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ConIidential and proprietary

Understanding Challenges to Quality
by Design




Final deliverable for FDA Understanding Challenges to QbD Project
December 18, 2009



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TABLE OF CONTENTS
Table oI contents 2
Executive summary 3
Introduction 5
Methodology 6
Overview oI current state oI QbD 7
Key adoption challenges 9
Business case Ior QbD 14
Implications Ior FDA 19
Appendix 23

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EXECUTIVE SUMMARY
This report is the result oI work done with the FDA, CDER - OIIice oI Pharmaceutical
Sciences as part oI its eIIort to Iacilitate adoption oI QbD. Its purpose is to help
understand the challenges and opportunities Ior adoption oI Quality by Design (QbD).

The work was conducted with input Irom several sources: an outside press search / scan
oI relevant articles, conIerences, databases, interviews with internal experts, as well as a
set oI blinded industry interviews.

These inputs uncovered several key Iacts about the state oI QbD adoption as well as
potential catalysts.
1) The understanding and practice oI QbD is evolving, gaining momentum and
passion throughout the industry
2) More than half of companies interviewed identified the business case as
strong, however, there are still some skeptics
3) Despite the acknowledgement oI a strong business case, companies are at
different levels of maturity characterized by Iour segments Novice, Pilot,
Rollout, and Fully implemented
4) 10 key challenges are the most problematic Ior QbD adoption. These
challenges are evaluated by their relevancy against diIIerent drug types as well
as diIIerent levels oI adoption
The Iirst Iour challenges occur within companies
! Internal misalignment (i.e., Disconnect between cross Iunctional areas,
e.g., R&D and manuIacturing or quality and regulatory)
! Lack of belief in business case (e.g., 'There is a lot oI uncertainty over
timing oI and investment requirements Ior QbD implementation)
! Lack of technology to execute (e.g., DiIIiculty managing data, limited
understanding oI Critical Quality Attribute (CQA) implications)
! Alignment with third parties (i.e., How to implement QbD with
increasing reliance on suppliers and contract manuIacturers?)
The next six challenges are directly related to the FDA
! Inconsistency of treatment of QbD across FDA (e.g., 'Although a
number oI people in the FDA are supportive oI QbD this is not
consistent)
! Lack of tangible guidance for industry (e.g., 'We understand what
you are asking Ior broadly, but there are hundreds oI variables there`s
got to be an end in mind a tangible one we can deliver on)
! Regulators not prepared to handle QbD applications (i.e., reviewers
at diIIerent levels oI understanding and acceptance)


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! The way promised regulatory benefits are currently being shared
does not inspire confidence (e.g., 'At the end oI the day it is still
unclear whether the FDA will actually back these Iilings)
! Misalignment of international regulatory bodies (i.e., DiIIiculty
gaining acceptance oI QbD applications in other countries)
! Current interaction with companies is not conducive to QbD (e.g.
'. we are treated with suspicion, it does not Ieel like collaboration.)
5) Although key challenges will diIIer by the level oI maturity, there is
uniIormity across the participants that FDA can increase the quality and
consistency of its reviews and degree of internal alignment
6) Broadly, lack of corporate alignment is a challenge centered on cultural
issues and the need for cross-functional processes and tools to execute - this
alignment is crucial to reap the beneIits oI QbD (i.e., an aligned operating
model)
7) Two commonly held belieIs about QbD are not true. II QbD is executed
properly, the cost to implement QbD is negligible, and it will not lead to a
longer development timeline
8) Interviews also identified several steps the FDA can take to accelerate
momentum around adoption of QbD. These steps should address three main
areas
FDA policy. The FDA will need to think about what incentives, regulation
and direction they will give to companies in industry. These will likely vary
by drug type. There is potential to mandate in areas where a strong case can
be made Ior QbD supporting patient saIety.
Internal FDA change management. The FDA should also think about
how they can adjust internal alignment to ensure uniIormity in QbD
understanding and actions within oIIices, across oIIices, and between the
center and the Iield.
External change management. Finally, the FDA can consider the best
way to engage both with other international regulatory bodies, as well as
with individual companies.

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INTRODUCTION
In 2003, the Federal Drug Administration released its Final Report on Pharmaceutical
current good manuIacturing practices (cGMP) Ior the 21st Century. The cGMP initiative
described a 'Desired State Ior pharmaceutical manuIacturing through QbD in which:

Product quality and perIormance are achieved and assured by design oI
eIIective and eIIicient manuIacturing processes
Product speciIications are based on a mechanistic understanding oI how
Iormulation and process Iactors impact product perIormance
ManuIacturers have the ability to aIIect continuous improvement and
continuous 'real time assurance oI quality
Regulatory policies and procedures are tailored to recognize the level oI
scientiIic knowledge supporting product applications, process validation and
process capability
Risk-based regulations are commensurate with the level oI scientiIic
understanding oI how Iormulation and manuIacturing process aIIect product
quality and perIormance, and the capability oI process control strategies to
prevent or mitigate the risk oI producing a poor quality product
Recent years have ampliIied the case Ior change to the desired state. SaIety issues have
highlighted the gap between the pharmaceutical industry`s quality systems and those oI
other industries. Public pressure to reduce pharmaceutical costs is adding to the case to
improve the inIrastructure Ior drug development and continuous process improvement.

The industry has made progress on QbD since the FDA began its 21st Century Quality
Initiative, but this has been a limited number oI QbD submissions to date. Despite the
compelling case, the widespread change that the FDA envisioned has not happened at the
pace that was envisioned. Achieving the 21st Century Quality vision will require a
transIormative journey Ior the industry that demands a signiIicant shiIt in its development
process. This transIormation has not taken place due to challenges within companies,
within the FDA, as well as the international regulatory community.

This report is the result oI a detailed look at the current state oI QbD adoption, Iocusing
on the challenges preventing Iull scale implementation. The report additionally takes
preliminary steps to build and quantiIy a business case Ior QbD.



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METHODOLOGY
This report was generated with inputs Irom three main sources.
Data mining within internal McKinsey resources
Extensive search oI McKinsey database, including case study libraries, benchmarking
eIIorts, articles, survey databases, and conIerence presentations. Team identiIied and
analyzed relevant materials, including previously obtained industry data and surveys, to
act as a supplement to industry interviews. Team additionally conducted several
interviews with global leading McKinsey experts in strategy, R&D, operations, quality
and product development across Pharmaceuticals, Biologics, and Generics. Experts
shared their knowledge and perspectives Irom many years oI experience dealing with key
decision makers in industry to help push thinking on the topic.
Public publication search
Extensive search Ior most relevant industry articles, publications, and web resources.
Team identiIied and analyzed relevant materials to act as a supplement to industry
interviews.
Interviews with industry leaders
The steering committee identiIied a set oI industry leaders Irom leading Pharmaceutical,
Biotechnology, and Generic pharmaceutical companies across Technical Development,
Pharmaceutical Science, Chemistry ManuIacturing and Control, Operations, and
Regulatory. Team conducted interviews with identiIied set oI leaders Iocusing on Iour
main areas: (1) current state oI the company`s QbD adoption (2) perceived challenges or
barriers to QbD adoption (3) business case Ior QbD and (4) potential steps to catalyze
QbD adoption.
Exhibit 1: Outline for Industry Interviews
Current state of companys QbD adoption
! Company deIinition oI QbD
! Current scope oI application (mechanisms in place to support)
! Source oI motivation to utilize QbD
! Characterization / Track record oI company`s QbD eIIorts
! For generics manuIacturers, impact oI Question Based Review (QBR)
Perceived challenges or barriers to QbD adoption
! Technical / scientiIic barriers
! Internal / organizational realities
! External / regulatory / market driven Iactors
Business case for QbD
! Perceived business beneIits Irom implementation - anticipated / realized
! Costs to implement anticipated / realized
! II applicable, comparison oI development costs oI QbD relative to traditional
Potential steps to catalyzing QbD adoption
! Internal to company
! Technical / scientiIic
! Regulatory (FDA related, International)


