A Strategic Approach to CMO Serialization Compliance

Cognizant 20-20 Insights | January 2018

Executive Summary

Serialization compliance timelines across the

globe are fast approaching, pushing pharma-

ceuticals companies to quickly meet compliance

requirements. Contract manufacturing orga-

nizations (CMOs) have, over time, become an

important component in the pharma manufac-

turing ecosystem. In fact, CMOs are expected to

generate $79.24 billion in revenue by 2019.1 Given

this codependency, pharmaceuticals companies

need to collaborate closely with their CMO part-

ners on serialization to avoid compliance-related

supply chain disruptions.

Since pharma companies generally deal with

multiple CMOs across different markets and prod-

ucts, CMO serialization is much more complex

than internal enterprise serialization. Implemen-

tation of a CMO serialization solution is also more

challenging given that teams from two different

organizations need to align and collaborate within

an established framework and the processes of

their respective organizations to ensure that the

“integrated” solution works seamlessly across

organizational boundaries.

A Strategic Approach to CMO Serialization Compliance

Pharmaceuticals companies must address the risk of supply chain disruptions related to products requiring serialization to meet impending regulatory mandates. This means closely collaborating with contract manufacturing organization partners and jointly implementing compliance solutions.

COGNIZANT 20-20 INSIGHTS

Cognizant 20-20 Insights

2A Strategic Approach to CMO Serialization Compliance |

A strategic approach to CMO serialization covering

all phases of program implementation is needed to

ensure that the solution landscape is comprehen-

sive, effective and efficient.

This white paper describes a strategic approach

for CMO serialization, covering all the aspects

a pharma company needs to consider when

undertaking CMO serialization programs. The

framework describes an execution approach (in

various phases) to structure CMO serialization

activities and addresses in detail the factors to

be considered in each phase. This paper also

identifies key outputs in each phase and provides

recommendations for each phase to guarantee

successful CMO serialization, thereby ensuring

regulatory compliance and product supply.

THE SERIALIZATION CHALLENGE

By 2020, approximately 90% of prescribed med-

ications worldwide are expected to be serialized.2

Pharma companies are in various stages of imple-

menting serialization across their supply chain to

meet emerging regulatory mandates. As regula-

tions across the globe are still evolving, a standard

approach to serialization with well-established

ways of working is still in progress.

Beyond packaging, serialization also impacts busi-

ness processes in supply chains, manufacturing

operations, quality, inventory management and

regulatory reporting. Integrating all these organi-

zational components is an arduous undertaking for

most companies. Serialization implementation is

further complicated when a company engages or

outsources manufacturing and packaging to CMOs.

A global pharma company will typically engage

with multiple CMOs across geographies; each CMO

is likely to have different approaches and strate-

gies to comply with serialization regulations. This

puts the pharma’s whole serialization initiative at

significant risk, a risk that rises with the volume of

products outsourced to CMOs.

Based on our experience with CMO serialization,

pharma organizations need a structured, proactive

and strategic approach that ensures successful

CMO collaboration. Our CMO serialization frame-

work (explained in the following section) provides

the required structure and covers the dimensions

that pharma companies must consider when under-

taking CMO serialization.

A CMO SERIALIZATION FRAMEWORK

Our framework provides a structured approach

to ensure successful CMO serialization collabora-

tion, and enables a pharma company to approach

CMO serialization in a logical sequence. Pharma

companies also need to implement serialization

across their manufacturing units. So our frame-

work considers the existing serialization stack as

an important input to all CMO serialization activ-

ities and recommends alignment with internal

serialization initiatives.

The framework’s execution approach has four

distinct phases covering the CMO serialization

journey (see Figure 1, next page). It addresses the

different factors/dimensions that need to be con-

sidered during the different phases. All phases

in our execution approach, as well as input fac-

tors/dimensions, are geared toward two primary

objectives: ensuring product supply (no supply

disruptions) and regulatory compliance.




1

Cognizant’s Framework for CMO Serialization

Figure 1

We now will take a deep dive into the four phases

of our execution approach, including relevant con-

siderations and key outputs and recommendations.

