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Manufacturing site rationalization – a regulatory and logistical challenge

Posted on the 11th June 2024

GLHA Focus On CMC Ivan Fisher 1

Dr Ivan Fisher, Vice President of Commercialization and Commercial Development at G&L, examines the the intricate dynamics of streamlining manufacturing operations amidst the evolving global regulatory landscape.

The global pharmaceutical industry faces the dual challenges of mounting pricing pressures and increasing manufacturing costs.

Given the significant challenges of COVID-19, global inflation, and geopolitical unrest, a significant number of “blockbuster” products coming off patent in the coming years, and the global economic challenges faced by a post-pandemic world, realizing cost savings is more important than ever, as many companies are trying to achieve more from less.

Whilst merger and acquisition activities have been a mainstay and driving force of the industry over previous decades, recent years have seen several “demergers,” “spin-offs” or “splits,” especially about Consumer Healthcare divisions. Nonetheless, mergers and demergers present challenges and opportunities for the companies concerned, not least the opportunity to identify efficiencies, synergies, and cost savings.

Cost of goods sold

Central to this issue is the cost of goods sold (COGS), the direct costs attributable to the manufacture of goods sold by a company. For pharmaceutical companies, this is commonly in the range of 25%-50% of total sales revenue, with generics companies representing the higher end of this range. By contrast, this may be several times higher than the cost of a pharmaceutical company’s R&D activities. Therefore, M&A and spin-off activities represent an opportunity to take stock of potential cost savings and operational efficiencies/synergies between manufacturing sites to minimize this cost. Central to this can be the rationalization of supply chains and manufacturing sites and the potential consolidation of Qualified Person (QP) release.

Manufacturing site rationalization strategy

Manufacturing site rationalization (or ‘source transfer’) strategy can be a complex and multifactorial logistical process. Each manufacturing site will possess several different qualities (not always quantifiable) that will inevitably be considered during the decision-making process. These may include:

  • Manufacturing site capacity
  • Manufacturing site technology
  • Location, transportation, and ease of access
  • Cost of workers (an aspect of COGS)
  • Cost of materials (an aspect of COGS)
  • Specialization (e.g., biotechnology, vaccines, and biologics)
  • Local economy (e.g., strength of currency, available workforce)
  • Local intellectual property laws (e.g., risk to confidential industrial information)
  • Geopolitical considerations (e.g., regional stability, risk, and international relations)
  • Regulatory environment (e.g., is an ex-EU site GMP-compliant or open to inspection? Is the local regulatory authority sufficiently sophisticated?)
  • Potential disruption to stock and supply network
  • Potential manufacturing compliance issues
  • Local employment law and costs of closure or redundancies
  • Site potential for future expansion or reduction in capability.

Regulatory strategy and requirements for source transfer

As part of the manufacturing site rationalization activity, source transfer is the essential process of transferring the manufacture of drug product and drug substance to different sites while ensuring continuous product supply to all markets. From a regulatory perspective, numerous challenges must be considered, especially if the product is marketed globally. Central to the success of such a project are (Fig.1):

  • Regulatory information filed in each marketing company
  • Details of any commitments made to authorities
  • Will company registration be required in any of the impacted markets?
  • Political and geopolitical considerations
  • Regulatory approval timelines
  • Effective gathering and maintenance of regulatory intelligence
  • Effective (yet flexible) upfront planning, coupled with strong, clear communication and direction.
Success Factors

Fig.1. Components of Success.

Conversely, several issues could stop or seriously delay a source transfer. Typical issues encountered that may cause serious delays if not addressed early within the transfer process are (Fig.2):

  • Lack of clear financial benefits
  • Lack of company registration
  • Lack of product registrations in the country of the receiving (new) site
  • Potential compliance issues following review of site practices against registered details
  • Artwork and registration samples (required at the time of submission)
  • Certificate of pharmaceutical products (CPPs) are needed
  • Political constraints (supply from the receiving site is unacceptable to market)
  • Time required to put capital facilities in place
  • Realistic confirmation of timeline
  • Longer than expected regulatory timeline
  • Above-normal level of dossier submissions through external regulators
  • Absence of appropriate third-party contracts
  • Inadequate planning of auditing and approval of contractors.
Impacts of delays

Fig.2. Contributors to Delays.

