Appendix - Risks

Quality Efficiency Force majeure Other Risks

• Intellectual Property Loss – Intellectual
• Lack of proper Quality
Property rights agreement should be available,
Management Systems -
and the pharma should not face any
Quality management up to
intellectual theft
the necessary standards are
not maintained, as per US
• Capacity Constraints – Total capacity of
FDA guidelines
production and storage is limited and change
in capacity cannot be adjusted easily
• Compliance issues -Legal
and financial penalties for
• Relationship – Relationship with project
failing to act under
company, suppliers and distributors are well
regulations
maintained
• Lack of Control over
• Loss of flexibility and responsiveness –
Product - Quality of the
Unable to cope with unforeseen situations or
product is non-consistent
changes in demands
and not as per standards
• Time &/or Cost Overruns – Requirement
• Problems in monitoring
of excess time and cost than estimated
and evaluating supplier
performance - Regulation
• Low Adherence to schedule – Not able to
and quality checks with
manufacture product as per schedule
suppliers are not
frequently
consonantly performed
• Critical dependence on supplier – Do not
have a bargaining power over supplier,
weakness for manufacturing company
• Changes in Government Policy
pertaining to Healthcare – New policies
pertaining to third party manufacturers, taxes,
import and export may impact pharma
contract manufacturing
• Change in Regulations – Rigid regulation
standards established by the regulatory bodies
impacts negatively
• Natural Calamities – Losses caused by
natural force majeure risks should be covered
by the project company as per contract
guidelines
• Accidents – Accidents due to non-
compliance lead to penalty for pharma
contract manufacturing company
• Lack of Skilled Labor -
Survey Labor availability,
competitive advantage,
customer segmentation and
outsourcing is a KPI for the
pharma contract manufacturer
• Language and cultural
barriers- For outsourced
third party manufacturer
language of the project
company and TPM company
may be barriers
• Loss of critical skills –
Shortage of skills , not updated
skills necessary for pharma
manufacturing
• Lack of shared vision and
objectives – Vision of the
project company and the
third-party manufacturer are
not aligned
 Appendix - TPL
Service Quality
• Delivery Quality -
1. FAA/FDA or other
compliance requirements
for ware-housing
requirements
2. ISO procedures for units
handling, storing, and
preservation
3. ISO procedures for Pick,
Pack, and Ship facilities
and quality requirements
4. ISO procedure for
delivery
5. Six sigma and
commitment to
continuous improvement
• Client Satisfaction –
Client acquisition and
retention rate
• Conflict Resolution -
The metrics of efficiency,
equity, and voice provide
an analytical framework
for. analyzing the extent to
which different dispute
resolution systems
Capability Overall Company Development Sustainability
Parameters Prospects
• Optimization Capabilities – To • Philanthropy – CSR
• Cost – Total cost the project
undergo the process in an efficient activities and amount
company has estimated for • Growth
manner to generate maximum invested , % of profit for CSR
project . Forecasts –
output at minimum cost
Growth statistics of • Training programs –
• Financial Strength – the company in
Employee benefit training
• IT Capabilities – The IT determined by liquidity and CAGR over past 10
programs for growth
infrastructure setup for data solvency financial ratios, Credit years, and
security, real time data transition rating of the company estimated growth in
and network accessibility next 5 years • Employee Compensation
• Geographical Location – – Policies for employee
Country of origin • Continual compensation
• Management Capabilities –
Efficiency of the company to manage Improvement –
• Logistics Equipment – easy Agile framework
resources & orders • Occupational Health &
availability of equipment's and implementation
Safety – Policies for health
distribution channels, ease of with principles of
• Responsiveness – How efficient hazards , regulated practice of
doing business index Kaizen
the company is in responding to fire drills and others
external requests and queries • Market Share – market share • Investment Plans
of company in the industry – Future growth & • Investment in local
• Compatibility – How is the
diversification community – Part of CSR
compatibility of the third party • Experience in Industry- investment for local
manufacturer with project company, strategies for the
years of experience and similar company community
suppliers & distributors project experience
• Employee Avg. Duration
• Connections/Networks – of Stay – Employee attrition
Distribution network in terms no. of rate
distributors and sub- distributors ,
dealers and retail outlets.
 Appendix - TPM
Cost Product
• Trade Terms - Trade terms are used to • Quality Standards - contract terms
define the division of costs and responsibilities should state that all pharmaceutical
during the shipment of commodities between products are to be manufactured in
the supplier and the buyer’s stores. conformity with recognized
pharmacopeial standards
• Purchase Quantities - The buyer may
request tenders for either fixed or estimated • Product Labelling & Packaging -
quantities The language for labeling & information
given in labeling should be clearly
• Exchange Rates/ Payment Currency - specified in the contract. Proper
Bidding documents will require that bidders packaging should be clearly specified in
use a specified currency or currencies to the tender documents
express their bids. Or, The contract must
specify the payment currency, which should • Experience and Expertise - The
be the currency specified in the terms and bidder should provide documentary
conditions of the bid. evidence acceptable to the purchaser—
including sales figures for at least three
• Validity of Contract Prices - The validity years
period is the time after contract signing during
which contract prices apply • Track Records and References –
Bidder should provide track record and
• Payment Terms - The contract must specify
references for selection
payment terms.
• Core competencies – Core
• Deferred Payment Terms - The buyer and competencies of the bidder should be
the seller may contract for payment at the time stated ‘
of delivery (without a letter of credit), or • Ease of monitoring/auditing –
payment may be deferred for a period of 30, Monitoring frameworks established by
60, 90, 120, or 180 days. the manufacturing company
Operations Others
• Manufacturing Approvals -
• Risk Involved – Risks in
tender conditions should specify
manufacturing and mitigation
that the bidder provide
strategies
documentation for evaluation like
license status, product
• Loss of Control- Risk
certification
management by implementing
loss control
• Production Capabilities –
KPIs like throughput and yield
• Human Rights – Policies for
human rights, equal rights
• Adherence to production
employment
schedules - Schedule adherence is
the percentage of time in which
• Health and Safety of
the activity did not match
Employees – Policies
their scheduled activity
regarding health and safety
hazards
• Inventory- RM, PM and FG
Inventory holding capabilities,
• Environmental Awareness
Specialized storage (cold storage)
and Waste Reduction –
Policies regarding reduction of
• Process Excellence – KPIs
carbon footprint, recycling,
including turnaround time, cycle
plastic usage reduction
time, availability capacity
utilization, mean time between
• Protection of Intellectual
failure, OEE
Property – No. of Patents
• Production Efficiency –
• Cultural Differences- Major
Unions, Machinery, Labor Skills
foreseeable cultural barriers
and experience