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OVERVIEW OF CURRENT STATE OF QBD
Evolution of QbD over the past year
QbD has continued to gain momentum over the past year. One oI the most striking
Iactors has been an increase in the codiIication and practice oI QbD on a standardized
basis. More and more companies are experimenting with the concept and developing
mechanisms to support it. This is accented by an increase in the passion and recognition
oI QbD. Several companies, although not the majority, expressed the opinion that this is
something they would do regardless oI regulatory beneIits Irom the FDA.
As companies invest and gain experience with QbD, there are also increasing demands
Ior the FDA and other regulatory bodies. Two major demands that have emerged are the
need Ior greater clariIication oI acceptable methods oI execution and Iiling and or
concrete tangible examples, as well as better codiIication oI the beneIits FDA promised`
when QbD was originally advocated.
Perception of the business case
Exhibit 2: Strength of business case by companies examined











50
33
8
Strong business
case with year 1
payback
Strong business
case with multi-year
payback
Business case is
uncertain / neutral
8
No viable
business
case
Percent of companies examined Percent of companies examined
[Pie chart showing the belief in the business case for QbD. Strong case with multi-year payback = 50%,
Business case is uncertain / neutral = 33%, Strong business case with multi-year payback = 8%, No viable
business case = 8%]
Levels of adoption of QbD among companies
Companies are at very diIIerent places in terms oI adoption oI QbD. Some companies are
still skeptical about the idea oI QbD and have not made much, iI any, change towards a
QbD approach. While others have Iully implemented the concept and are designing every
product in development along a QbD Iramework. Most are in between these extremes.


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Where companies Iall on this spectrum will play a large role in how the FDA should
interact with them.
Novice: Company is skeptical about the value QbD can bring. Utilizes
conventional development and has no platIorming.
Pilot: Company is trying QbD, but still on the Ience about the potential value.
Tends to apply QbD to a small subset oI projects and processes and has
implemented limited or no platIorming.
Rollout: Company is convinced about impact oI QbD and is beginning to see
some oI the beneIits. Uses QbD techniques regularly, but not universally. May
engage in some liIecycle management with integrated platIorm and network
strategy.
Fully implemented: Company is completely convinced about the positive
impact oI QbD and is realizing the beneIits. Uses QbD in almost every
development program and almost every production step. Additionally, has a
systematic, comprehensive review and re-design oI in-line products.
Exhibit 3: Level of maturity and drug type of examined companies
Group Novice Pilot Rollout
22% 22% 100%
40% -- 100%
17% -- 100%
Fully
implemented Total
22%
40%
17%
33%
20%
67%
New Drug
Gx
Biologics















[Chart with drug type on y-axis: New Drug, Gx, Biologics. Level of adoption on x-axis: Novice,
Pilot, Rollout, Fully implemented. Level of adoption
New Drug: Novice (22%), Pilot (33%), Rollout (22%), Fully implemented (22%)
Gx: Novice: (40%), Pilot (20%), Rollout (40%), Fully implemented (0%)
Biologics: Novice (17%), Pilot (67%), Rollout (17%), Fully implemented (0%)]

The majority oI examined companies develop new drugs. OI these, ~45 Iall into the
categories oI Roll-out and Fully implemented, another ~30 are piloting. By contrast,
Generics and Biologics manuIacturers are at a lower level oI adoption, with ~40 oI
Generics manuIacturers at the Novice level, and ~70 oI the Biologics manuIacturers at
the Pilot level. Overall, New Drug manuIacturers are at a higher level oI adoption than
Generics or Biologics.


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KEY ADOPTION CHALLENGES
The key objective oI this project was to develop a more nuanced understanding oI the
challenges preventing adoption oI QbD. Research brought 10 key challenges to light.
The Iirst 4 are challenges companies Iace internally as they attempt to implement QbD.
Internal misalignment. Internal misalignment within a company around iI
and how to implement is a key adoption challenge and can take several Iorms.
These are the Iive most important maniIestations.
1. Misalignment horizontally across the organization. An issue raised
by several companies was the misalignment horizontally across the
organization. This can either be a result oI a misaligned organization
structure or misaligned incentives. This results in pockets oI QbD
occurring in diIIerent areas. For example, while manuIacturing is the
group that tends to see the most direct beneIit Irom QbD application,
the resource investment oI both time and money comes Irom R&D.
Thus, the traditional organizational design does not incent R&D to
invest in QbD. As we will see in the business case Ior QbD (outlined
later in the document), one oI the most important Iactors in successIul
implementation is application oI QbD across the entire operating
model. However, our research showed that several companies that
have implemented QbD in R&D have not Iully carried through and
extracted the potential beneIits in manuIacturing. This was due to
horizontal misalignment across the organization.
2. Disconnect between leadership and middle management. While
leadership sees QbD as the way oI the Iuture and has set an agenda in
the organization, it is not being executed eIIectively by middle
management. This is oIten due to a lack oI processes understanding,
unclear goals, or lack oI clarity on how to execute within an individual
company context.
3. Culture of conservatism. Historically, companies have beneIitted
Irom being as conservative as possible when dealing with the FDA. A
representative comment was 'the best CMC strategy is to not show all
your cards. Additionally, in companies where people oIten have long
careers, there is a tendency to have a historic lens and reliance on
doing things the 'traditional way. Another cultural issue raised
around QbD was the question oI hampering the Ireedom oI developers.
Some Ieel QbD would hamper this Ireedom, believing 'development is
an art-Iorm. how can you make a platIorm out oI an art-Iorm? An
additional cultural challenge is the Iear oI doing something that is
unknown. Several companies commented that they 'didn`t understand
QbD until |they| did it. QbD is learned by doing and Iear to invest in
something that is unclear is holding several companies back.
4. The amount of change required within company is not feasible. In
order to really implement QbD, many companies will have to redesign
certain aspects oI their operating model. This type oI redesign will
inevitably take time, money, and involve a lot oI corporate politics.