PHASE 1:

CMO SERIALIZATION STRATEGY

The first and arguably most important phase is

understanding the overall impact of CMO seri-

alization and devising a strategy that enables a

pharma company to successfully collaborate with

CMOs. And a first step in grasping the effect of

CMO serialization is to know how many products

and CMOs are impacted. Most pharma compa-

nies have relationships with numerous sizeable

CMOs. One director of external supply at a major

pharma company, for example, said his company

has hundreds of CMOs globally.3 Understanding

which CMOs will be impacted by serialization will

help to determine the overall scope of the CMO

serialization initiative.

The company also needs to align its long-term

product supply strategy in various serialization

markets. This will enable the pharma to assess

whether an investment in a CMO serialization

solution may or may not be warranted – partic-

ularly if some products do not figure into the

business strategy for a specific market. Because

regulations can vary greatly market to market

(i.e., labeling requirements, country-specific

reporting, etc.), it is important to know if the CMO

partner is capable of navigating the regulatory

landscape. Strategic evaluation of the CMO and

its capabilities is also required to make a decision

on long-term relationship potential and continu-

ing investment on a joint serialization solution.

Parallel to understanding the scope of CMO serial-

ization, the pharma company at this stage should

also be thinking about broad CMO serialization

solution options. Alignment with the existing or

planned enterprise serialization solution stack

is a must; beyond this, the company should

identify broad solution options and business

processes for exchanging serialization data with

CMOs. Options to consider include automated

business-to-business exchange mechanisms, net-

work integration solutions and semiautomated

data exchange mechanisms to integrate with less

sophisticated CMOs.

CMOSerialization

Strategy

Pro

du

ct S

up

ply

Reg

ula

tory

Co

mp

lian

ce

CMOLandscape

CMO Serialization Framework

Execution Approach

Serialization Solution Stack

Data Exchange Standards

Enterprise Data Security and Governance

SerializationRegulations

Supply ChainStrategy

CMOSupply Team

Enterprise ProgramExecution Methodology

CMO Engagement and Implementation

Planning

CMO Solution Design

CMOProgramExecution

4A Strategic Approach to CMO Serialization Compliance | 1

Alignment with the existing or planned enterprise serialization solution stack is a must; beyond this, the company should identify broad solution options and business processes for exchanging serialization data with CMOs.

We also urge companies to undertake a risk

assessment exercise at this stage. Serialization

by itself introduces significant risks concerning

good manufacturing practice and good distri-

bution practice (GxP) related to IT solutions and

business processes. According to U.S. Federal

Drug Administration (FDA) guidance,4 each party

performing manufacturing tasks is responsible for

ensuring compliance with current good manufac-

turing practice (CGMP) related to those activities.

Enabling serialization with a CMO introduces addi-

tional risks, and companies should understand

these additional risks and document potential

mitigations. According to one study,5 enterprises

should apply standard GxP quality management

principles and requirements immediately after

identifying the serialization approach.

Finally, it is important to understand the commercial

aspects of enabling CMO serialization. According to

a recent study,6 a primary and critical question con-

cerning CMO serialization is who pays for enabling

serialization on the packaging lines? Serialization

is quickly becoming the cost of doing business for

both the CMO and brand owners, depending on

how the costs are shared contractually. Upgrading

a packing line to enable serialization with aggre-

gation capabilities ranges between $250,000 and

$1 million, depending on the level of sophistication

required. Packaging lines that utilize manual pack-

ing are at the low end of the price range but have a

greater probability of error.

Cost factors to take into account include soft-

ware licensing fees, monthly/annual subscription

fees, serial number/transaction-based fees, stor-

age costs, internal systems integration and the

cost of validating these systems. It is important

to evaluate the differences in functionality and

cost between a single-tenant architecture and a

network-tenant architecture to address specific

business needs. Companies must study the pric-

ing and profitability implications in each market

in order to effectively negotiate with CMOs.

Key outputs of this phase:

• Understanding of overall CMO scope.

• Supply strategy for serialized products manu-

factured by CMOs.

• Broad CMO serialization solution options and

business processes.

• GxP risks and mitigations related to CMO

serialization.

• Commercial considerations and negotiation

strategy.

Recommendations for this phase:

• Create a multidisciplinary team to draw up a

CMO serialization strategy. Include business,

quality, supply chain, manufacturing oper-

ations and solution architects. Involve and

educate supply chain/manufacturing opera-

tions teams responsible for CMO relationships

about serialization.

• Evaluate product portfolios in every market


2


and look at supply option strategy afresh in

light of serialization.

