At the outset of the decade, Ernst & Young issued a report on the top 10 risks for business. Topping the list: regulation and compliance. As the decade has unfolded, perhaps no manufacturing industry has had to cope with this challenge more intensively than the life sciences sector.
In times of accelerating change, pharmaceutical, biotechnology, and medical device companies face a host of compliance challenges, most of them driven by globalization. More complex supply networks, greater transparency expectations, increasingly strict reporting obligations, and highly vigilant enforcement combine to make regulatory compliance a key issue for life sciences manufacturers. The situation is not new, just intensifying.
One of the principal compliance challenges that those in the life sciences experience is an increasingly wide variety of regulatory standards. Consider the United States: in the past, U.S.-based life sciences companies addressed a small number of markets, which meant that the regulatory compliance aspect of their businesses was also limited. This is no longer the case. With emerging markets now representing an increasing percentage of their revenues, the number of markets being sold into has proliferated, and regulatory standards have become a burden. Brazil, Russia, and China—just to name a few—are new markets for companies, so now they not only have to deal with FDA standards, but also the standards bodies in each of these countries. The bottom line is that the number of product submissions has gone up dramatically as a necessary practice for marketing and selling into new areas.
A further challenge is that the regulatory bodies of each country may audit the businesses. In an article anticipating these developments, John Blanchard, principal analyst at ARC Advisory Group, notes, “the industry is now defining the infrastructure, automation architecture, and technology platforms required to change from a science- to a business-based organization.” Because of new business and regulatory requirements, he suggests that life sciences companies foster continuous improvement, enable better process understanding, and justify innovation to improve process design.
These concerns are echoed in Deloitte’s recent “2013 Global Life Sciences “Outlook”:
“Following years of growth and favorable market trends, the global life sciences industry now finds itself facing a challenging ‘new normal.’ A changing health care landscape, expiring patents and generic competition, pricing pressures, heightened regulatory scrutiny, expansion into emerging markets, increasing alliances and acquisitions, and a persistent economic slowdown are prompting global life sciences companies to adopt new business models designed to counter slowing sales growth and declining profitability, deliver better patient outcomes at lower cost, and position them for success inand beyond.”
The report notes that regulatory bodies in various countries are stepping up activities in a range of areas that impact the life sciences industry, including:
- Implementing more stringent quality measures and new drug approval regulations, and limiting sales force access to physicians in accordance with conflict-of-interest policies.
- Increasing the scrutiny of manufacturing processes—particularly materials sourcing from China and other emerging markets—to ensure product safety.
- Improving the collaboration among regulatory agencies in-country and in different markets to strengthen regulatory decision making and enforcement action.
- Introducing new pharmacovigilance legislation from the European Medicines Agency (EMEA) that will significantly increase data provision requirements and the burden on regulatory operations and systems.
Clearly, as life sciences companies address new opportunities to remain or become more competitive in global markets, their ability to integrate technologies to meet regulatory compliance issues will be key. Systems that enforce standard practices in manufacturing, historically not top of mind in the sector, can be expected to emerge as a central part of evolving compliance strategies.