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For a lot oI companies, implementing QbD is 'not enough oI a priority
to do that.
5. For some, QbD remains low on the priority list. Most managers
have many things on their plates and a laundry list oI priorities.
Unless the beneIits are guaranteed, it is made a requirement, or is
speciIically made a priority by senior leadership, QbD oIten Ialls low
on the list oI things to do.
Lack of belief in the business case. The majority oI companies believe that
there is a strong business case Ior QbD, but there are some skeptics. Many
skeptics Irom Generics companies believe that QbD will slow time to Iile, and
that the First to File` concept is not conducive to QbD development. Several
Biologics companies Ieel the amount oI clinical trials necessary to implement
QbD Ior drug substance production steps (e.g. upstream) make the business
case negative until there are Iurther advances in the actual science. Others just
didn`t believe that QbD as a concept 'will have any beneIits that will truly
change the saIety or eIIicacy oI a drug.
Lack of technology to execute
1. Insufficient solution for controlling variability of raw materials.
Industry is divided on what QbD means Ior raw materials some
claim since raw materials are not a part oI the development process,
QbD does not apply. Since they oIten are 'the biggest cause oI
variability, it does not make sense to apply the rigor oI QbD
elsewhere. On the other hand, there is the Ieeling amongst others that
QbD provides an opportunity to apply more rigor to raw materials and
better understand their parameters and impact on process perIormance,
saIety and eIIicacy.
2. Limited understanding of implications of quality attributes. A
cornerstone oI QbD is an ability to deIine the Critical Quality
Attributes (CQA) oI a product. In order to have a solid understanding
oI the CQAs, one must also have a solid understanding oI how the
drug works and what parts oI the drug are most important Ior eIIicacy.
Some skeptics claim that 'you will never know enough about your
materials and process to be able to really understand. This problem
was raised Irequently Ior Biologics, especially at the molecular or bulk
level. ScientiIically, 'we are just not very clear about what aspects are
doing what.
3. Knowledge of QbD techniques is limited. When implementing QbD,
a company will need to explore new experimental techniques and
make new types oI measurements. Some companies Ieel they are
simply not at a point where they can handle these demands and will
have to 'develop new skill sets and get new technology. One
interviewee Irom a company that successIully implemented QbD,
commented that 'developing the technical tools and standardization
necessary was a big challenge.


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4. Difficulty with data management. In driving to gain a deeper
understanding oI a product`s CQAs, design space and monitoring the
product during development a lot oI new data will be generated.
There is a challenge around the 'need to develop new skill sets and get
new technology to execute this data gathering and analysis. Not only
will this data need to be mined in a smart and understandable way, this
'huge volume oI inIormation will need to be continuously managed
and maintained. Companies identiIied the need Ior 'more statisticians
with diIIerent skill sets and more education to be able to handle all this
data.
Alignment with 3
rd
parties. Industry is also concerned with the role oI third
parties. Questions arose around how to manage both suppliers as well as
contract manuIacturers. Some companies are concerned that 'it will be more
complicated to bring |contract manuIacturers| along since all resources are not
under complete control.
The next 6 are challenges to QbD implementation that are speciIic to the FDA and other
regulatory bodies.
Inconsistency in treatment of QbD across FDA. There is an inconsistency in
how QbD is understood throughout the FDA, both between diIIerent oIIices
and within oIIices. The oIIices deIine QbD diIIerently. ONDQA thinks about
QbD as being based on scientiIic prooI, while OGD thinks about QbD in terms
oI Question Based Review
1
. Even within oIIices, there is inconsistency.
Several examples were raised where a QbD Iiled product made it 'all the way
to the end and then the biopharma side overturned what the reviewers had
already approved. This inconsistency leads to a lack oI 'trust that the FDA
will actually accept this Iiling in a consistent manner.
Lack of tangible guidance for industry. One challenge that was raised by the
majority oI companies, especially those in the novice and pilot categories, was
a need Ior more tangible guidance, or 'inIormation. about how to actually do
it on the ground. One interviewee commented that 'we understand what you
are asking Ior broadly, but there are hundreds oI variables there`s got to be an
end in mind a tangible one we can deliver on. Companies are seeking a set
oI ground-rules Irom the FDA around such things as acceptable methods,
criteria to select and deselect critical quality attributes, standards to judge
adequacy oI controls, and criteria Ior analytical method substitution.
Regulators not prepared to handle QbD applications. This challenge has
been apparent Ior years, and the FDA is taking steps to remedy it. However,
this is such a prominent challenge that it is important to reiterate again.
Interviewees cited more speciIic problems than reviewers just being 'green
including 'high turn over and the tendency Ior reviewers to 'Iall back to what
their organization used to do |when they worked in industry|. 'A disconnect
between compliance and Iield groups. |also results in| diIIerent Ieedback.
Additionally, companies are hesitant to Ilag these issues to senior FDA leaders
as they occur since they do not want to delay or hazard the Iiling in question.

1
McKinsey White Paper: Transforming to the Desired State of cGMPs for the 21
st
Century


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The way promised regulatory benefits are currently being shared does not
inspire confidence. This challenge is primarily a result oI the lack oI
codiIication oI real regulatory beneIits Irom the FDA. 'There is questionable
payback it is unclear how much regulatory Ilexibility will actually be given.
Without clear beneIits, proponents oI QbD in industry have expressed diIIiculty
in promoting the idea within their companies, increasing 'skepticism and
reliance on the internal business case. There are a lot oI strong Ieelings
around this challenge, interviewees commented 'the FDA has still not shown
us the Ilexibility we can get Irom this and 'we started this because we were
promised regulatory beneIits, now we can`t even talk about them it`s like |the
FDA| has amnesia. Additionally, a couple oI companies expressed
disappointment that they had not received as much Ilexibility as they thought
should be granted in their previous QbD Iilings.
Misalignment of international regulatory bodies. A large concern,
consistently raised by companies at the Rollout and Fully Implemented levels
oI adoption, is whether QbD applications would be accepted by other
regulatory bodies. For example, one interviewee commented that 'we are very
concerned about the response to this outside the US and Europe. We sell
products in 75 countries, most are not a part oI the ICH. Although no
interviewees have experienced Ilat-out rejection, there were comments about
the increased time and eIIort required in other markets. 'It is much more
diIIicult in secondary markets it takes longer to review because they ask a lot
oI questions several times. This increased eIIort has caused some companies
to implement QbD practices but not bother to submit QbD Iilings.
Current interaction with companies is not conducive to QbD. There is an
admittance that 'historically, there is not a lot oI comIort talking with the
FDA, however, companies are eager to open and improve this communication.
Companies that are passionate about QbD want this to be an open, collaborative
journey. One interviewee Ielt 'the pilots asked a lot oI tough questions, there
were several tough interactions. When we are treated with suspicion, it does
not Ieel like collaboration. One interviewee suggested joint teams working
together. Whatever the solution is, a clear challenge is the current closed way
companies interact with the FDA.
Challenges by industry segments
In order to gain a more nuanced understanding oI the challenges, it is interesting to
analyze which challenges are most relevant Ior the diIIerent types oI drugs.
New Drug. The challenge companies cited as the most important was the
consistency across the FDA. This consistency pertains to both quality oI
reviews, in other words the 'amount oI reviewer inconsistency, as well as the
understanding oI QbD within and across departments. Another challenge that
was cited very Irequently, although not highlighted as the most important, was
the lack oI international harmonization. The increased eIIort and time to Iile
QbD outside oI the USA, a result oI those countries` regulatory agencies taking
'a while to get it,` negatively aIIected the business case. The next big
challenge highlighted was the lack oI codiIication oI regulatory beneIits and or


