An increase in regulatory requirements, the development of products that are technologically demanding, and the constant pressure to keep costs down are driving increased sophistication in manufacturing operations—and challenging the industry.
As manufacturing technologies become more sophisticated and advanced, IVD companies find challenges in sourcing materials and dealing with globalization. Outsourcing continues to be one method for easing these challenges, as does streamlining documentation and finding new IT solutions.
To learn more about manufacturing and processing technologies in the IVD realm, IVD Technology editor Richard Park spoke with Ray DeGrella, vice president, advanced supply chain, Beckman Coulter. In this interview, DeGrella discusses what drives the increase in manufacturing sophistication, strategies for keeping current, and the challenges of adapting to various regulations and standards.
IVD Technology: What have been the most significant advances and the latest trends in the area of IVD manufacturing and processing technologies during the past few years?
Ray DeGrella: The trend that comes to mind the quickest is the increasing sophistication of manufacturing and process technologies. If we look at the general state of the manufacturing facilities, they are becoming more high-tech.
Many of the technologies used in the IVD industry are relatively simple and have been around for a long time, such as assembly for instrumentation, and processing of reagents and filling reagent containers. The computerization associated with these things has increased. The amount of robotics used has gone up, and there has been an increase in technologies such as automated in-line sampling of reagent fill levels. The checking of online printed barcodes is increasing, too. It’s all becoming more and more sophisticated and higher tech.
What would you say have been the driving factors pushing this growing sophistication in IVD manufacturing and processing? Has it been more product-driven, with the newest IVD products demanding the sophistication? Has it been more market-driven, with the market itself demanding faster products of higher quality? Or has it been more of a reaction to various new technologies that have emerged?
I would say there are three or four key drivers for this. One is an increase in regulatory requirements around manufacturing of products. Number two is the demands of the products themselves, such as in molecular diagnostics, which requires a cleaner environment than the more traditional clinical chemistry–type products.
The third factor is the continuing cost pressures on manufacturers and producers of IVD products to be able to supply products at lower and lower cost to our customers. And because of that, the desire for reduced cost and improved efficiency is driving the industry to more automation and sophistication.
In terms of sheer technical complexity, what are the most troublesome and challenging areas involved in manufacturing IVD products today?
Some of the more challenging and troublesome areas in manufacturing IVDs are in the securing of materials for those products on an ongoing basis. Manufacturers need products that continue to meet the increasingly high standards for the industry.
One of the other challenging areas is the industry’s move from serving regional markets to global markets. It becomes much more complex to meet all the regulatory requirements for global products. In certain areas such as labeling, it gets fairly complex because there aren’t harmonized standards for universal labeling and packaging. Different regions require different labeling on the primary containers or the secondary containers or the tertiary containers.
You mentioned the challenge of securing and sourcing materials. Please explain and elaborate on that point. Which materials sources are particularly challenging, and how exactly do IVD manufactures go about addressing those challenges and securing and sourcing materials?
One example would be that we might use a particular material in a formulation. Then under new regulations, that material would be banned. And so that source of material would dry up. And if we have used that component, let’s say in a product such as a buffer that is used across many, many different reagents, we would then have to go and find a suitable alternative for that material, and then go through all the validation associated with demonstrating that the new formulation performs as safely and effectively as the previous formulation. In other cases, because of demands for some specialty materials in the areas of plastics, a particular type of raw material may no longer be available, or a particular type of resin for injection molding may be unavailable. And if that material is used for any product, such as a bottle that contains reagents, we would have to go back and revalidate that we’re able to get the same inherent stability of the product over the lifetime of that reagent in that new bottle.
I know that Beckman Coulter is very heavily involved in the clinical chemistry and instrumentation areas. Are there different and unique challenges for the clinical chemistry and instrumentation sides of IVD manufacturing, from Beckman Coulter’s perspective and experience?
The unique challenges for chemistry reagents and chemistry instrumentation might come from two areas. One is that these products have been around for so long, they have basically become commodities. And so we see significant year-over-year price pressure in the marketplace.
We continually need to look at ways that we can improve in order to maintain or grow margins in a product line where we continue to have downward cost pressures.
The other thing is that since chemistry reagents have been around so long, it is very easy for other companies to be able to make reagents that would run on clinical chemistry systems fairly easily.
One of the problems that we do run into with that is that if they are running reagents that we haven’t manufactured, then we run into a whole set of issues trying to deal with performance problems that come up. Customers look to us to solve the problems, even though we’re not the ones who actually produced those reagents. Those are the two unique challenges I see.
What sort of cost pressures has the economic downturn had on IVD companies and their manufacturing? How are they finding ways to deal with these cost pressures, and finding areas where they can cut their costs?
It has affected us and caused us to redouble our efforts at looking for opportunities in the entire supply chain. We are looking for alternate sources of materials, looking for deals with some of our suppliers to possibly consolidate for additional buying leverage.
We are looking at transportation routes and looking at order quantities. We are looking at using approaches such as lean manufacturing and Six Sigma to get waste out of our system. We are looking for new opportunities for automation. We are even looking at outsourcing operations that are really not our core competencies.
