A qualified supplier base provides customers with a range of raw materials, optimizing the performance of finished devices.

The list of components needed to make IVDs ranges from simple to highly complex materials. Regardless of whether a given component falls into the former or the latter category, its quality—and that of any other of the materials used, from buffers and antibodies to the most highly complicated conjugate—can significantly affect the performance of the finished device.

It is, therefore, essential that the IVD manufacturer invest a significant amount of time at the front end of the raw-material sourcing exercise. In order to ultimately provide a stable and reproducible product, the manufacturer must execute a full and exhaustive validation of all components and potential suppliers.

Vendor Quality Assurance

Quality governs every aspect of the IVD industry, so it should have an impact on every aspect of the component supplier's business as well. The vendor not only should have in place its own stringent quality control (QC) procedures, but also should be receptive to, and compliant with, those of the purchaser.

A supplying company's quality system should incorporate a framework for establishing and reviewing quality objectives. This will enable the company to maintain a reputation for excellence. Policies relating to quality should be consistently reviewed and, as necessary, updated so that standards are always the best they can be, and at least up to date with those of the industry. If complaints arise, the supplier should respond to them immediately. Similarly, vendors should always be receptive to customer input, applying it as part of a program of continual improvement.

A vendor's accreditations will provide an initial indication of the company's commitment to quality. Frameworks should be built on ISO 9001, and GMP standards should be reflective of an intention to meet FDA requirements. The QC procedures of any vendor should be based on strict protocols, with documentation openly available for customer review. QC systems should control the use of any approved suppliers by the main vendor, and raw materials included within the product supplied must be fully qualified and accompanied by certificates of analysis where required.

The vendor should exercise an open-door policy regarding external audits, and should provide documentation that satisfactorily attests that components used meet the necessary requirements. As with the review of quality policies, the IVD manufacturer should make audits part of an ongoing review of the vendor. An audit should not be an initial, one-time-only consideration to check off on a list.

Paramount in deciding with which company to sign the supply contract will be consideration of the level of accreditation the finished product will achieve. A product seeking FDA approval will bring with it an additional set of criteria to be met, which again must be considered early on. FDA will require a full backup plan to ensure the continual supply of the product, and will frequently specify dual-site manufacturing capability, for example.

Another important requirement for the supplier is to agree to notify its customers of any changes in the processes it uses for the products it supplies to them. This should be written into the supply agreement. Such notification of change will allow the customer to assess the impact of the changes on its own processes.

Partnership Support

Researching the market thoroughly to identify vendors with a strong reputation for delivering high-quality products can lead to fewer risks for the IVD manufacturer over the long term. The key is to contract with a well-established supplier with a proven track record that can qualify its ability to carry out its customers' requirements. The value of a company with many years of expertise in its specialized field should not be underestimated by the IVD manufacturer when it is deciding whether to produce reagents in-house or to outsource their production. A manufacturer of rapid tests, for example, is not necessarily expected to produce its own membrane, or test housing. However, when it comes to reagents, there is a common misconception that the manufacture of raw materials is a quick and easy cost-saving process. This is far from the case, in fact. Development teams for manufacturers that use self-produced raw materials frequently experience problems down the line, when there is no choice finally but to call on the expertise of a good vendor to undo the damage. By this point, though the problems can be solved, the loss of time and the costs already incurred cannot be recouped.

The vendor will have worked through a variety of processes many times, and its expertise will prove invaluable over the lifetime of a working relationship. A good supplier will work with the purchaser over many years to help in continually optimizing the latter's product range. Troubleshooting will be carried out in partnership, and regular communication will ensure that the ongoing supply needs of the purchaser are met at all times.

Supply Flexibility

Flexibility is key for anyone working within the IVD industry, as the market evolves and grows at a tremendous pace. A range of services should be available that can meet the demands of any would-be purchaser; the purchaser should not have to trim its requirements to suit available supplies. A smaller customer, for example, will have a set of requirements different from those of a larger organization, and a more modular approach to supply and costing may be more effective.

The product, too, must be appropriate for the (often unanticipated) requirements of the customer. Here the issue of quality arises again. Only the most stable biochemical and chemical products can be stored for any length of time, and these will be needed if the market brings a sudden increase in demand. A good supply source will support any unexpected sales spikes. Of course, the vendor clearly would appreciate being given an approximate forecast of potential demand for its customer's product from the outset of the contractual relationship.

A vendor deemed qualified by the IVD manufacturer and appointed as its raw-material source should form a committed team of company representatives to work alongside the purchaser at all times. The team should be a stable group likely to exhibit little turnover in personnel.

A partnership approach is essential to the success of any supplier-customer relationship. Also, it brings with it a number of benefits beyond simple reliable current supply. An experienced supplier will have its finger firmly on the pulse of the industry, following new trends and developments, and will be able to share a wealth of industry knowledge with its customers, keeping them up to date with emerging technologies. The vendor itself will probably be developing the next generation of product, the benefits of which will be passed on to the customer. Very likely, the supplier will be able to offer the device manufacturer other significant services as well, including advice on general industry issues such as patent protection and regulatory affairs.

Most important, however, is that the vendor always be able to protect the purchaser from the perils of single-source supply. In an ideal world, all suppliers would be able to offer a secondary production facility that could be utilized in the event of the main site's failure to deliver. This frequently is not the case, however. Thus, the IVD manufacturer should have some sort of contingency plan covering a significant volume of raw material, in case of a supply failure.