• GxP risk assessment is critical. Conduct a

workshop to tease out the risks associated

with CMO serialization; construct a mitigation

plan with the internal quality assurance team.

• To engage CMOs and provide guidance, it is

helpful to define the commercial constructs

related to serialization and finalize a negoti-

ating strategy.

PHASE 2: CMO ENGAGEMENT AND IMPLEMENTATION PLANNING

Once an organization has readied its CMO strategy,

the next phase is to engage CMOs and jointly pre-

pare individual implementation plans. In order to

select key focus areas, it is helpful to construct a

three-dimensional matrix covering timelines for reg-

ulatory mandates, product portfolios in particular

markets and contributed revenues. To greatly facil-

itate such activities in this phase, we recommend

using the existing organizational channels (teams)

that manage and monitor CMO relationships.

It might be necessary to prioritize CMOs, depend-

ing on how many CMOs the pharma company

engages. A leading CMO typically manufactures

products for 48 of the top 50 pharmaceuti-

cals companies.7,8 This means the CMO must

work with numerous pharmas to comply with

the serialization regulations during roughly the

same timeframe. Depending on the influence

the pharma company has on the CMO (based on

volume and revenue), it might be a challenge to

align on timelines and solutions.

Another aspect to consider is documenting CMO

requirements. Detailed IT requirements should

be documented, based on the broad IT solution

options identified in the previous phase. Consider

documenting the required artwork requirements

for each logistical level in all the markets. This

document will form the baseline for discussions

with CMOs and help to define implementation

timelines more realistically.

Finally, a pharma company must think through

and finalize all serialization enablement elements

such as timelines, the serialization solution stack,

quality requirements and costs. Current commer-

cial and supply agreements should be leveraged

to include all the necessary serialization elements.


• A well-defined CMO engagement approach.

• Documented IT and artwork requirements.

• Jointly-agreed-upon implementation plan.

• A draft of commercial and supply agreements

covering serialization activities.



3

Pharma companies should work with the CMO to build the framework for the aggregation of serialized data into their strategies to ensure a fully-functioning traceability architecture for upcoming regulations.


• Educate CMO supply teams on serialization

and ensure they are aligned with the overall

strategy, timelines and requirements.

• Engage early with CMOs. It took approxi-

mately a year for one of our pharma clients

to agree on the requirements and develop

a solution with a CMO. Since the company

engaged with that CMO far ahead of the

compliance timeline, it had enough time to

manage requirements, undergo negotiations

and prepare for impending regulatory shifts.

• Document CMO requirements.

• Review existing commercial agreements with

CMOs, and modify as necessary to include

serialization. This generally takes much

longer than expected as many rounds of

negotiations may be required.

PHASE 3: SOLUTION DESIGN

This phase establishes common understanding

and leads to finalization of both technical aspects

and business process aspects of the CMO serial-

ization solution. As a first step, pharma companies

and their CMO partners need to clearly scope out

serialization activities and each entity’s associ-

ated responsibilities. This sets the requirements

for technical and procedural elements of the solu-

tion required and agreed to by both entities.

To illustrate the above point, a recent study reveals

that the question of which party generates serial

numbers is among the top concerns for CMOs and

pharma companies.6 A serial number can be gen-

erated by the authorization holder and supplied to

the CMO, or the CMO can generate the serial num-

bers on behalf of the authorization holder. Either

way, the two entities should exchange the serial

number and serialization batch data for reporting

purposes. The two should agree in advance on the

data exchange format, including serial number

format requirements and the corresponding

master data requirements.

Companies should give due consideration to the

aggregation requirements and the capabilities of

the CMO to provide aggregation data. Pharma

companies should work with the CMO to build the

framework for the aggregation of serialized data

into their strategies to ensure a fully-functioning

traceability architecture for upcoming regula-

tions. Although aggregation may not be required

to comply with the regulations in markets such as

the EU, Korea and Saudi Arabia, a pharma com-

pany may decide to implement aggregation as a

standard and may expect CMOs to follow suit.

Another key aspect requiring agreement between

the CMO and pharma company concerns data

standards, security and governance. While it may

appear to be an additional requirement to share

serialization-related information over and above

the commercial information (which may already

be shared electronically), the downstream

implications of how and where the product and



serialization information is used in the CMO and

pharma company make things quite complex. We

strongly recommend that mechanisms to ensure

alignment on data standards, security and gov-

ernance between CMO and pharma company be

established early to address design and opera-

tional issues on an ongoing basis.