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what it takes to achieve them. It makes sense that New Drug issues center
around execution oI actual applications; in general, examined New Drug
companies were at a more mature stage oI adoption. Internally, alignment
across the company is a problem Ior many New Drug companies. In many
companies 'R&D is incentivized by shots on goal, not QbD a concept
contrary to good QbD practices oI Iocusing on developing a solid
understanding oI the product.
Generics. The most prominent challenge identiIied by Generics manuIacturers
was a lack oI belieI in the business case. However, there are two camps. One
halI believes that there is a business case Ior QbD in generics and is
implementing. The other halI believes that today, 'generics is all about Iile
Iirst, Iigure it out later. These companies Iear the potential additional time in
early development will disadvantage them in making it Iirst to Iile.` Generics
manuIacturers also identiIied unclear regulatory beneIits as a key challenge
likely closely related to the lack oI belieI in a business case. A Iinal key
challenge Irom Generics manuIacturers was lack oI guidance Ior how to
actually implement.
Biologics. The most prominent challenge identiIied by Biologics
manuIacturers was around the lack oI technology to execute. There is
consensus across the board that it is almost impossible to 'prove the molecular
parameters necessary in a QbD Iile since we don`t really understand what
eIIects what at the molecular level. Despite the inability to execute in this
upstream arena, there is general agreement that QbD can be applied to
downstream processes, Ior example puriIication and Iormulation processes.
Biologics manuIacturers also identiIied lack oI codiIication oI regulatory
beneIits as a key challenge.
Challenges by stages of adoption
Novice. Novices have very little experience with QbD. Most oI their
challenges are perceived rather than experienced. Internally, they Iace a lack oI
belieI in the business case. Externally, Novices Ieel the regulatory beneIits are
unclear and there is a lack oI tangible guidance. They simply do not see the
case Ior pursuing QbD.
Pilot. Companies in the pilot phase are beginning to implement QbD. They
begin to see more tangible internal challenges, such as internal misalignment,
and limited knowledge oI QbD techniques. As with novices, there is still a
substantial problem with lack oI clarity oI the business case. They Iace the
same external challenges as Novices, including unclear regulatory beneIits and
lack oI tangible guidance Ior the industry. As companies in the pilot phase
have begun experimenting with QbD, they have started to realize other external
challenges, including inconsistency oI treatment oI QbD across FDA, and
misalignment oI international regulatory bodies.
Rollout. Companies in the rollout phase have solved, or are solving, most oI
their internal problems in terms oI implementation the majority oI their
challenges are external. These challenges are Iocused on the lack oI alignment
oI regulatory bodies, we well as lack oI clarity oI regulatory beneIits. They


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also identiIied regulator`s ability to handle QbD applications as a big challenge,
as well as the Iact that the current interaction with companies is not conducive
to QbD.
Fully implemented. Companies that are Iully implemented Iace seemingly
more advanced` problems. For example, they struggle with the question oI
alignment with third parties such as suppliers and contract manuIacturers.
They are also preoccupied with regulators` ability to handle QbD applications
and the suIIiciency oI the interaction with the FDA in order to Ioster QbD.
BUSINESS CASE FOR QBD
As part oI this project the team gathered preliminary data and insights on building the
business case Ior QbD. The work is meant to provide a Ioundation on early answers and
a recommended path Iorward to continue to build and understand the business case.
Our analysis shows a strong preliminary business case Ior QbD. Interviews debunked
two commonly held belieIs surrounding the extra time and money required to execute
QbD. Additionally, preliminary modeling indicates huge potential long term value Ior the
industry as a whole, which could be as large as $30 billion incremental annual proIit. Our
analysis also surIaced key Iactors which must be in place within companies, as well as
within the FDA, Ior this strong business case to hold true.
Debunking QbD myths
As a company thinks about executing QbD, many Iactors must be weighed and
considered. Two Iactors that commonly work against QbD are the Iear that QbD is very
expensive and will drive costs up, and the Iear that QbD will require a lot more time and
analysis. Our interviews provided evidence that the cost to implement QbD is in Iact
minimal, and the increase in time, iI at all, is negligible.
The cost to implement QbD is minimal. Most people believe QbD leads to a
marginal increase during set up mostly Irom procedure development, a
change in human resources, as well as new analytical tools or knowledge
management capabilities (see additional exhibit 1 in appendix). AIter this
initial set up Iee, most people Ieel there is no marginal cost, some interviewees
even claimed that QbD drives development costs down. Some polled claimed
that QbD has reduced their technical development costs by up to ~25 per
program.
QbD will not increase the timeline for development. Interviews indicated
that QbD may add a negligible amount oI time (~2 FTEs over 2 days) during
the early development phase, however there is no eIIect on time spent in critical
path, and time in tech transIer and scale up were oIten reduced. Although QbD
many cause minimal increases in time upIront, many companies experienced
time savings downstream.




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Exhibit 4: Conceptual timeline showing QbD development vs. traditional




Clinical
development
Pre-proof
of concept
Post-proof
of concept
Filing
Traditional
technical
development
Early dev Late dev
Launch
ready
Tech
Transfer
Scale
up
Technical
development
with QbD
+ 0 - 10% -10% - +10% - 10 - 0% - 10 - 0%
Early dev Late dev
Launch
ready
Tech
Transfer
Scale
up







[Conceptual picture of three timelines, vertically stacked. Three timelines are clinical development,
traditional technical development, and technical development with QbD. Clinical development shows three
stages pre-proof of concept, post proof of concepts and filing. Traditional technical development is
below the clinical development and show 5 phases, Early development, Late development, tech transfer,
scale up, and launch ready. Below is the 3
rd
timeline for technical development with QbD. This shows the
same phases as the traditional technical development. The Early development phase shows a potential 0
10% increase in time for technical development with QbD. The late development phase shows a 10% -
+10% difference in time for the technical development with QbD. Tech transfer and scale up both show a
potential 10% decrease in time for technical development with QbD.]
Potential benefits from QbD
Analysis identiIied many potential beneIits Irom QbD some oI which are quantiIiable,
and some oI which are not. In terms oI quantiIiable beneIits, value comes Irom Iour main
areas a reduction oI Cost oI Goods Sold (COGS) and capital expense, increased
technical development productivity, improved quality (and lower risk), and increased
sales. These Iour combined could potentially provide $20 - $30 billion more proIit to the
industry.
Reduction of COGS and capital expense. QbD allows improved planning,
cycle time, yield and quality potentially driving down costs by as much as $15
$25 billion across the industry.
Technical development productivity. Utilizing QbD techniques during the
product development process (e.g., platIorming, taking advantage oI growing
knowledge base) can lead to $4 $5 billion in savings.
Improved quality and lower risk. Implementing QbD is really using 'good
science which leads to an overall better, more reliable product. Savings Irom
reduced risk oI regulatory citation are estimated to be $0 - $2 billion.
Increased sales. Products that utilize QbD have better launches and generally,
will have better product design leading to Iewer stock-outs. This can lead to $0
- $4 billion in increase sales.


