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The EU Parliament voted its position on the Unitary SPC


by Giuliana Miglierini The intersecting pathways of revision of the pharmaceutical and intellectual property legislations recently marked the adoption of the EU Parliament’s position on the new unitary Supplementary Protection Certificate (SPC) system, parallel to the recast of the current Read more

Reform of pharma legislation: the debate on regulatory data protection


by Giuliana Miglierini As the definition of the final contents of many new pieces of the overall revision of the pharmaceutical legislation is approaching, many voices commented the possible impact the new scheme for regulatory data protection (RDP) may have Read more

Environmental sustainability: the EIPG perspective


Piero Iamartino Although the impact of medicines on the environment has been highlighted since the 70s of the last century with the emergence of the first reports of pollution in surface waters, it is only since the beginning of the Read more

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Key issues in technical due diligences

May 6, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

by Giuliana Miglierini

Financial due diligence is a central theme when discussing mergers and acquisitions (M&A). Not less important for the determination of the fair value of the deal and the actual possibility to integrate the businesses are technical due diligences, assessing the technological platforms and product portfolios to be acquired. A series of articles published in Outsourced Pharma discussed, under different perspectives, the main issues encountered in technical due diligences. We provide a summary of main messages to be kept in mind while facing this type of activity.

Technical due diligence of pharmaceutical products

The third millennium is being highly characterised by the closure of many M&A operations in the biopharma sector as a way to support the transfer of new technological platforms from their originators – usually an innovative start-up or spin-off company – to larger multinational companies. The latter are usually managing advanced clinical phases of development and regulatory procedures needed to achieve market authorisation in the territories of interest.

Furthermore, the acquisition of already marketed products often represents a way to renew the product portfolio or to enter new markets. Should this be the case, an article by Anthony Grenier suggests that a main target is represented by the understanding of how the products were maintained on the market by the seller company.

The restructuring of assets following acquisition may require the transfer of products manufacturing to sites of the acquiring company, or the possibility to use the services of a Contract Manufacturing Organisation (CMO). These are all issues that should enter the technical due diligence, that usually includes the exchange of information about the product, equipment, manufacturing, quality, and regulatory aspects of the deal.

The regulatory and quality perspectives

Regulatory due diligence takes into consideration the approval status of the interested products in target markets. Relevant documentation to be examined include the CMC dossier (Chemistry, Manufacturing, and Controls) and/or the Common Technical Document (CTD), and the current status of approval procedures undergoing, for example, at the FDA in the US or the European Medicines Agency in the EU. A possible issue mentioned by Anthony Grenier refers to the assessment and management of dossiers relative to unfamiliar markets, that may differ as for regulatory requirements and thus need the availability of dedicated internal resources or consultants. This type of considerations may impact also on the selection of CMOs; the transfer of older dossiers is also challenging, as they often do not reflect current requirements and standards and may require significant investments (including the request of additional studies) to support the submission of variations.

A visit to the facility manufacturing the product during the second round of bidding, in order to better understand issues related to the technology transfer, is also suggested. Technical documentation available to assessors should include copies of batch records and specifications for raw materials, active ingredients, and drug products. Analysis of the annual trends in manufacturing may be also useful, as for example a high number of rejected batches may indicate the need for a reformulation of the product.

From the quality perspective, the due diligence should also examine issues with supply or quality agreements, and the date of the last revision of documents. Examples of relevant documentation to be examined include process validation reports, change control lists, stability studies, inspection reports, etc.

The manufacturing perspective

In a second article, A. Grenier examined technical due diligence from the perspective of manufacturing, equipment and logistics.

The manufacturing process is key to ensure the proper availability of the product in the target markets, and it should be correctly transferred to the acquiring company or the CMO. To this instance, executed batch records are important to provide information on actual process parameters, processing times, and yields. Here again, process validation reports and master supply agreements provide information on the robustness of the processes and the steady supply of raw materials.

Consideration should also be paid to the transfer of any product-dedicated equipment involved in the manufacturing or packaging process, including its actual ownership. The time period for technology transfer should be long enough (at least 12 months) to ensure for the proper execution of all operations.

From the logistics point of view, it is important to understand the need to update printed components to reflect the new ownership of the product, a task that may result complex should it be marketed in many different countries and/or in many different dosage forms. Inventories of all raw materials, APIs, and packaging components should be also assessed, paying a particular attention to narcotic products for which specific production quotas may be present in some countries (e.g. the US).

Technical due diligence of entire facilities

M&A deals often involve the acquisition of one or more manufacturing facilities and other complex industrial assets. Anthony Grenier also examined the key factors impacting on this type of technical due diligence.

The “technical fit” between the two companies involved in the deal is a primary target for assessment, in order to evaluate the achievable level of integration and the existing gaps in experience to be filled. This may refer, for example, to the acquisition of a manufacturing plant for non-sterile products that would need to be converted for aseptic manufacturing: a goal that may require the building of new areas, thus the availability of enough space to host them. Experience of the staff is also highly valuable, as well as the successful introduction of new equipment.

Capacity of the plant should also be considered, neither in excess or defect with respect to the effective needs in order to avoid waste of resources or need of new investments. Experience of the seller company in CMO may be also relevant, as it may be used to fill some of the excess capacity. To this instance, the fields of specialisation and the availability of containment capability to avoid cross contamination are important parameters to be considered.

Compliance of the facility to regulatory requirements arising from the different target markets should also be assessed, as it impacts on the positive outcomes of inspections.