As part of the solution design exercise, compa-

nies also need to evaluate or design current/

future mechanisms of sharing information/data

in a scalable manner to meet requirements in a

serialized environment. We have seen solutions

ranging in sophistication from e-mails to elec-

tronic data exchanges to cloud-hosted solutions

used by CMOs and pharma companies. Various

options need to be evaluated, depending upon a

number of factors such as existing data-sharing

mechanisms, data volume, long-term supply chain

strategy, the number of CMOs for integration, etc.


• Design of CMO serialization solution.

• Clearly identified roles and responsibilities of

the pharma company and CMO.

• Evaluation of network integration solutions

and a mechanism to securely exchange seri-

alization data.


• Finalize the serialization activities scope first

with the CMO.

• Reach agreement/alignment on data stan-

dards, security and governance with CMOs.

• Investing in a network integration solution

may make sense given serialization data

exchange requirements. A cost-benefit anal-

ysis may be required.

• One design may not fit all. Two or three

variations of the solution may be needed to

address all CMOs, given the expected vari-

ability in their capabilities and integration

requirements.

CMO Serialization Solution Landscape

Scope Definition Solution Design

Regulatory Needs Organizational Capabilities Data Exchange Mechanisms

Serialization Strategy CMO CapabilitiesData Standards, Security

& Governance

• Serial Number Generation• Serial Number Application• Serial Number Reconciliation• Serial Number Sharing with Supply Chain Partners• Regulatory Reporting• Exception Handling

• Business Process • Order Processing • Serial Number Reconciliation, Exception Handling and Sharing with Supply Chain Partners • Regulatory Reporting • Technical (Software) Solution • Data Exchange • Exception Handling

Figure 2

Conceiving and Building a Serialization Solution



4 PHASE 4:

PROGRAM EXECUTION

Integration projects across organizations are

among the most intricate software missions.

This is because they involve agreement and

alignment between organizations that often have

their own methodologies, applications landscape,

data standards and governance practices, as well

as IT or business constraints. We have worked on

many projects that require two or more organiza-

tions to join hands and move successfully toward

the goal. All the tenets of strong program/project

management are applicable to serialization, with

the following being especially critical.


• Overall execution/project plan to enable CMO

serialization.

• Established governance structure and escala-

tion mechanism.

• Change management process to cope with

the dynamic nature of serialization.


• Consider establishing a program office to

undertake CMO integrations if the number of

CMOs is large.

• Develop a couple of standard execution

approaches and supporting templates that can

be replicated across CMOs based on various

solution designs. This can increase efficiencies

in delivering projects as it avoids rework and

provides clarity to execution teams.

• Project/program governance should ensure

that knowledge is shared or carried across

projects, and that project execution metrics

are established and tracked to ensure improve-

ment with each integration in an agile fashion.

• Consider running a pilot CMO implementation

project to understand which areas of the busi-

ness and IT capabilities require additional work.

We also recommend that pharmas develop

a business-as-usual process as part of the

pilot project that maps all activities (engage-

ment, documentation, IT connection, business

change) required to enable CMO serialization.



LOOKING FORWARD

Complying with mandatory serialization regulations

across geographies is a herculean undertaking. The

complexities of serialization implementation and

regulatory compliance increase when pharma

companies have CMOs that supply a variety of

serialization-impacted products. It is essential

for pharmas to take a holistic view of the process

and develop a CMO serialization strategy as a

first step to ensure that the company and its CMO

partners successfully scale up organizational

capabilities to meet serialization challenges.

Our OneSerial framework can accelerate your

serialization road map. After an initial assessment

of your organization’s supply chain landscape, the

OneSerial framework can be deployed to define

and document user and architectural require-

ments, regulatory requirements, implementation

plans, process flows, road maps, business cases

and project lifecycles. In addition, the framework

includes a suite of templates to streamline the

serialization process in the supply chain. The

OneSerial framework also provides guidance on

vendor selection, program management, orga-

nizational change management, and testing and

validation services.

Given approaching regulatory deadlines, ensuring

the success of CMO serialization initiatives requires

proper planning, internal alignments across teams,

early engagement with CMOs, flexible architecture,

investment in integration solutions and robust pro-

gram/project management.