Confidential Page 16

Exhibit 5: Potential sources of incremental profit from QbD
2










24-35 Total
0-4
ncreased
sales
mproved
quality
lower risk
0-2
Tech Dev
productivity
4-5
Reduction of
COGS and
capital
expense
15-25
USD billions

[Build-down vertical waterfall chart showing potential sources of incremental profit from
QbD, as determined by McKinsey analysis. First bucket of potential incremental profit is
from reduction of COGS and capital expense, $15 - $25 B. The second bucket of
potential incremental profit is Tech Dev productivity, $4 - $5 B. The third bucket is
improved quality lower risk, $0 - $2 B. The fourth bucket is increased sales, $0 - $4 B.
The fifth bucket is the total bucket, showing potential incremental profit of $24 - $35 B]

Additionally, QbD has potential to provide beneIits that are more diIIicult to quantiIy.
Improved public image, standardized deIinitions within a company, and best practice
sharing were highlighted in interviews.
Improved public image. Implementing QbD in development will lead to an
overall increase in quality oI product. As the public learns more about QbD
and its positive implications Ior product quality, people will potentially trust
companies that are QbD users` more so than those that are not.
Standardized definitions. Several interviewees indicated an unanticipated,
but extremely valuable beneIit in the standardization oI deIinitions across their
companies. In implementing QbD, a company must ensure that the entire
operating model is aligned and that the same language is being used throughout
the company.
Sharing best practices. One company commented that 'since our redesign
was global and we are all on the same system, everyone has access to the best
practices iI experts in Sweden develop something, we can roll it out
immediately. Implementing QbD has enabled global best practice sharing.

2
McKinsey


Confidential Page 17

Critical factors to enable business case
Our analysis indicates that in order Ior companies to experience the most business
beneIits possible, two things must be in place. Companies must be aligned across the
entire operating model to support QbD, and the FDA must ensure a high quality oI review
and deliver on the regulatory beneIits many companies Ieel were promised.`
Alignment across entire operating model. Companies that are seeing the
most beneIits Irom QbD have aligned their operating systems to QbD in a
systematic and streamlined way. They have aligned across the three elements
oI the operating model technical / processes, management system, and culture
and capabilities.
1. Technical Processes. Companies that are successIul have the right
tools and processes to execute on QbD. They have standard
development processes built on QbD principles and may have
standardized equipment across development and commercial
manuIacturing plants as well. They also have the data management
systems in place to really make QbD work. Additionally, they
participate in industry and regulatory thought groups.
2. Management system. SuccessIul companies also have alignment to
QbD among leadership 'executive sponsorship is crucial to making
this work. Additionally, incentives must be aligned to support a
connected operating model (e.g., R&D developers have interest in
product throughout its liIecycle).
3. Culture and capabilities. The right talent with the appropriate
capabilities needs to be in place Ior QbD to work. This is about
ensuring a company has 'people with the smarts, motivation, and
sponsorship to drive it Iorward. This can be ensured through talent
acquisition, and capability and training programs. Beyond capabilities,
the company culture needs to support QbD. All oI the companies who
are seeing tangible beneIits believe QbD is 'a part oI our culture.

High quality of reviews and delivery of regulatory benefits. In order to
allow companies to get value Irom the business case the FDA needs to ensure
reviews are consistent and smart. Additionally, there needs to be delivery upon
the promised` regulatory beneIits. Other potential steps the FDA can take to
catalyze QbD adoption will be covered in the next section.








Confidential Page 18

Exhibit 6: Correlation between supporting mechanisms and level of adoption













[Chart listing 9 mechanisms to support QbD on the y-axis, and their alignment against stage of adoption
(i.e., Novice, Pilot, Rollout, Fully implemented) on the x-axis. A dotted check mark under the stage of
adoption and next to the mechanism indicates somewhat implemented, a full check mark under the stage of
adoption and next to the mechanism indicated implemented.
Novice Pilot Rollout
Fully
implemented
Formal QbD pilot program / organization / special
project
Standard development processes built upon QbD
principles
QbD principles "built in" to our regular Regulatory
CMC processes
Stage-gate process for CMC program review
ncentive alignment amongst development &
manufacturing
Talent acquisition and management
Participation in industry / regulatory groups
Capability / training programs for personnel
Standardized equipment
Mechanisms to support QbD
Implemented
Somewhat
implemented

Formal QbD pilot program / organization / special project somewhat implemented for Pilot,
implemented for Rollout
Standard development processes built upon QbD principles somewhat implemented for Novice
and Pilot, implemented for Rollout and Fully implemented
QbD principles "built in" to our regular Regulatory CMC processes somewhat implemented
for Rollout, implemented for Fully implemented
Stage-gate process for CMC program review somewhat implemented for Pilot, implemented
for Rollout and Fully implemented
Incentive alignment amongst development & manufacturing implemented for Rollout and Fully
implemented
Talent acquisition and management implemented for Rollout and Fully implemented
Participation in industry / regulatory groups somewhat implemented for Novice, implemented
for Pilot, Rollout, and Fully implemented
Capability / training programs for personnel somewhat implemented for Pilot, implemented
for Rollout and Fully implemented
Standardized equipment somewhat implemented for Rollout, implemented for Fully implemented]
Potential next steps to continue building business case
Moving Iorward, there are many things that can be done to continue to build and
substantiate the business case.
Bring together industry leaders to share case examples encourage sharing oI
real, speciIic numbers
Build library of business impacts Irom pilot and other QbD applications


Confidential Page 19

Continue to invest in a deeper understanding of where value is coming from
and what must be in place to achieve this value
This potentially could involve a project-by-project based analysis, building
an understanding oI baseline development perIormance and how that is
diIIerent than when utilizing QbD (i.e., time and eIIort to develop and Iile
by phase, technical transIer and scale up, process outcomes in terms oI
quality, cost and perIormance, one time costs)
One could bolster this analysis with an examination oI the various operating
systems and management inIrastructures companies have in place to
determine which have the greatest impact on the business case
IMPLICATIONS FOR FDA
Our research has highlighted many challenges to the implementation oI QbD. These
challenges indicate several areas that the FDA may consider addressing in order to speed
QbD adoption. The actions the FDA can take become more tangible when applied to the
segmentation oI drug type and level oI adoption.
Potential options to consider
We have identiIied several options the FDA can consider to enhance QbD adoption.
These options Iall into several areas FDA policy, internal FDA change management,
and external change management.
FDA Policy options
1. Define and codify incentives. Although the FDA may or may not
believe there are beneIits to Iurther deIining and codiIying incentives,
Irom our conversations with industry, it is clear many companies see
this as a powerIul way to incentivize QbD adoption. We recommend
the FDA consider analysis to understand what such incentives could be
(e.g., a Iaster review process, easier to change processes later on), and
what beneIits could come Irom adoption oI these incentives.
2. Develop tangible guidance for QbD execution. Companies,
especially in early stages oI adoption, have identiIied conIusion around
what QbD means and how to actually execute as a huge challenge.
They strongly believe they could beneIit Irom more tangible guidance.
Issues raised Irom the regulatory side against increased direction are
around a Iear oI creating guidance too early, while things are still
being 'Iigured out, as well as Iear oI being too prescriptive. Although
there are valid concerns around the dissemination oI more direction, it
is a clear need within industry that the FDA is able to, and should
meet.
3. Mandate. Some drug areas, Ior example several areas within the
Generics industry (e.g., controlled and modiIied release drugs), have
had numerous saIety issues. For drugs such as these, where there is a
public health risk due to lack oI process understanding, mandating


