Abstract
Goal: The goal of this paper is to test the possible connection between pharmaceutical manufacturing plants’ Operational Excellence implementation and regulatory inspection outcomes.
 Methodology: This paper uses logistic regression models on a unique dataset compiled from proprietary operations datasets and published FDA inspection outcomes.
 Results: The findings show that sites with advanced Operational Excellence implementation are more likely to receive favorable inspection outcomes and more so when specifically focusing on Total Quality Management implementation as a subset. A similar trend exists for the Quality Control laboratories and their compliance deficiencies when analyzed separately.
 Limitations of the investigation: The limitations of this research mainly lie in the limited size and composition of the available dataset. European manufacturing sites and quality control labs are overrepresented and the sample size for quality control labs is rather small.
 Practical Implication: This paper can help industrial managers and regulatory officials to better direct their resources to manufacturing sites and QC laboratories that are at a higher risk of quality non-compliance.
 Originality/value: It is a long-standing maxim in literature and practice that manufacturing sites shall build improvement capabilities to reach Operational Excellence which includes superior product quality. Quality Management is particularly important in the pharmaceutical industry and often evolves on its own in the organizations. Pharmaceutical production plants are inspected regarding their quality processes and systems by regulatory authorities. However, there is lacking published evidence of the interplay of Operational Excellence practices and regulatory inspection outcomes.
Highlights
Pharmaceutical drug shortages and product recalls occur frequently and affect companies, markets and patients continuously
Operational Excellence implementation databases and Food and Drug Administration (FDA) inspection outcome data are introduced in more detail
Considering to the results obtained, sites that have a greater level of implementation of their overall Operational Excellence plans and programs have better inspection outcomes
Summary
Pharmaceutical drug shortages and product recalls occur frequently and affect companies, markets and patients continuously. Quality issues account for 62% of the these shortages as documented by the FDA (FDA - CDER, 2019). The U.S market faced rising numbers of drug recalls (Hall et al, 2016). This development explicitly applies to Class 1 recalls, which categorizes violative drugs with the most severe health consequences (O’Connor, Yu and Lee, 2016). In addition to the risk to patients, such recalls have come with notable negative economic effect on the affected companies (Shah, Ball and Netessine, 2017). The pharmaceutical industry, regulators and patients suffer from quality deficiencies
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