While other components of the serialization solu-

tion stack pose unique challenges, determining

CMO serialization scale and scope is the most com-

plex step in the serialization solution landscape,

requiring significant efforts to overcome. It might

be tempting to wait until all the uncertainties

surrounding regulations, technological solutions

and supply constraints are sorted out. However,

pharma industry decision-makers must bear in

mind that serialization is mandatory, not optional.

Moreover, delaying serialization poses a real risk

of product disruptions in key revenue-generating

markets and potential for financial setbacks.



Madhukar SabooSenior Manager, Cognizant Business Consulting

Karthick Venkatachalam Senior Consultant, Cognizant Business Consulting

Madhukar Saboo is a Senior Manager within Cognizant Business Con-

sulting. He has nearly 17 years of experience in consulting, project

management, and solution design and business development within

the life sciences industry. Madhukar specializes in regulatory affairs

and compliance, quality assurance, manufacturing and supply chain

within the life sciences industry. He holds a bachelor’s degree in chemical

engineering and an M.B.A from Indian Institute of Management, Kozhi-

kode. Madhukar can be reached at [email protected] |

LinkedIn: www.linkedin.com/in/madhukar-saboo.

Karthick Venkatachalam is a Senior Consultant within Cognizant

Business Consulting, focusing on manfacturing and supply chain

challenges. He has 10-plus years of experience in business consult-

ing and IT transformation. In his current role, Karthick works as a

serialization business consultant for a global top-10 pharma com-

pany. He holds a bachelor’s degree in computer science engineering

and a pan-European master’s degree in IT management. Karthick

can be reached at [email protected] | Linke-

dIn: www.linkedin.com/in/karthickvenkat.

ABOUT THE AUTHORS

FOOTNOTES

1 “Pharmaceutical Contract Manufacturing World Market to Reach $79.24bn In 2019, New Visiongain Study Predicts,” www.

visiongain.com/Press_Release/761/%E2%80%9CPharmaceutical-Contract-Manufacturing-World-Market-To-Reach-79-24bn-I

n-2019%E2%80%9D-New-Visiongain-Study-Predicts.

2 Dirk Hendrik Kneusels, “The CMO Serialization Threat,” Antares Vision Germany.

https://themedicinemaker.com/issues/0116/the-cmo-serialization-threat/.

3 “For big pharma, ten is the magic number of CMOs says ex-GSK Director,”

www.outsourcing-pharma.com/Contract-Manufacturing/For-big-pharma-ten-is-the-magic-number-of-CMOs-says-ex-GSK-Director.

4 “Contract Manufacturing Arrangements for Drugs: Quality Agreements,” FDA, November 2016,

www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm353925.pdf.

5 Dana Buker and David Loy, “Serialization – A worldwide challenge,” www.ispe.org/pharmaceutical_engineering/12so-buker.pdf.

6 “Top answers for Strengthening Serialization Collaborations, Tracelink,” http://go.tracelink.com/Brand-CMO-Q-and-A-eBook.html.

7 “CMOs: Pharma’s Heavy Lifters,” www.pharmamanufacturing.com/articles/2015/cmos-pharmas-heavy-lifters/.

8 www.catalent.com/index.php/about-us/.

ACKNOWLEDGMENTS

The authors would like to acknowledge the support and inputs from Pari Sanghavi and Adam Barlett, a Senior Director and an

Associate Director, respectively, within Cognizant’s Life Sciences business unit, for helping to shape this point of view.

mailto:Madhukar.Saboo%40cognizant.com?subject=

mailto: [email protected]

https://www.visiongain.com/Press_Release/761/%E2%80%9CPharmaceutical-Contract-Manufacturing-World-Market-To-Reach-79-24bn-In-2019%E2%80%9D-New-Visiongain-Study-Predicts



https://themedicinemaker.com/issues/0116/the-cmo-serialization-threat/

http://www.outsourcing-pharma.com/Contract-Manufacturing/For-big-pharma-ten-is-the-magic-number-of-CMOs-says-ex-GSK-Director

http://www.fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm353925.pdf

http://www.ispe.org/pharmaceutical_engineering/12so-buker.pdf

http://go.tracelink.com/Brand-CMO-Q-and-A-eBook.html

http://www.pharmamanufacturing.com/articles/2015/cmos-pharmas-heavy-lifters/

http://www.catalent.com/index.php/about-us

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A Strategic Approach to CMO Serialization Compliance