When To Outsource
Do IVD manufacturers outsource any of their manufacturing processing activities? If so, what is the business rationale for a company’s decision to do so?
Yes. If you look across the IVD industry, there are companies with varying degrees of outsourcing. Some companies outsource all of their instrument manufacturing. Other companies outsource reagent formulation, and maybe all they are doing themselves is the filling and packaging operations.
Other companies, ours included, at one time were involved all the way from bending metal to painting it to doing final assembly and tests. I think as we participate in this global economy we have to determine what our real core competencies are, and where we as an organization can add value, as opposed to particular competencies that are not part of our core, which we could outsource.
If management is looking to make investment decisions, often the company can’t make the amount of investments it needs to keep those non-core competencies up to snuff. As an example, there are very few, if any, IVD manufacturers that make their own plastic parts in house. The equipment to do that type of operation is very expensive. There is always advancement going on in the industry, where a company who specializes in that advancement is able to invest because it is their core competency and their core business.
I would say that the primary reason for outsourcing is that in looking at the entire value chain you must decide what is really critical to the products that you design, develop, and manufacture, and which competencies really can be done better and less expensively outside the company—particularly if it doesn’t involve any type of intellectual property.
Do you think that IVD manufacturers will outsource their manufacturing and processing technologies activities more and more as time goes on?
I think that trend has been going on for some time. And I think it will continue. It is going to eventually reach the point where, when products are very critical to your business, or if products contain a lot of intellectual property that you wouldn’t want to be practiced outside of your company, that is where the outsourcing is going to stop.
I think it’s going to stop when it doesn’t make business sense—when it doesn’t make economic sense to do it. Because anytime you outsource, you do give up an element of control. And ultimately what we’re trying to do is deliver the best products to our customer at the right price all the time.
You have to weigh the risks and benefits of doing any type of outsourcing activities.
Regulatory requirements and international standards are intended to keep IVD companies from designing or producing bad products. In what ways do these requirements and standards help to make technically complex manufacturing processes simpler for IVD companies?
Where the regulatory requirements and the international standards help is that they lay out what needs to be done. They don’t specify how you need to go about doing it. But they determine the boundaries within which you must operate.
It is good to know what those boundaries are. And then the second area where the international standards help is by getting us to use standard accepted methods to answer the questions of how to meet those regulatory requirements.
I would say that the other ways that the requirements and the international standards do help is that they provide a base of knowledge that we can use for benchmarking. And so by looking at things like international standards, they should represent, if not the best way of doing things, often the better way of doing things than what might already be in place.
It allows you to cut to the chase and not have to go through the process of reinventing how you are going to address issues over and over again. You can go to a standard base of knowledge that you can apply directly in your particular situation.
Are regulatory requirements and international standards equally useful when dealing with manufacturing such cutting-edge IVD products as next-generation IVD tests and molecular diagnostics?
I think they are equally as useful, both the requirements and the standards. Part of the issue that you run into, though, with these cutting-edge products is that often, the requirements are being written as you are developing the tests, and the standards haven’t been developed yet. And so it is a little more difficult. But if the requirements and standards are there, then they do make it more useful by providing the boundary conditions of what is required from a regulatory perspective as well as the standard for meeting those regulatory requirements.
How can IVD manufacturers streamline their compliance activities for FDA and for international standards—for example the EU’s IVD directive—in order to eliminate any redundancies? Or are there still areas within which independent compliance efforts are required?
IVD manufacturers can streamline their compliance activities primarily in the area of documentation and IT solutions. It used to be that the only really competitive countries in our field were the United States, Europe, and Japan. But now we have specific and different requirements from emerging markets, the smaller countries. So compliance does become very complex. And I think the only way to really address much of this complexity is with IT solutions, particularly in the area of documentation that would allow you to have a certain body of data that can easily populate documents that are templated for specific countries and different regulatory requirements.
How does an IVD company keep up in terms of making their manufacturing and processing technologies comply with the various changing regulatory requirements of FDA? And at the same time, how does that company keep up with the different regulatory requirements of various global markets?
I can talk in terms of how Beckman Coulter does it, and I think many of the major IVD manufacturers operate the same way. We have dedicated professionals in our quality and regulatory affairs organization whose job is to not only keep up with what regulations get published, but actually to engage with the regulatory agencies drafting those requirements and help to direct them. We try to basically provide the regulatory agencies with what the issues are. Another way we keep up with various requirements is through industry organizations such as AdvaMed or EDMA, who can work on the behalf of all of the IVD manufacturers on regulatory requirements as they’re being developed and as they’re changing.
You are likely aware that during the process in Europe with developing the requirements for the EU, a lot of effort went into working with them, not only in terms of the impact of some of the decisions made regarding actual implementation, but also helping to set realistic timeframes for implementations of those regulations.
Beckman Coulter has very close contact with the various regulatory bodies, such as FDA and groups in Europe. At the same time, I am guessing that your in-house regulatory personnel work closely and coordinate closely with your manufacturing personnel and those who are on the front line of actually putting together these manufacturing processes and overseeing the actual manufacturing of the products.
