Optimizing Global Biopharmaceutical Operations Through Risk Mitigation and Management - A UC Berkeley survey provides insight into biopharma's risk concerns and strategies. - BioPharm International


Optimizing Global Biopharmaceutical Operations Through Risk Mitigation and Management
A UC Berkeley survey provides insight into biopharma's risk concerns and strategies.

BioPharm International
Volume 25, Issue 12, pp. 38-43


Over half of respondents (53%) currently use disposable technology for commercial manufacturing, and a total of 83% either plan to or are likely to use disposable commercial manufacturing technology in the future. The most reported significant risks around this technology focus, in decreasing order of reported significance are: comparability as products are scaled up for commercial runs, timely availability of supplies from suppliers, and extractables and leachables. To address these risks, respondents turn to many of the same approaches that they use for managing raw-material risks, including using multiple suppliers where possible, stringent vendor qualification and audits, extensive quality control testing and validation, and carefully constructed contracts specifying minimum inventory levels.

Forecasting and demand variability

Figure 6: Respondents indicate how well they explicitly model demand variability in their planning processes.
About half (49%) of the respondents consider forecast errors a significant risk; less than a quarter (24%) are not concerned. In spite of this, 30% do not explicitly model demand variability in their planning process, and another 45% only model some upside and downside scenarios; only 18% explicitly model demand distributions (see Figure 6).

By far, the dominant approach (70% of the respondents) to dealing with demand uncertainty is to hold extra inventory—most of the other cited approaches have to do with securing extra capacity, either internally or through relationships with CMOs. About one third of respondents explicitly track forecast accuracy by comparing point forecasts with actual demand, and about one quarter suggest that their firms do not explicitly track forecast accuracy.


Of the various risks associated with finished-goods distribution, cold storage and expiration-related issues are more of a concern than contamination, theft, and counterfeiting. No single approach stands out in the reported mitigation methods for these concerns, although respondents seem to continually explore alternative suppliers and methods for packaging, shipping, and storage (in particular, they mention continual quality auditing of transportation service providers, secure packaging, tracking systems, diversification, inventory management software, and so forth). More than 80% of responding firms store inventory in multiple sites, selecting these sites in most cases for their proximity to manufacturing sites or their low operating costs. Once finished goods shift to distributor control, only 25% of respondents are not concerned with distributors' risks, although only 20% are confident in their visibility into distributors' risks, suggesting a key area of potential improvement.


This survey provides initial insights into the current state of risk management and risk-mitigation strategies in the biopharmaceutical industry. In subsequent surveys, the BOI team intends to explore specific risk-mitigation app-
roaches and metrics currently employed by progressive firms, in order to develop a better understanding of which metrics, tools, and approaches are particularly useful. At the same time, there is clearly a need within the biopharmaceutical industry for analytical tools and approaches that account for the specific characteristics of this industry, and that use the vast quantities of data available to help managers make more rigorous, informed, model-based decisions to manage and mitigate the complex set of risks faced by the industry.

Phil Kaminsky, Jiyang Liu, and Julia Olsen-Claire work at the CELDi Biopharmaceutical Operations Initiative at the University of California, Berkeley.


1. Ernst & Young, "Beyond Borders: Global Biotechnology Report," 2007.

2. R. Johnson and P. Kaminsky, "Biopharmaceutical Operations: Developing the Science," PharmaFocus Asia 9 (2008).

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