Five Points to Note when Supplying to the Healthcare Sector

Medical Device Business Partners

Like any other industries, the healthcare sector sits amidst a supply chain that manages the supply of manufacturing inputs and the delivery of product outputs to patients. In healthcare product manufacturing, this supply chain appears to have all the standard characteristics of the process involving various partners that provide raw materials, parts and components, semi-finished products, technical services, transportation, storage and warehousing, purchasing, and other professional or corporate services. In a market that is poised to gross US$455 billion by 20181, it creates an eagerness for many suppliers to extend the applicability of products or services for healthcare. However, those who have attempted this would have their share of exasperating anecdotes to tell about the regulatory hoops to squeeze through in order to get accepted by the industry. Entering the healthcare market as a supplier requires more than proof of concept. You will need to operate, think, act and manage as if you are a healthcare company to begin with. This means diving into the regulatory requirements and picking out which ones will impact the products or services you are supplying. Very likely, business strategies and even corporate cultures may also have to change as suppliers find themselves tuning up to the needs of the healthcare market. Here are some tips for businesses eyeing healthcare customers in their business development pipeline:

1. Identify the sectors within healthcare and the relevant regulations

Healthcare products can be very broadly divided into pharmaceuticals and medical devices. Although the fundamental regulatory principles governing these product groups are somewhat similar, the control methodologies are different and separate directives are set for each product group. Healthcare product regulations have a wide coverage stipulating requirements for all aspects of product design, manufacturing, storage, labelling, advertising and distribution. Therefore, it is essential to be fully knowledgeable of these measures, not only those that directly impact the product or service to be supplied, but also the regulatory obligations of the supplier in maintaining a comprehensive system and controls for corrective and preventive action, vigilance and surveillance, validation and verification, change management and traceability.

2. Implementing a quality management system

Investing time and money in implementing the relevant quality management system (QMS) puts a supplier a step further in aligning itself with its healthcare customers. The QMS ensures that all business, management and operational activities occur within an ethical framework upheld by written procedures and agreed processes. It forms one of the core requirements of healthcare regulations that monitors compliance with and consistency in meeting product or service specifications. This measure has a clause stating that healthcare organisations implement supplier controls within its purchasing procedures, which stipulates a supplier qualification and regular audit process. The US Food and Drug Administration (US FDA) stated that implementing the appropriate supplier qualification and audit procedures should be a part of product risk management strategies.

3. Having a dedicated regulatory and quality department

Do not underestimate the amount of work needed to set up compliance processes. A dedicated personnel who is focused full-time on regulatory and quality matters will help greatly to manage communication with regulatory authorities and customers, maintain records, perform investigations, conduct internal audits and implement a quality culture within the supplier organisation. Quality conscientiousness should be in-built within all the supplier processes in order to effectively activate its preventive mechanism and avert disasters. Unfortunately, many supplier companies are indifferent to these responsibilities especially in good times when it seems unwarranted to spend the extra penny on additional headcount.

4. Prepare the technical documentation

Simply submitting a brochure would not suffice to trigger conversions. In addition to quality documentation and certifications, suppliers will very likely be asked to submit technical specifications with details on performance, tolerance, durability, accuracy and precision, shelf-life, etc. The healthcare industry does not make assumptions and unlikely to purchase based on perceptions of similarity. Decisions to engage suppliers or on purchasing is based on objective evidence. So be prepared to be able to answer all questions pertaining to the solution offered and substantiate them with the relevant data required. If the supplier is a distributor, obtain the cooperation of experts from manufacturers and principals to support the pitch.

5. Provide samples for testing and validation

Healthcare companies will put new accessories through rigorous validation and testing to ensure that they work as intended in the environment of use. Depending on how these accessories affect the performance of or accompany the use of the healthcare product, validation may take from months to years. This duration will depend on the risk posed by the accessory. The US FDA has recently proposed to give medical device accessories a risk-based consideration2. If realised, it stands to regulate rechargeable batteries indispensable to the operation of automated devices like defibrillators.

Battling the waves of greater risks

For healthcare companies, changing or appointing new suppliers means going through protracted qualification and change management processes. Where new accessories directly affect the performance of the final product, market approval and registration processes may be inevitable. Such moves demand large budget allocations towards verifying the consequence of new partnerships, including the technical, safety, quality, performance and market impacts, and involving top management oversight to evaluate financial and business outcomes. The US FDA acknowledges that there is an “explosion of participants” into the healthcare supply chain with increased sub-contracting work, globalisation and cost-cutting opportunities. The increasing complexity in monitoring the supply chain would result in greater risks of lacklustre application of regulations and upscaling business processes that still effectively locks in change management procedures. For the supplier, understanding these situations is vital to evaluating whether it is prepared to enter the healthcare sector. For those already in a successful partnership with healthcare, the compliance journey does not end with the contract, but is the beginning of a long journey worth travelling.

Bibliography

  • Deloitte: 2014 Global life sciences outlook
  • US FDA: Medical Device Accessories: Defining Accessories and Classification Pathway for New Accessory Types
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