Absolutely, yes. And I doubt our organization is any different than the industry as a whole in this regard. Our quality and regulatory affairs organization is involved in auditing the facilities, the processes, and the techniques on a regular basis. We have processes in place whereby when new regulations are pending or have been released, that information gets communicated.
And the affected organizations, such as manufacturing, are notified of what’s coming. They are provided help and assistance on developing plans to meet those impending regulations. We have formal reviews on a periodic basis among the quality and regulatory organization and the other functions in the company.
And part of those reviews includes providing an update on any changes to the regulations that would then impact operations or quality system requirements.
You mentioned that IVD manufacturing has become more sophisticated and more high-tech, with more computerization. How do IVD companies keep current on the newest manufacturing and processing technologies?
My impression is that it’s the business requirements that drive the technologies. A business need will arise, either because there is a new product or a new technology. We’re trying to improve our manufacturing efficiencies. We go out and try to find the relevant solutions. We do, on occasion, bring in experts in the field of manufacturing that come and possibly do a walk-through of the facility, trying to help us identify opportunities for improvement. But usually there is a combination of business needs, information about what’s changing, things like that.
Let me give you a hypothetical case. Let’s say we are manufacturing reagents or buffers using simple batch techniques that we have been using for 30 or 40 years. We have filled the tank with water. We add chemicals. We mix it up. But we find that due to demand, we have a need to increase capacity. And our business is going so well that the capital investment that we might have to make to keep up with producing it would be astronomical.
One somewhat obvious approach might be, “Well, why don’t you make that up in a concentrated solution, and then do some dilution of it using some technology that you have never used before, so that you don’t have to build large tanks for doing batch processing?” That would be an example of our having a business need that would then compel us to go out and look for a solution.
Most automation and similar technologies generally come from a business need—whether it’s to do online printing of labels or to do online weighing of reagent cartridges to make sure that filling and other tasks are accurate. There is always a business need driving those types of adoptions of technology.
How have various “green” initiatives affected IVD companies in terms of their manufacturing and processing technologies?
I think the initiatives have been positive for us. We have found opportunities where we actually have synergies from a cost perspective as well as from a green perspective. And this goes back to many of the lean efforts taking place in many IVD companies. We look at things like piles of cardboard in the facility where a supplier will box something in cardboard to send it over to us.
We un-box it from the cardboard. Then we need to dispose of the cardboard. Many, many trees are destroyed in the process. And so we have looked at doing things like reusable containers where the material from the supplier would come over in a reusable container that we would then send back and not fill up the landfills or destroy a lot of trees.
We look at cost opportunities where we might be able to take plastic out of parts that will save cost and at the same time save potentially millions of pounds of plastic from ending up in the landfill.
What the green effort does is challenge us to think differently. Many of the solutions that we come up with because of our awareness of the impact that we have on the environment can also benefit us financially.
What role does an IVD company’s organizational structure play in making the manufacture of a product line easier or more complicated?
I don’t think that one structure necessarily is better than another if we’re talking about one where we have functional organizations, or one where we have organizations around the process. I think the real key there, what is going to make things work, is how the employees work together in a matrix environment. It doesn’t matter which of those two types of organizations you might use.
What I do think aids in making a difference in terms of making a product line easier or more complicated to produce is the span of control of the responsible organization. And by that I mean that if we have an organization, however it’s made up, that’s responsible for materials all the way from planning and ordering and receiving to production all the way out to the warehouse, it makes it easier.
I think the teamwork is the real key to making manufacturing easier. When people have the same goals in mind, and can look at the entire value chain, it is easier to make good decisions that benefit all the people that are involved with that value chain.
What future trends and challenges will emerge for IVD manufacturers in the area of manufacturing and processing technologies during the next few years?
The current trends will continue. I think the regulatory aspects of this business are going to continue to make things more challenging. Some of the regulations are put in place for consumer safety.
I think the regulatory environment is going to continue to make business more difficult. I think as the products become more and more sophisticated, and as the sensitivity of those products to environmental factors increases, more and more pressure will be put on us to maintain the cleanliness of the product. For example, when we start talking about DNA and RNA testing—those materials stay around for a long time and are ubiquitous.
And so in order to commercialize technologies like that, you must have a far cleaner environment than what we’ve had in the past. I think we’re going to see more and more miniaturization of products as we go forward. And all of that is going to require us to adapt and change to adopt new technologies and new ways of processing.
Is there anything else you would like to add or comment on about IVD manufacturing and processing?
One thing I would add is the use of process analytical testing, which is really to go from batching materials and measuring the product when you are finished, to measuring critical parameters during the processing so that you can control them better.
I think we’re going to see more and more movement to process analytical testing on the manufacturer’s part to minimize waste as well as to produce more consistent products. I think it will also serve as a way of providing evidence to regulatory bodies that a manufacturer’s processes are under control.
Raymond F. DeGrella
is vice president, Advanced Supply Chain, Beckman Coulter. He has 28 years’ experience in the Diagnostics Industry in various functions including product development, quality, marketing, manufacturing operations, and project management. He can be reached via Mary Luthy at firstname.lastname@example.org.
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