The central regulatory (RA) team is a key stakeholder in the transfer process and provides high-level advice when the project team is initially assembled. As the project progresses through the various milestones, central regulatory invariably becomes increasingly involved in the project.

If there is a separate independent RA team working on the rationalization project, they must collaborate and align with the regular RA teams who may also be planning or in the middle of regular CMC maintenance variations. If a MA is already "occupied" by another ongoing CMC variation, it could "block" a critical manufacturing rationalization variation.

Strong cross-functional collaboration (Manufacturing, QA, Supply, RA, etc.) is imperative. Manufacturing and QA need to determine the scope of changes to be included during the source transfers and act to freeze the scope to avoid reworking of strategy and extending timelines. Throughout the entire process, RA status reports of (planned and actual) submission & approval dates are critical to ensure regular alignment with Production/Supply staff at the Sites. This is to align production ramp-down (in closing/donating site) with the corresponding “ramp up” of production in the receiving/new site.

The receiving (new) site personnel, together with central regulatory, should draft the product transfer information and identify any differences to the current marketing authorizations (registered details, packaging and artwork, and labeling). Where manufacturing and packaging are to take place at different sites, the manufacturing receiving site(s) coordinates with the packaging sites and provides the product transfer information. The receiving site should ensure the product transfer information provides comparative details of the current site and receiving site manufacturing and packaging processes, analytical methodology, and specifications for the appropriate regulatory strategy to be devised.

Any proposed changes to the appearance of the dose form (e.g., color, pack type, etc.) should have been discussed and agreed upon with commercial groups in the relevant markets. The product transfer information should provide a list of all markets that are supplied by the current site, and marketing groupings such as “General Export,” should be clarified and specific markets listed, as the regulatory strategy is market-specific. The central regulatory team will then document the proposed regulatory strategy for the transfer based on current market intelligence, dossier data requirements, and other items, such as CPPs and price certificates. Typically, the regulatory strategy should (Fig.3):

  • Include a review of product/marketing company implications
  • Include a review of current registered details (product history)
  • Include regulatory timelines
  • Include stability requirements according to the International Council on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH) for zones/regions
  • Review availability of certificate of pharmaceutical production and supply (CPPS)
  • Review impact on referencing pricing (e.g., Gulf markets)
  • Include artworks/samples requirements
  • Establish a list of Ministries of Health (MoH) likely to inspect the receiving site
  • Include details of markets that will require import permits for samples, etc.
  • Highlight issues and risks, determine actions to minimize areas of negative impact
  • Suggest mitigation actions.
Good Strategy Indicators

Fig.3. Good Strategy Essentials.

Local in-market regulatory teams are often small and receive many different regulatory filings from global functions (new submissions, renewals, labeling variations, PSUR updates, etc.), often under considerable pressure. As Manufacturing Rationalisation projects are usually high volume and involve aggressive timelines, robust forward planning in collaboration with local RA teams is important. This should ensure a clear delineation between business-critical and “non-urgent” regulatory changes, and subsequent prioritization.

Once central regulatory has received all market-specific data, the appropriate dossiers/data packages should be compiled. Drafts are sent to the manufacturing sites and market affiliates for comments before these are finalized and published.

Dossiers/data packages should be despatched along with additional market-specific supporting documents and samples/artworks, to the local country affiliates (or agents). The affiliates/agents should complete appropriate MoH forms in the local language, arrange for the appropriate fees to be paid, and then submit the dossier/data package to the regulatory agency and, where possible, highlight the priority with them.

Central regulatory should manage the handling of any questions raised by regulatory agencies and should agree on the approach to resolve these questions with the manufacturing site and affiliate/agent and prepare responses accordingly. It is essential that the manufacturing site provides adequate support and appropriate data and gives prompt responses to central regulatory enabling responses to agency questions to be filed.

Central regulatory should inform the new manufacturing site on approval of source transfer registration. The manufacturing site can then manage supply via the logistics team in conjunction with market affiliates.

Regulatory requirements for international markets

From a practical perspective, there are various elements to consider for source transfers within international markets. These are summarised in Table 1.

Table 1: Regulatory requirements and considerations for international markets

Key requirements Comments

Key requirements Comments


A CPP (apostilled or legalized) is required for many international markets.

