Global Quality Eli Lilly and Company

Foundations for an Effective Quality Relationship with Contract Manufacturers

Fionnuala Walsh

Senior Vice President – Global Quality

Eli Lilly and Company

PQRI/FDA Conference

September 2014

Eli Lilly and Company

Founded by Colonel Eli Lilly in Indianapolis, Indiana in 1876 with a staff of three employees. The Chairman of the Board position was filled by a Lilly family member until 1969. Lilly became a public company and joined the NYSE in 1970.

Lilly Corporate Center Indianapolis, Indiana Employees 38,000

Revenue $23.1 b

Income $4.7 b 20% of revenue

R&D Expense $5.5 b 24% of revenue

Capital Investment $1.0 b 4% of revenue

source: 2013 Annual report

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Agenda

Contract manufacturing – whys

Building effective contract manufacturer relationships

– Foundational steps

– Implementing the relationship

– Maintaining the relationship

Lessons learned

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Contract Manufacturing – Whys

Flexibility for changes in demand

Support local access initiatives and/or presence

Capital deferment

Flexibility – clinical material, commercial product, and fill/finish/packaging CMOs

Considerations

Must have reliable supply of high quality products (Acceptable CpK for all specifications (>1.3))

Maintain the company brand – our name is on the product

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An excellent contract manufacturer is an excellent quality partner.

Lilly’s Comprehensive Framework for our Quality Management System for CMOs

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Framework for contract manufacturing relationships

Well defined standards, specific to CMO relationships that cover the entire business process – Standards are integrated with other

relevant company standards (e.g. Quality, Manufacturing Operational Excellence, Supply Chain, as well as Health, Safety, and Environmental)

– All Lilly employees that are responsible for decisions to outsource, select, validate, operate and terminate contract manufacturers are required to follow these standards.

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Foundational Steps

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The strategy for identification, evaluation, and selection of contract manufacturer is prepared by the business area.

The strategy should be commensurate with the criticality of the product or material to be produced.

Defines the necessary initial product quality requirements for a potential contract manufacturing opportunity. This is done in partnership with quality, manufacturing, and technical organizations.

Considerations may include: regulatory history of company, experience with supply market, type of material to be manufactured, capabilities of the company.

Foundational Steps

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Gather additional data on leading candidates for contract manufacturer selection.

Due diligence activities that are commensurate with the complexity and criticality of the product to be manufactured, including: compliance status, business evaluations, and technical evaluations, such as sterility assurance, scientific background and capability of staff.

Approval is made by the responsible quality leaders and production leader. A quality unit’s decision to reject the use of a contract manufacturer cannot be overruled.

The technology transfer plan is approved by both internal parties and the contract manufacturer.

Implementing the Relationship

The responsible internal parties must ensure the contract manufacturer has the information required to carry out contract operations correctly, including: product history, process flow document, safety data, analytical methods, etc.

Both business agreement and quality agreement are approved prior to process validation.

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Quality approves the authorization of the contract manufacturer based on the quality agreement (defines metrics and escalation expectations, including AEs), audits, due diligence assessments, state of compliance, successful process validation, and regulatory agency authorization to manufacture.

Maintaining the Relationship

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Appropriate oversight processes must be established Dedicated personnel/organization for relationship (e.g. joint

committees, person in plant, audits) Governance (routine metrics, site compliance reports, joint quality and

manufacturing oversight from process level to executive level) Clear expectations for escalation of issues

Effective communication

Managed to a defined change management system Evaluate quality, supply, and regulatory impact

Lessons Learned

Establishing a Quality culture with a strong foundation and maintaining appropriate oversight and communication is critical to success in an effective Quality relationship with CMOs, as the business is dynamic.

The quality culture of the CMO is the most important factor in the success of the relationship.

Metrics need to not only include operational performance, but also financial health of the company and management turnover.

CMOs play an important role in pharma supply chains. Establishing preferred CMOs makes managing relationships easier.

Lower CMO margins and pricing pressure may lead to over-emphasis on “cost control”, “just meeting regulations”, and excessive levels of capacity utilization.

The objective is the same, whether in-house or at a CMO: Safely and reliably manufacture high quality medicines for patients.

We must maintain our company brand – our name is ultimately on the product.

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Thank You

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