Protecting Supply: The Mechanics of Escrow

The quality of its raw materials is critical to the performance of a diagnostic device, and the distinctiveness of those materials may determine the essence of that device. Thus, it is important for a manufacturer to look at ways of protecting its supply. Because many raw materials are manufactured using a proprietary technique, it can often be difficult for the manufacturer to settle on a second choice of product owing to the uniqueness of the first-choice supply. Any organization with established customers has a responsibility to protect those customers' supply source, as any threat to that supply would impinge on the ability to continue with customer development and supply.

Escrow agreements are a good way to protect the supply source and also the methodology of proprietary techniques. Although they can be expensive, they are legally binding arrangements to protect both parties. A good vendor will always be in a position to enter into escrow.

Once the customer has established which materials are critical to a particular manufacturing process, negotiations regarding escrow agreements should commence. The agreement process requires a fully documented recording of all the elements of the supplier's manufacturing process: the materials used in each component, development procedures, details of the equipment used for manufacture, and complete operating procedures for each component. An independent representative contracted to the customer reviews the specifics of the manufacturing process. Then this legally binding document is stored within the safe of an appointed legal organization.

Specified within the agreement will be the circumstances under which the agreement may be activated. These circumstances usually include continual failure by the vendor to supply outside of an agreed time period; force majeure, including flood or fire; and the closing of the supply company, or its sale to a new owner who is unable or unwilling to continue the supply. It is likely that the supplier of the raw material will negotiate that, if the agreement is activated, the customer can apply the information held within the agreement only to its own production process, and cannot share it externally.

An additional consideration in evaluating this kind of agreement is that the vendor should be in a position to provide qualified members of staff to provide training in the correct manufacture of the materials. Should the escrow be activated, training support should be offered in order to ensure that exactly the same processes are employed.

By detailing its technique in an escrow, a supplier of unique proprietary products is protecting its customer's product as well as its own. If the proprietary formula were not secure, then the customer would be left wide open to the threat of its raw materials losing the unique status they once had.

Qualifying and Validating a Second Source

Should the manufacturer not consider escrow sufficient, it may require a second supply source, or site. This also offers significant protection, and will be advantageous from a regulatory perspective: If the product is crucial to the market, then continuation of supply must be guaranteed.

When a second source is qualified, the development process becomes elongated, even quite lengthy, and extremely thorough. For this reason, it is often considered by a secondary vendor only on a component-by-component basis against the original vendor's ability to supply forecasted volumes and commitment to long-term supply. A second-source vendor will not commence development of any product using materials still under development by any other supplier; therefore, all materials in the finished product should be from established product lines and protected by supply agreements.

Should a second source require validation, the IVD manufacturer needs to execute a series of actions. First, the company should complete a risk analysis designed to identify the impact of a change of material supply on the performance of its IVD test. Then it should itemize characteristic details of the original raw material to help guide identification of suitable second-source materials for evaluation. In addition, the manufacturer should take into account limitations or restrictions any existing physical test components or packaging (e.g., membranes, the housing) may place upon the material requirements.

The purchaser next needs to evaluate the second-source vendor itself in terms of quality assurance requirements, supply capabilities (e.g., lead time, volumes), and customer support. It should request samples from multiple independently manufactured lots, or limit samples, or both. Finally, the manufacturer should perform a complete matrix study, swapping in original materials with second-source materials and evaluating the test format for compatibility with the manufacturing process; assembled-test performance in terms of robustness, sensitivity, and specificity; and stability.

Because two different manufacturing processes are evaluated when the IVD producer evaluates a secondary supply source, procedures have to be more robust and the product made to perform under varying conditions. The upside of this effort is that the long-run savings can be considerable, as the second source can be used if the primary source fails or if the market suddenly demands increased production volume.

Cost Analysis

Cost is often the primary concern when a manufacturer looks to appoint a supplier. However, an in-depth analysis must precede any decision based on cost.

In-house manufacture of reagents was previously mentioned as a quick-fix solution frequently pursued in response to budget constraints. Similarly, recourse to a low-cost supplier may deliver initial cost savings. However, like self-manufacture, using an economy supplier could result in costly problems down the line.

A badly produced raw material will lead to significant wastage, for a number of reasons. While even poor-quality reagents may yield some excellent results in the early stages of the development process, once the product is scaled up, the result is often an unstable and irreproducible raw material. Such product will more than likely collapse and put a halt to the progress of the finished device, wasting significant time as the development process reverts to the very beginning. At this point, either another batch of poor-quality reagents will be manufactured—and will likely yield another set of inaccurate results—or supply of the reagents will be outsourced to the good vendor who should have been appointed in the first instance.

The quality and supply of a reagent must be guaranteed from day one, so that at any stage of the development process it is stable and can be reproducibly scaled up. Without the available expertise of a good supplier this assurance may not be possible.

The instability of poor-quality reagents makes such materials a very dictatorial element of the product development process. For example, in a lateral-flow assay, the reagent may have to be sprayed down very quickly in order to prevent it from destabilizing. A company should never let its manufacturing schedule be governed in this way, especially when an outsourced quality-controlled product can help to achieve a development goal—not to mention product commercialization—in a shorter time frame.

Conclusion

Outsourcing the production of chemical reagents brings the IVD manufacturer a whole host of benefits. Foremost, it will save on staff training costs and free up staff to concentrate on the core competencies of the organization. It is not a sensible financial decision for an in-house R&D team to be sidelined into troubleshooting manufacturing problems with badly produced reagents, as it takes key personnel away from moving forward the project in hand.

A simple cost comparison will lay out clearly the benefits of outsourcing to one supplier rather than another, and a good supplier should be able to offer this transparent service. This analysis, combined with flexible options regarding bulk purchasing and supply agreements for longer-term savings, should provide the manufacturer with qualified suppliers that are able to deliver reliably a superior range of raw materials.