Confidential Page 20

QbD is a reasonable option. As long as Iirst to Iile` exists in the
Generics industry, there is a strong argument that unless the quality oI
scientiIic understanding is raised Ior all applications, companies will
continue to cut corners` to Iile as quickly as possible disadvantaging
those companies that seek to gain a deeper scientiIic understanding,
and potentially putting patient saIety at risk.
Internal FDA change management
1. Ensure consistency of review process in terms of scientific
knowledge and quality of review. The desire Ior a consistent review
process and well trained reviewers is unanimous throughout industry.
The FDA is aware oI this need and has been working to train and
educate reviewers to prepare them to handle QbD applications. The
FDA is also exploring utilizing teams oI reviewers to handle
applications rather than a single reviewer. The FDA should continue
to pursue consistency in the quality oI its reviews.
2. Harmonize the approach to QbD across the FDA. There is a need to
harmonize QbD practices and requirements across FDA including OPS
and associated Iunctions e.g. compliance and inspectors. The current
state where decisions around QbD are sometimes called into question
or even overturned when areas subsequent to OPS review are involved
has the chance oI eroding or even stopping the momentum around
QbD adoption in industry. FDA should present a uniIied approach to
QbD regardless oI the section oI FDA that a company is interacting
with at a particular time.
However, opinions are split on whether or not the OPS should have a
uniIorm approach to QbD across its three oIIices. Since the oIIices
deal with such diIIerent products, it may be impossible, and potentially
harmIul to try and assign a single approach. At the same time,
completely diIIerent approaches can be very conIusing. The FDA
should establish one clear, broad deIinition oI QbD to be utilized by
OPS. Each oIIice can then tailor that broad deIinition with an
approach that is best suited to its drug type.
External change management
1. Change the method of communication. Industry almost universally
asked Ior more Irequent, 'no risk dialogs with the FDA. The
companies who participated in the pilot programs Ielt they beneIited
Irom the increased, and oIten less Iormal communications. There are
Ieelings that 'no risk dialogs are impossible, as the FDA needs to
protect public saIety and cannot aIIord to oIIer any immunity areas.
There is also a Iear that anything said by the agency, even iI in a
casual` conversation, could be taken as oIIicial opinion.`
Additionally, more meetings would put an even greater resource
constraint on the FDA. Despite the constraints Ior the FDA, there
needs to be a reassessment oI the FDA`s interaction with industry. A
system should be craIted that allows Ior more dialogs in a manner
comIortable to both FDA and industry.


Confidential Page 21

2. Create more buy-in by disseminating case examples. Industry has
made a clear call Ior real, tangible examples oI what the FDA has
actually approved or rejected and why. However, there are legal
barriers Ior the FDA in disclosing this inIormation. The FDA can
work with companies who have had successIul applications, to
develop more understandable examples, with which both sides
(industry and the FDA) are comIortable sharing publically.
Additionally, the FDA can continue to disseminate Iindings and tips on
successIully navigating challenges as they work with companies.
3. Improve international harmonization. There are questions around
whether or not the FDA is responsible Ior addressing international
harmonization oI QbD acceptance. This is an area worth at least
examining as the FDA is currently one oI the biggest proponents oI
QbD and the lack oI international harmonization is one oI the biggest
challenges raised by companies. The FDA should continue to seek
opportunities to work with other regulatory bodies (e.g., joint reviews).
The FDA should work to ensure alignment on what QbD means,
what`s required and how regulatory Ilexibility can be granted.
4. Utilize a 3
rd
party model as a means of catalyzing and
standardizing QbD within industry. There is a call Ior more
substantial direction Irom and interaction with the FDA. Clearly this
is putting a great resource strain on the agency. One way to alleviate
this strain would be to promote the use oI a 3
rd
party model as a means
Ior Iurther education and QbD development.
Implications for different drug types
New Drugs: Rapidly drive adoption. New drugs manuIacturers are the most
mature in terms oI their adoption oI QbD. There is potential Ior the FDA to
continue to push more New Drug companies to adopt QbD, utilizing learnings
Irom other companies` success (i.e., real case examples) to help Iacilitate
understanding and adoption. Although, we have not heard strong anecdotal
case Ior QbD changing the patient saIety Ior New Drugs, it seems this is an
appropriate area to provide incentives Ior adoption.
Generics: Consider mandate or policy change. In the generics arena there
have been a number oI examples where rushing to Iile and a lack oI process and
product understanding has led to serious patient saIety issues. Although this
has yet to be codiIied iI it was codiIied and accepted by the health community
there may be a good argument to make QbD a mandate Ior some types oI
Generic Iilings. Even iI Iull blown QbD is not made a mandate, there is
potential to make the process understanding required within applications more
detailed, and to make some oI the optional` parts oI QBR mandatory.
Biologics: Do not give up on QbD. Although many manuIacturers site QbD
as being impossible, especially with upstream processes our interviews
indicate this is not true. Many biologics manuIacturers are applying QbD to
downstream processes with great results. These manuIacturers believe that
QbD is even more important Ior Biologics as the molecules are more complex,
a deeper understanding will lead to better product. There is no reason why


Confidential Page 22

QbD should not apply to biologics. The FDA should continue to be patient,
disseminate success stories, and hold Iorums concerning QbD Ior Biologics
companies. Over time, the case Ior QbD Ior biologics will become increasingly
clear.

Implications for different levels of adoption
Novice: Ensure understanding. The FDA should ensure Novice`s understand
what QbD really means, and what the potential beneIits are. There is potential
to distribute more case examples and ensure codiIication oI beneIits is clear.
There is also potential to invite novices to workshops or a QbD Academy`
where the basics are covered and the FDA can train ambassadors` to bring a
more nuanced understanding oI QbD back to their company.
Pilot: Help with internal issues. As companies begin piloting QbD, they Iace
many internal issues, including internal misalignment, and limited knowledge
oI QbD techniques. There is potential Ior the FDA to disseminate best
practices` or a more tangible how-to` guide. There is also potential to hold
seminars / workshops where more experienced QbD companies discuss the
challenges they Iaced in implementation and lessons learned. Additionally,
more casual interaction with companies in a collaborative manner will be
crucial as they develop QbD programs.
Rollout: Work through external issues. Companies in the rollout phase have
usually begun to work out their internal issues, and are more Iocused on
external challenges. It will be crucial to improve the interaction with
companies to be more open. Companies at this phase oI adoption are looking
Ior how to have a more collaborative role with the FDA in making the QbD
application process run smoothly. Additionally, it will be very important Ior
the reviews to be consistent and oI a high quality.
Fully implemented: Collaborate. There is potential Ior the FDA to work with
companies at a very mature state oI adoption to build case studies and share
best practices. The FDA can Iacilitate industry leader Iorums where companies
debate some oI the more complicated issues Iacing QbD, such as what is means
Ior suppliers and contract manuIacturers.