Highly complex technical due diligences

Technical due diligence becomes even more complex in the case of multi-site acquisitions. In this case, visits to assess specificities of the single facilities involved in the operation may be needed. The above mentioned parameters of technical fit, capacity and compliance should be always considered, and the take-at-home message from the A. Grenier is for the acquiring companies to “look for the weakest links that would prohibit them from bringing their product or technology to the sites to be acquired”. Capacity optimisation may be needed, for example.

The different steps of technical due diligence have been also examined in another article by Anne Ettner and Norbert Pöllinger published in Pharm. Ind.. They presented a mind map that clarifies the complexity of the items that should enter the due diligence process, and lists typical documents and questions that should be taken into consideration. Examples and case studies are also provided relative to the assessment of starting materials, the evaluation of the pharmaceutical formulations and that of the production process.


FAT and SAT, a critical step for the introduction of new equipment

March 25, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

by Giuliana Miglierini

There are two key moments to be faced to introduce a new piece of equipment in a pharmaceutical plant: a factory acceptance testing (FAT), usually performed by its manufacturer to verify the new equipment meets its intended purpose, prior to approve it for delivery and once arrived at its final destination and installed, a site acceptance testing (SAT) run by the purchasing company and is part of the commissioning activity.

According to an article published in Outsourced Pharma, the commissioning of a new piece of equipment poses many challenges, and criticalities needs to be considered both from the business and regulatory point of view. Pharmaceutical plants are very complex and often customised upon the specific business needs, and the delivery of a new equipment requires the interaction of many different parties, both internal and external to the purchasing company. FAT, SAT and commissioning activities require a careful planning and detailed responsibilities for all participating parties to be included within the Commissioning and Qualification Plan (CQV plan). A possible responsibility matrix is suggested by the authors to provide clarity and ensures ownership of activities.

FAT, assessing the equipment at the manufacturer site

FAT and SAT testing involve the visual inspection of the equipment and the verification of its static and/or dynamic functioning, in order to assess the actual correspondence to the user requirement specifications (URS). While FATs are usually based on simulations of the equipment’s operating environment, SAT testing occurs at the final site after installation, thus it reflects the real operating conditions and environment in order to support qualification.

There are many different elements to be considered during FAT testing, including for example verification of the existing site drainage, piping, or room dimensions, or the position of the handle for accessibility, as well as software design specification, interface, and device integration.

The FAT exercise is always highly recommended, as it is essential to solve in advance (before shipment to the final destination) any error or malfunctioning of the equipment, that otherwise might occur at the purchasing company’s site. This results in the optimisation of the delivery and commissioning process, with important savings in terms of both time and costs for the purchasing company. To ensure for the transparency of FAT testing, the entire procedure (that requires usually 1-3 days, depending on the complexity of the equipment to be verified) is usually performed in the presence of a third party inspector and customer representative.

A comprehensive set of documentation should be always available to support FAT, including URS, drawings, checklists and procedures, calibrations and certifications, data sheets, references, etc. Raw data acquired during FAT are transmitted to the customer for analysis and validation. FAT should take into consideration all aspects relevant to the evaluation of the safety and functionality of the equipment and its compliance to URS, GMPs and data integrity. To this regard, it is also important for the engineering team called to run the new equipment at its final location to learn and share knowledge with the manufacturer along the entire commissioning process, so to increase the first-hand direct experience. According to the article, this is also critical to authorise the shipment of the equipment to the final destination, a step that should always be performed by an authorised, trained, and approved subject matter expert.

 SAT acceptance testing

All criticalities emerged during the FAT exercise are then checked again at the final site, after installation and verification; additional test cases may also be added to the SAT protocol to check for potential failure modes. SAT testing is performed once all connections between the new equipment and other machines/softwares are in place, under the real operating parameters, and may be witnessed by a representative of the equipment’s manufacturer.

Results from SATs may thus differ from those obtained from the FAT previously run by the manufacturer. From the regulatory point of view, SAT testing is a key element to demonstrate the compliance of the equipment to GMP requirements and to support the overall quality and safety of pharmaceutical productions. In this case too, many are the possible elements to be inspected and verified, including interlocks, ventilation, internal box pressure, electrical/hydraulic connections and safety systems, visual checks of components, training of the operators, etc.

A plan for each testing phase

FAT planning begins at the very moment of the purchasing company placing the order for the new equipment, and it has to reflect all URS to be checked for acceptability of the manufactured apparatus. This step in the design is critical and calls for a strict and positive communication between the manufacturer and its customers, a key point to take into consideration all elements that should enter the project.

All identified items and procedures to be challenged during FAT and SAT testing are usually addressed within the CQV plan, that connects the design phase to user requirements specifications and the other elements impacting the commissioning and qualification processes (i.e. system impact assessment, design specification, functional risk assessment, hardware / software specifications, Installation / Operational / Performance Qualification), including deviations and change management. The plan specific to SAT testing should include the scope, test specifications and logs, a test summary, the Commissioning report and the final Certificate of Acceptance.

Transparency and a robust statistical approach should represent main targets along the entire commissioning and validation procedure, that may be run with the assistance of external consultants. All activities that shall enter the regulatory dossiers should always be justified and documented, also under the perspective of data integrity. The Outsourced Pharma’s article also suggests paying a particular attention to controls on data provided by the manufacturer in the case a risk-based leveraging is applied.