Why Supplier Utilization is Important in Pharmaceutical Quality Assurance

The Importance of Supplier Utilization

Just as airlines do not conduct quality assurance for jumbo jets themselves, quality assurance of computer systems should fundamentally be the responsibility of suppliers. Pharmaceutical companies should focus on monitoring and supervising (verification) supplier activities, avoiding duplication of work. However, it is important to note that this does not mean pharmaceutical companies can completely delegate their quality assurance responsibilities. According to ICH Q10 guidelines, pharmaceutical companies bear the ultimate responsibility for ensuring quality, while suppliers are expected to perform their work with appropriate capabilities.

Quality Improvement through Optimization of Expertise

Suppliers specialize in specific areas and accumulate specialized knowledge and experience in those domains. The pharmaceutical industry clearly states that “suppliers are required to acquire advanced production management and quality assurance capabilities.” In computerized system quality assurance as well, higher quality can be ensured when system development and testing specialists take responsibility. In practice, Astellas Pharma has outsourced the development and maintenance of core business systems such as Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) systems to external companies, demonstrating quality improvements through delegation to specialized firms.

However, this outsourcing does not eliminate the pharmaceutical company’s responsibility for quality assurance. According to ICH Q10 guidelines, pharmaceutical companies must “ensure that processes are in place to guarantee supervision of outsourced work and the quality of purchased materials,” and must always “bear ultimate responsibility.” Specifically, the pharmaceutical company’s quality unit must:

• Evaluate the suitability and capability of contractors/suppliers prior to outsourcing operations or supplier selection
• Define responsibilities for quality-related activities and communication processes between parties involved
• Monitor and review contractor performance or material quality from suppliers
• Monitor incoming components and materials to ensure they are from approved suppliers using agreed supply chains

Resource Efficiency Supported by Market Trends

The pharmaceutical R&D outsourcing market is projected to grow from $81.23 billion USD in 2023 to $187.8 billion USD in 2032, indicating that the strategy of pharmaceutical companies concentrating on their core areas of expertise while delegating detailed quality assurance work for IT systems to suppliers has become an industry standard. Takeda Pharmaceutical Company has implemented a “selection and concentration” strategy, narrowing disease areas from seven to four, and states that “to achieve appropriate resource allocation, it is important to prioritize research themes,” thus practicing resource efficiency through focus on core operations.

Clarification of Responsibilities Based on Regulatory Requirements

According to guidance from the Ministry of Health, Labour and Welfare (MHLW), “Marketing authorization holders shall thoroughly manage and supervise manufacturers and establish close coordination with manufacturers.” This institutionalizes the division of responsibilities between suppliers and pharmaceutical companies. This clarifies where responsibilities lie when problems occur, enabling rapid response. Pharmaceutical companies can meet regulatory requirements while maintaining efficiency by focusing on monitoring and supervision.

The MHLW “Guideline for Proper Management of Computerized Systems for Pharmaceutical and Quasi-pharmaceutical Manufacturing and Marketing Authorization Holders” (2010) and ICH Q10 guidelines clearly specify requirements for supplier management:

Aspect	Pharmaceutical Company Responsibility	Supplier Responsibility
System Development	Define user requirements and verify deliverables	Develop systems based on specifications and conduct appropriate testing
Quality Assurance	Ultimate quality responsibility and supervision	Implement quality management systems and provide evidence
Documentation	Approval and storage of validation documents	Create technical documents and validation evidence
Problem Response	Final decision-making and regulatory reporting	Root cause analysis and corrective action implementation

Elimination of Duplicate Work with Proven Effects

By establishing quality assurance agreements with suppliers, “the response to troubles and responsibility locations can be clarified,” and “rapid corrective measures when quality defects occur and implementation of regular quality audits” enable the construction of a system that ensures quality while avoiding duplicate work.

Chugai Pharmaceutical has established a system to “conduct EHS and compliance risk assessments at least once every three years,” combining supplier self-assessments with on-site inspections to achieve efficient quality management. This risk-based approach, as recommended in ICH Q10, enables appropriate resource allocation according to supplier risk levels.

Risk Management Utilizing Expertise

In the pharmaceutical industry, a system has been established to “classify suppliers through risk analysis of impacts on workers, local residents, and the surrounding environment from chemicals and biological samples essential for pharmaceutical manufacturing, and conduct evaluations according to supplier risk.” This demonstrates the practice of appropriate identification and management of technical risks by specialized suppliers. In supply chain quality management, it has been confirmed that “early detection and response to quality problems” can “prevent large-scale recalls and reputational damage risks.”

