Elizabeth Murray, & Rodney McAdam. (2007). A comparative analysis of quality management standards for contract research organisations in clinical trials. International Journal of Health Care Quality Assurance, 20(1), 16-33.
Schnoll, L.. (2008). Ensuring Supplier Quality. Quality Progress, 41(8), 64-66.
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