Confidential Page 23

APPENDIX
Comprehensive data mining efforts
List of articles examined for this project
Avellanet, John, 'Why Quality by Design? An Executive`s Guide to the FDA`s
Quality by Design. Cerulean Associates, March, 2008.
Fuhr, Ted, Michele Holocomb and Paul Rutten. 'Why 'Quality by Design'
should be on the pharma CEO's agenda March 2009, McKinsey & Co.
Operations Extranet.
Ginsberg, Peter L., Sandeep Bhatia, and Rachel L. McMinn, 'The road ahead
Ior biologics manuIacturing. January 2002.
McKinsey White Paper: 'TransIorming to the Desired state oI cGMPs Ior the
21st Century.
Neway, Justin. 'How to Make the Business Case Ior Quality by Design.
BioPharm, December, 2008.
Paskeit, Diane M., 'QbD and Parentals: Strategies Ior assessment oI leachable
in parental drugs. Contract Pharma, April, 2009,
http://www.contractpharma.com/articles/2009/04/qbd8200and-parenterals.
Pickett, Joseph, 'CMC pilot program succeeding in integrating concepts oI
QbD. Inspection Monitor, February, 2007,
http://www.entrepreneur.com/tradejournals/article/159645395.html.
Quality by Design is Essential in the New U.S. Regulatory Environment, Aegis
Analytical Corporation, www.aegiscorp.com.
Rathore, Anurag. 'Roadmap Ior implementation oI quality by design (QbD) Ior
biotechnology products. August, 2009.
Snee, Ronald D., Philipple Cini, Jason Kamm, and Chester Meyers, 'Quality
by Design: Shortening the Path to Acceptance. Pharmaceutical Processing.
Tunnell Consulting,
http://www.pharmpro.com/ShowPR.aspx?PUBCODE021&ACCT0000100
&ISSUE0802&RELTYPEPR&ORIGRELTYPEATO&PRODCODE000
0&PRODLETTY&CommonCount0.
Snee, Ronald D., 'Quality by design: Four years and three myths later.
Pharmaceutical processing, February 1, 2009,
http://www.pharmpro.com/ShowPR~PUBCODE~021~ACCT~0015856~ISSU
E~0902~RELTYPE~PR~ORIGRELTYPE~ATO~PRODCODE~4315~PROD
LETT~A.html.


Confidential Page 24

Somma, Russ, 'How Quality by Design Is Changing Drug Development: Without
QbD thinking, sponsors` attempts to address FDA 'complete response letters may be
doomed. SommaTech Consulting, http://www.pharmaqbd.com/node/90.
Somma, Russ and Andre A. Signore. 'Embracing Quality by Design: Applying
concepts can help CMOs Create Value,
http://www.ipsdb.com/pdI/insight/EmbracingQualitybyDesignApplyingQbDconcept
scanhelpCMOscreatevalue.pdI.
Spurgeon, Tom. 'Quality by design in Solid Dosage Processes: How will QbD impact
manuIacturing?
http://www.ipsdb.com/pdf/insight/EmbracingQualitybyDesign_ApplyingQbDconcepts
canhelpCMOscreatevalue.pdf.
Conferences / Presentations
'Implementation oI Quality by Design in New Product Development, GSK, Peter
Watmough (senior development scientist), Laura Morris (process development
engineer).
Peri, Prasad, 'Quality by Design (QbD) Approaches Ior Orally inhaled and Nasal
Drug Products (OINDPs) in the USA. OIIice oI New Drug Quality Assessment
(ONDQA), OPS, CDER. RDD Europe 2007.
PhARMA perspective conIerence: 'Potential barriers to QbD implementation.
September, 2009.
'Sandoz: Pioneering Global development oI Biosimilars, Bio Super Session, June
17th, 2008, Freidrich Nachtmann, PhD. Head oI Biotech Corporations, Sandoz
GmbH.
Somma, Russ. Using Quality by Design (QbD) in Designing Efficient, FDA
Compliant Pharmaceutical Manufacturing Processes and Facilities: What is the
Impact? SommaTech, LLC.
Winkle, Helen. 'Evolution oI the Global Regulatory Environment: A Practical
Approach to Change, PDA / FDA Joint Regulatory Conference: Implementing
Quality by design. September, 2007.
Yu, Lawrence. 'Pharmaceutical Quality by Design: Regulatory Perspectives.

Additional quotes supporting challenges
Internal Misalignment: Disconnect between leadership and middle management
'People are at diIIerent stages within diIIerent Iunctions in terms oI Iiguring
out how to do things leadership agrees with the general mantra, but the
groups that need to execute don`t understand how to deliver
'Middle management understands QbD but the lower or higher into the
organization you get there are misunderstandings
We have pockets and silos oI QbD going on but are not united overall
Internal Misalignment: Misalignment horizontally across the organization
'R&D is 100 incentivized on the quantity oI Iilings they get


Confidential Page 25

'The biggest challenge is getting alignment within a company to support
many players need to be involved Ior this to be executed successIully
'The groups that stand to get the most beneIit Irom QbD are not the same that
bear the brunt oI the (perceived) risks and costs
'There is no credit` Ior helping out with these issues |understanding biologics
CQAs| and so the progress is slow
Internal Misalignment: Culture of conservatism
'We need to ensure everyone understands the paradigm shiIt today the best
CMC strategy is to not show all your cards
'Smart people get into a company and are trained to do things a certain way
they get stuck we have to open people`s minds back up to understand QbD
'There is a resistance to eliminating QC resources
'People believe development is an art Iorm and ask, how can you make a
platIorm out oI an art Iorm?`
'We have a history oI playing by the old rules
Internal Misalignment: The amount of change required within company is not
feasible
'Adoption oI QbD will require remodeling oI the entire operating model it`s
a huge change
'In order to get the beneIits Irom this we would have to totally redesign our
entire development process QbD is not enough oI a priority to do that
'For this to work it`s more than just QbD you need lean alignment, 6 sigma,
and an organizational culture element
'We needed to restructure manuIacturing and development to recognize the
multi-Iunctionality necessity to support these initiatives
'SigniIicant change is required at manuIacturing site when you implement
QbD
'Although it`s now implemented, this new radical approach |redesigning
development program| took a while to get an embed and get real acceptance
Internal Misalignment: QbD remains low on the priority list
'When a manager looks at the list oI things he needs to do, QbD
implementation is not high up there
'Unless this is a mandate Irom above, there is no reason to do this beIore
something else
Lack of belief in business case
'Planning Ior a QbD Iiling requires a huge investment oI time and eIIort early
in development, beIore you even know iI the product will make it to launch
'There is a lot oI uncertainty over timing oI and investment requirements Ior
QbD implementation
'Re-usability oI knowledge gained on one product in support oI another is
uncertain
'I`m not sure QbD will have any beneIits that will truly change the saIety /
eIIicacy oI a drug
'We have some drugs Ior which the increased Ilexibility would not be helpIul
'We need to build out scenic understanding this requires many resources,
many people, many hours, and many expensive studies
'This costs more because it really is around making more and more batches
amount oI analytical testing
Lack of technology to execute: Insufficient solution for controlling variability of
raw materials


Confidential Page 26

'QbD does not address raw materials that`s the biggest cause oI variability
Ior us
'A robust raw material management system needs to be in place to Iacilitate
QbD implementation. Critical raw materials signiIicantly impact product
quality and should thereIore be thoroughly characterized
3