CMC dossiers (complete CMC registration file) or impacted, relevant CMC sections (mini dossier)

It is a requirement to provide updated drug substance and drug product CMC dossiers for certain international markets. Some markets (e.g., Middle East/Gulf/Latin America) are likely to require a complete CMC dossier, which may then need to be translated into local languages. For Asia-Pacific markets dossiers are required to be in a specific format, i.e., ASEAN Common Technical Dossier (ACTD).


Generation of stability data at different climatic zone conditions (e.g., Zone IVb for Brazil and some Asia-Pacific markets).

Validation Data

Sufficient validation data in line with current regulatory requirements needs to be generated by the receiving site to accommodate all market requirements.

Clinical and nonclinical data requirement

Clinical and nonclinical summary/overviews are required for some international markets even if the transfer has no impact on the clinical or nonclinical data.


For some markets, samples for the purpose of registration are required to be available at the time of submission. Additional samples may also be required for local dissolution testing (in

Asia-Pacific markets) before accepting the registration file. Timing is important, especially for the importation of samples in Latin American markets which may take several months.


Timing for the availability of actual artwork needs to be considered.


license availability

Current GMP manufacturer’s license should be available for the new site.


Some markets may require site GMP documentation or may want to inspect the site before GMP certification is issued.


Inspection requirements are needed for international markets including some Latin America/CARICOM and Middle Eastern markets.

Local application form requirements

Market-specific applications would have to be completed, some in local languages.


Some markets may require specific site-transfer statements which would have to be prepared and legalised.

Batch manufacturing records (BMRs)

Specific BMR would be required for some Latin American/Asia-Pacific markets.

Site registration

Site registration may need to be applied for, if the market is not currently supplied by the receiving site.

Supply consideration

Dual sourcing may not be permitted for certain markets. Subsequently, effective logistic planning is required for continuity of product supply to avoid a ‘stock out’ situation.

The importance of communication

Source transfer projects invariably involve the movement and exchange of a wealth of information between numerous stakeholders. Central to their success (or failure) is clear, effective, and diplomatic communication in what can be a politically sensitive environment. Project stakeholders may include project sponsors, higher management, manufacturing personnel (quality and regulatory), local in-country affiliates, central regulatory, local supply network, and potentially third-party manufacturers (TPMs). A robust external supply network will facilitate an effective working relationship with the latter, although the extent that the lines of communication are open will differ by organization, and whether the rationalization activities offer new business opportunities.

Potential impact on regulatory compliance

Regulatory compliance (otherwise known as quality or manufacturing compliance) is an area of increasing interest within regulatory authorities and the industry as a whole. Essentially ensuring that a medicinal product is manufactured according to the details specified within the CMC section of an approved dossier (Module 3 of the CTD), source transfer activities pose a genuine threat to the regulatory compliance of an organization. In particular, one must bear in mind that a single set of manufacturing documentation may serve a medicinal product registered and sold across multiple markets and geographies – compliance with all must be ensured.

Failure to ensure regulatory compliance can lead to considerable penalties from regulatory authorities, including fines, withdrawal of a Marketing Authorisation (MA), product recalls, or disruption to product distribution at a regional level.

Central to ensuring regulatory compliance is a robust and comprehensive change control process spanning across both regulatory (manufacturing, corporate or local affiliate level) and the quality organization. Such a process should be able to communicate any changes within the manufacturing process to the regulatory organization, and conversely communicate changes to registered information to the quality organization.

Source transfer projects, by definition, bring considerable change that must be effectively managed and controlled. An organization undertaking such activities must therefore make provision for these changes, and understand the potential regulatory impact on multiple formulations, products, markets, and geographies.

Without consideration of regulatory compliance and the potential penalties and disruption to sales, any organization looking to implement manufacturing site rationalization activities may ultimately find its strategy to be a “false economy.” Furthermore, a lack of robustness in existing regulatory compliance can also lead to challenges when generating data from “current” manufacturing processes.


Manufacturing site rationalization and source transfer applications play an important role in delivering cost-saving efficiencies within the pharmaceutical sector. It is therefore vital that the numerous regulatory and logistical complexities of such activities are fully considered and planned for, regulatory functions treated as a key stakeholder throughout the process, and any potential impact on ongoing regulatory compliance is successfully mitigated.

Dr. Ivan Fisher is Vice President of Commercialization and Commercial Development at G&L Healthcare Advisors

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