The “Guideline for Proper Management of Computerized Systems” published by MHLW in 2010 (revised 2012) explicitly requires:

• Risk assessment of computerized systems’ impact on product quality
• Supplier audits (vendor audits) conducted on a risk basis
• Establishment of change management systems
• Securing system documentation and records
• Establishment of education and training systems

Alignment with Core Competence Theory

This approach is completely consistent with the core competence theory approach of “companies focusing on core operations and outsourcing non-core operations to external parties.” In Apple’s case as well, they “primarily conduct operations considered important such as product planning, development, and marketing in-house, while outsourcing component manufacturing and assembly to external specialized companies to ensure high management efficiency,” demonstrating the effectiveness of each organization concentrating on areas where they excel most.

Cross-Industry Common Principles

Regarding the comparison with the aircraft industry, both industries state that “suppliers are required to acquire advanced production management and quality assurance capabilities,” confirming that the concept of responsibility sharing in quality assurance systems is established as a cross-industry common concept. However, it should be noted that the specific methods and intensity of supervision differ according to the characteristics and risks of each industry and product.

Recent Regulatory Trends and International Standards

Computerized System Validation (CSV)

The pharmaceutical industry has increasingly emphasized Computerized System Validation (CSV) in recent years. MHLW’s “Guideline for Proper Management of Computerized Systems” (revised 2012) is harmonized with international standards such as GAMP 5 (Good Automated Manufacturing Practice) and PIC/S guidelines, adopting lifecycle concepts from system development to verification, operation, and disposal.

In CSV implementation, while pharmaceutical companies bear ultimate responsibility for quality assurance, they actively utilize supplier documents to efficiently create CSV documents. The Japan Pharmaceutical Manufacturers Association (JPMA) has published reference materials to promote understanding of regulatory requirements among vendors and efficient creation of system reliability assurance documents through cooperation between pharmaceutical companies and vendors.

ICH Q10 and Supplier Management

ICH Q10 (Pharmaceutical Quality System) guidelines clearly state that pharmaceutical companies must have ultimate responsibility for the quality of outsourced work and purchased materials. Specifically:

• Pharmaceutical quality systems extend to supervision and review of all outsourced work and the quality of purchased materials, including management responsibilities
• Pharmaceutical companies bear ultimate responsibility for ensuring that processes are implemented to guarantee supervision of outsourced work and the quality of purchased materials
• These processes must incorporate quality risk management

This means that while pharmaceutical companies monitor and supervise supplier activities, suppliers themselves are responsible for implementing appropriate quality systems and providing evidence of quality assurance.

GAMP 5 and Risk-Based Approaches

GAMP 5 (published in 2008) promotes risk-based approaches in CSV activities. Supplier audits are conducted on a risk basis, and the depth and frequency of audits are determined according to system categories and risk levels. This enables efficient and effective supplier management.

Summary

The effectiveness of efficiency and quality improvement through supplier utilization is demonstrated across market data, corporate case studies, regulatory requirements, and management theory. The approach of pharmaceutical companies delegating computerized system quality assurance to suppliers and focusing on monitoring and supervision is established as an industry best practice, and this trend is expected to continue and expand in the future.

However, it is crucial to understand that delegation to suppliers does not mean abandonment of responsibility. Pharmaceutical companies must always maintain their role of bearing ultimate responsibility for quality and fulfill their monitoring and supervision duties appropriately. Establishing appropriate partnerships with suppliers while clarifying mutual responsibilities and obligations is the key to success.

The following points are particularly important for successful supplier utilization:

1. Risk-Based Approach: Determine the intensity and frequency of supplier management according to system risk levels
2. Clear Responsibility Sharing: Clearly document responsibilities and authority for quality-related activities between pharmaceutical companies and suppliers
3. Effective Communication: Establish and maintain effective communication processes between pharmaceutical companies and suppliers
4. Continuous Monitoring: Regularly monitor and review supplier performance and material quality
5. Documented Quality Agreements: Establish quality assurance agreements in writing and clarify response procedures when problems occur
6. Appropriate Supplier Audits: Conduct supplier audits (vendor audits) appropriate to risk levels and verify audit results
7. Change Management: Establish change management systems and ensure all changes are appropriately evaluated

By properly implementing these elements, pharmaceutical companies can enjoy the benefits of supplier utilization while fulfilling their responsibility for quality assurance.