'We need a better understanding oI excipients, what are their properties?
Their Iunctionalities?
Lack of technology to execute: Limited understanding of implications of quality
attributes
'You will never know enough about your materials and process to be able to
change as you go through
'This is a really big problem Ior large molecules, we are just not very clear
about what aspects are doing what
'We just don`t understand the biological signiIicance oI CQAs there is
misplaced conIidence in being able to Iigure this out
'Vaccines will be an issue, we have always built consistency into the process
without knowledge oI what was going on, we need better technology to get
there
Lack of technology to execute: Knowledge of QbD techniques limited
'In order to make some oI the new types oI measurements we will need to
develop new skill sets and get new technology
'Developing the technical tools and standardized processes necessary was a
big challenge
Lack of technology to execute: Difficulty with data management
'In order to make some oI the new types oI measurements we will need to
develop new skill sets and get new technology
'There is a challenge monitoring a product in late development to understand
how a process is playing out since there is such a huge volume oI inIormation
'We will need more statisticians with diIIerent skill sets and more education to
be able to handle all this new data
'For older products we are having diIIiculty with knowledge management, the
data could be stuck on someone`s hard drive somewhere
Alignment with 3rd parties
'It will be diIIicult Iiguring out the best way to provide guidance Ior outside
partners heavily engineer vs. brute Iorce . it will be more complicated to
bring them along since all resources are not under complete control
'QbD is a space to redeIine relationships with suppliers hopeIully it will
give more Ireedom in terms oI changing suppliers
'Suppliers come more into play as we think about sources oI variability
Inconsistency of treatment of QbD across FDA
'The FDA is not aligned, the only thing they are aligned on is where you Iile
'Although a number oI people in the FDA are supportive oI QbD this is not
consistent
'ONDQA has a very philosophical deIinition based on scientiIic prooI '
4


3
Rathore, 'Roadmap

4
McKinsey White Paper: Transforming to the Desired state of cGMPs for the 21st Century



Confidential Page 27

'OIIice oI Generic Drugs has taken a more pragmatic approach and provided
an explicit, required process Ior submitting via Question based Review
(QbR)
5

'We had trouble with a recent drug where we put all the appropriate controls
in place, passing our own bio-equivalency tests, then, the bio-equivalence
department asked us to change our method since that was not what they
typically see
'We got all the way to the end and then the biopharma side overturned what
the reviewers had already approved. This was a major blow.
'There are many diIIerent opinions within the FDA on how to apply QbD to
solution, we came to an understanding with chem group that was overturned
by biopharm group at the end
'There is a big disparity between center and Iield. We worked with the center
on QbD Iiling, then in an inspection the inspector didn`t know what QbD
meant
Lack of tangible guidance for industry
'The QbD lingo is cutting edge and sexy but there is very little inIormation
out there about how to actually do it on the ground
'FDA has not explained what is expected Irom a QbD Iile that has to be
proven clinically
'We understand what you are asking Ior broadly, but there are hundreds oI
variables there`s got to be an end in mind a tangible one we can deliver
on
'The path the FDA would like us to take to get here is not clear
'We know DOE is not suIIicient anymore we need more but it`s unclear
how to invest
'We don`t trust that the FDA will actually accept this Iiling in a consistent
manner
Regulators not prepared to handle QbD applications
'The FDA needs to increase the depth oI expertise oI reviewers and inspectors
in the various approaches to quality by design, Ior example chemometrics,
engineering and modeling
'High turnover seems to be an especially big problem
'Reviewers who come out oI industry Iall back to what their organization used
to do
'Dealing with reviewers who don`t Iully support this or understand this really
slows us down a lot
'How can we be comIortable that the recipient oI our Iile will understand?
'You never know what Ieedback you are going to get these days, it`s a very
inconsistent interIace
'There is a disconnect between compliance and Iield groups, we oIten get
diIIerent Ieedback
'FDA is not leveraging the data we are giving reviewers are green and don`t
understand the processes
'Regulators have diIIerent expectations and ask diIIerent questions Ior smaller
companies than bigger companies

5
McKinsey White Paper: Transforming to the Desired state of cGMPs for the 21st Century


Confidential Page 28

'Not everyone at FDA understands, they need more education and
development oI CMC staII. I`ve seen conIlicts within the FDA especially
with post approval, once you get approval gap in terms oI level oI
understanding
The way promised regulatory benefits is currently being shared does not inspire
confidence
'There is a questionable payback it is unclear how much regulatory
Ilexibility will actually be given
'The lack oI clarity makes it harder Ior us internally and increases skepticism
and reliance on the internal business case
'FDA has still not shown us the Ilexibility we can get Irom this
'At the end oI the day it is still unclear whether the FDA will actually back
these Iilings
'It is a challenge to understand what the agency actually wants, and what sort
oI Ilexibility it will provide
'People are wary is this really going to come to pass?
'What we really need are Ior the regulatory beneIits and Ilexibility that have
been promised to be codiIied, delivered and then realized
'We started this because we were promised regulatory beneIits not we can`t
even talk about them its` like they have amnesia
'We do need more clarity on short term apparent return on investment vs. real
ROI
'FDA needs to show business beneIits
'There is a lack oI clear regulatory incentives; without it you are giving an
advantage to someone who just seeks approval at the minimalist cost and
hurting companies who take a holistic approach
Misalignment of international regulatory bodies
'Duplication oI industry resources to satisIy international markets that are not
willing to accept the content oI a QbD Iiling submitted to the FDA
'Lack oI clarity on how QbD and associated Ilexible regulatory approaches
will be received by countries outside oI ICH
'Beyond FDA who else will accept this Iiling?
'Since there is no global harmonization, why move away Irom traditional
Iiling?
'It is much more diIIicult in secondary markets it takes longer to review
because they ask a lot oI questions several times
'We are very concerned about the response to this outside the US and Europe.
We sell products in 75 countries, most are not a part oI the ICH
'This is an FDA initiative, the rest oI the world is watching and waiting
'We managed a joint FDA EMEA audit there were too many people with
diIIering opinions and in diIIerent places with QbD
'You have the Japanese saying you are doing QbD so we want this stuII, you
have Europeans saying we want this other stuII
'Japan`s structure oI submission documents, is so that you can`t apply Ior
Ilexibility on Iormulation
Current interaction with companies is not conducive to QbD
'There needs to be a diIIerent way to interact, may even be joint teams doing
parallel reviews together
'Historically, there is not a lot oI comIort talking with the FDA


Confidential Page 29



'This needs to be more oI a collaborative process it should be a mutual
education activity
'Pilots asked a lot oI tough questions, there were several diIIicult interactions.
When we are treated with suspicion, it does not Ieel like collaboration
'There is a Ieeling that the FDA has yet to act on any Ieedback that the
industry has been giving
'It would be helpIul iI we could make changes without writing a PhD thesis
every time

Additional Exhibits
Additional Exhibit 1: Correlation between supporting mechanisms and level of
adoption

Cost drivers
Process / procedure development
Human resources (e.g., new human
resources, trainings)
nfrastructure (e.g., analytical tools)
Knowledge management
capabilities
Projected total cost to
implement
$100 $200 K
$0 - $200 K
< $200 K
$0 - $200K
Total < $1 MM