An Interview with Axendia’s Daniel R. Matlis
I recently sat down with the President of Axendia, Inc. Daniel R. Matlis to collectively share the latest research, trends, and insights around digital technology adoption in the life sciences industry.
Axendia is a leading analyst and strategic advisory firm that focuses exclusively on the Life Sciences markets. The firm provides strategic advice that enables their clients to prepare for, adapt to and overcome disruption. For over 16 years, industry executives, technology innovators and regulators have trusted Axendia to provide analysis, advice and insights at the intersection of business, regulatory and technology domains based on trusted sources.
Adoption of Digital Technologies in Life Science Manufacturing
Jennifer: Can you tell us some of the things you’re seeing today and how digital technologies are being adopted to support manufacturing, supply chain and enterprise collaboration?
Daniel: Absolutely. If you think about it, the world has always been changing and as Heraclitus said 2500 years ago, change is constant. However, our research shows that the rate of change is increasing exponentially as a result of continuous disruption.
Historically, Life Sciences companies were regional. We were manufacturing for a particular region, we were vertically integrated. So, raw materials came in one side of the facility and finished goods went out the other. The knowledge base was tribal so you went to Jane or Mary or Joe to find out how to do a certain task.
We were very document-centric. Everything that the company did was based on paper, we had very rigid supply chains. And our model as an industry was the Blockbuster model, so one size fits all. As organizations, we were extremely focused on compliance which made us very reactive.
Today, as a result of this continuous disruption, organizations are now global. They’re looking for ways to smart source, rather than vertical integration. Knowledge is based on analytics and intelligence, and we’re transitioning from documented evidence to digital evidence, and regulators are leading the way there. In addition, we are moving to value networks that provide more resilience. And transitioning our models to more precision and personalized medicine, rather than one size fits all. From a quality and regulatory standpoint, we’re shifting from the compliance focus to a quality focus with compliance as a baseline, and as a result, we’re becoming more predictive organizations.
Regulators Encouraging Digital Solutions to Improve Quality
Jennifer: Now, let’s shift gears and take a look at regulatory and how regulatory agencies around the world are responding to some of these changes that are happening.
Daniel: Doctor Janet Woodcock, who’s the Acting Commissioner at FDA, and before that was the Director for the Center for Drug Evaluation and Research has been a huge proponent of modernization in the biopharmaceutical industry and this actually stems from an article in the Wall Street Journal in 2003 that talked about the fact that there was better manufacturing technology and plants that made potato chips compared to those who made pharmaceutical products. Dr. Woodcock has been a huge proponent and has led the push to the implementation of initiatives like quality by design and Process Analytical Technology. And the agency has been heavily involved with quality standards. What she talked about around the FDA’s vision for pharmaceutical quality is to have a maximally efficient and agile, flexible manufacturing sector that reliably produces high-quality products without the need for extensive regulatory oversight.
See Axendia’s related article.
So here, the regulators are telling us that we – industry – need to be more flexible. We need to be more agile and focus on high-quality products. And at the same time, they – regulators – want to regulate us less. And Dr. Jeff Shuren, Director of the Center for Devices and Radiological Health, agrees. He told me that in the industry, there’s often too much focus on compliance with regulations, and on making FDA inspectors happy. And checking quality system regulation boxes, rather than focusing on innovation and device quality. So here are two top FDA officials telling the industry that we need to focus on quality, instead of hyper-focusing on compliance.
See Axendia’s related article.
Adoption of “Smart” Digital Manufacturing Processes
Jennifer: Historically, life sciences manufacturing has been very paper-centric, in some cases inefficient. If we think about the pandemic when we had limited workers on the shop floor, limited in-person trials and limiting opportunities to develop and produce products, many operations were completely shut down and we’re still seeing the impacts of those shutdowns.
Can we really get to this digital, smart manufacturing model, and from a regulatory perspective, an “electronic” device history record? The goal is full product traceability. Is digital manufacturing, smart manufacturing really possible? Can you talk a little bit more about that?
Daniel: The answer is “Absolutely, positively, YES.” It’s been a long journey. One of my very early projects 30 years ago, when I worked in the industry, was the development of what at the time, we called computer integrated Manufacturing. Now, MES (manufacturing execution systems), or MOM (manufacturing operations management), where we were actually developing solutions, creating electronic device history records. But the concern from quality was such that, at the end of the run, we would print that record and use the paper record and sign the paper record with a wet signature, and that would become our official record. And, unfortunately, that regulatory inertia is driving companies to still use this practice today.
The other question we always get is, how is FDA going to be ready for all this digital transformation? In 2019, the FDA rolled out its Technology Modernization Action Plan, in 2021, they rolled out their Data Modernization Action Plan, and in September of 2021, they created the Office of Digital Transformation, led by Vid Desai, who came from industry to the agency to transform the way it does business. They are leveraging cloud technology in order to make that happen, and providing a roadmap that the industry can align to in order to support the broader transformation of our industry.
See Axendia’s related article.
Standardizing Processes with Global Harmonization
The other area where regulators are really helping is through harmonization. For example, they’re working on ICH Q13, a standard on continuous manufacturing, as well as analytical procedure development. We are really seeing the regulators not only supporting but, in many cases, leading the way for the industry to adopt some of these transformational technologies to make that happen.
See Axendia’s related article.
The EMA also has an initiative around digital transformation and manufacturing modernization that will enable the industry as a whole, all constituents within the industry to take advantage of the modern technologies.
See QAD’s related whitepaper.
Improving Supply Chain Visibility and Streamlining Sourcing
Jennifer: Let’s take a look at the supply chain and how we work with suppliers. I recently heard Johnson & Johnson, Senior Vice President and Group CIO of Global Supply Chain, Steve Wrenn, talk about this huge manufacturing shift from the old “push the supply chain model” to now a “pull supply chain model.” Getting the products to people right when and where they’re needed.
How do we ensure that visibility is built right in our supply chains, come up with dual sourcing strategies and ensure that we can get products to market and not leave hospital or store shelves empty?
Daniel: That is an excellent question and something that we are all living through now and for some time to come. Supply chain issues are real.
In the life sciences industry, as a way to lower costs, many companies shifted to global supply chains and single sourcing. Many supply chain executives will tell me, yeah, but we have a dual source. And we always qualify multiple vendors for every raw material. My pushback is that it’s great that you qualify them. But when is the last time that you actually ordered from your alternate supplier? And the answer is often never, or when we did the qualification run.
What we are proposing is the transition to resilient value networks, where you have many nodes in your network that are qualified in order to provide a certain raw material or assembly.
And you use what we call smart sourcing, where you are able to identify at any point in time, where is the best place to source this particular component. Where’s the best place to manufacture this product? Where’s the best place to package it? The answer is based on a number of variables within your network, not just cost, because the cost is a race to the bottom, and you don’t want to win the race to the bottom. Instead, we need to focus on value. You obviously want to have the highest quality, you want to have it available when you need it. And yes, price is part of that equation, but it’s not the only one.
And what we’re seeing, as a result, is that smart sourcing and leveraging value networks enable standardization and more repeatable, industry-wide best practices for execution, which in turn drives operational efficiency, on-time delivery and reduces inventory.
Cloud Architecture, Machine Learning and Advanced Analytics
Jennifer: Great point, Dan. With smart sourcing certainly being a key strategy, AI and machine learning take it even further where the system is helping you respond and find those issues before a human can even interact. Can you talk about that a little bit more?
Daniel: Yes, let’s talk about some of the key trends. As an industry, most companies are not on the right side of the digital divide.
To get on the right side of the digital divide, companies today need to be looking at implementing modern cloud architectures, solutions that enable them to become effective and frictionless and to have unified processes and data. And we’re not talking about a monolithic approach where you get everything from a single vendor necessarily. Leveraging the modern cloud architecture to enable you to have those unified processes across the organization and having that integrated and extendable platform, which allows you to solve as many problems as possible within your solution.
But one of the challenges is the fact that we have been so focused on what are called digital threads that are often created by a single system or point solution. What we are proposing is that all those digital threads be woven into what we call a digital fabric which gives you visibility to support outcomes, enable improved visibility, and control collaboration across your entire value network, from raw material to patient and from the shop floor, to the top floor. This will enable companies to be able to prevent issues proactively and to be ready for what’s next, as opposed to reacting.
Once you have that digital foundation, then you can leverage advanced analytics such as AI and machine learning. Actually, the FDA has already issued guidance around the use or what they call good machine learning practices (GMLP), and it’s has collaborated with a number of regulators around the world to publish the 10 Regulatory Commandments of Artificial Intelligence.
Becoming Digitally Sustainable
Another important thing is looking at what’s Next. We like to use the term digitally sustainable. How do you become digitally sustainable? That means that you’re always looking to implement tomorrow’s technology today.
So, when we’re looking at technology, it’s important to know what is happening today and what technologies we should be implementing today, for example, cloud-based applications. But in order to become digitally sustainable, we also need to be looking at what’s ahead and not discounting the next technology as something that we will never be able to implement or validate within life sciences.
Instead, collaborating across constituents, from technology and service providers, the manufacturers and the regulators in order to enable the adoption of the latest and greatest technology, because ultimately, our goal is around improving patient outcomes. And to improve patient outcomes, we need the best technology to improve outcomes across our entire value network.
Digital Transformation: Business Imperatives for Life Sciences
Jennifer: Incredible transformations happening, but an extraordinary opportunity for our industry, and just a really exciting time for all of us. Dan, any final thoughts or recommendations? What can you leave us with today before next time?
Daniel: Let me leave you with some thoughts around what we see as imperatives across the life sciences industry.
- The organizations that are going to thrive need to embark on a digital transformation journey. Digital transformation is a journey, not a project.
- Companies need to cultivate a culture of resilience to overcome disruption. In order to do that, and gain visibility, we need to weave digital threads into a digital fabric that provides improved visibility, and collaboration across the entire value network.
- Companies should focus on quality, not simply compliance. Compliance is the baseline. Compliance is what we need. Those are the rules of the game. However, winning teams don’t focus on only the rules. They need to play by the rules. But to win, you need to play by the rules and focus on strategic differentiators – and for life sciences that’s quality and innovation.
- Adopt risk-based regulatory models to focus resources on the areas of highest risk, rather than treating every risk the same. And true risk-based approaches, like CSA (computer system assurance), enable that.
- Companies should embrace master data governance and identify which systems have sovereignty over what data and establish the appropriate frameworks that facilitate the management of that data. This allows companies to streamline quality and regulatory compliance requirements and mitigate data integrity issues.
- Companies need to transition from supply chains to value networks because we need resilience in order to be able to adapt to the next disruption and be able to prepare for the disruption rather than simply react to it.
- In order to do that, we need to leverage innovative technologies, always looking at what is next, and seeing how we can use that technology, and if there is value to using that technology.
I’m not talking about looking at and implementing every new shiny object, every cutting edge technology, but looking ahead and seeing how we can leverage innovative technologies to improve outcomes. And that will allow us to get on the right side of the digital divide.
Get more insights from Daniel Matlis and Jennifer Petrosky. Watch or listen to the entire interview.
