Few life science markets are as enigmatic and crucial as Japan. As more companies look to Japanese suppliers for their quality and innovation, they face unique challenges that go far beyond mere logistics.
We recently sat down with Derek Wessman, a life science consultant based there, to explore the nuances of Japanese supplier audits. Since moving to Japan in 2004, Derek has spent nearly two decades navigating the complex intersection of Japanese business culture and international regulatory requirements. Derek also assists international clients in conducting supplier audits of Japanese firms. His work encompasses various quality standards, including ISO 9001 and ISO 13485.
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Summary, Key Points, and Practical Takeaways
This interview has been edited for clarity and length.
Nick Capman: Derek, can you start by introducing yourself and your background?
Derek Wessman: I've been here in Japan since 2004. Since 2009, I've run a company here that provides Japanese companies with help navigating regulatory hurdles, FDA inspections, applications, and all other aspects of compliance. We also help companies do supplier audits of companies in Japan that they need to audit. We help with both pharma as well as medical device and combination products, and also ISO 9001 and ISO 13485, depending on the situation.
What are some unique challenges Western companies face when working with Japanese suppliers?
There are several challenges. Japan's been the second or third largest life science market, depending on how you segment it. It's been pretty insular, depending on the company. A lot of companies in Japan have just done business with Japan, so when they have to do business overseas, there can be some hurdles. There's a more prominent language barrier than probably in most other countries.
There's also the physical distance. Even in today's age, that does tend to matter. You've got to send an audit team over if you want to do a supplier audit. Let's say you have a critical API supplier or an OEM manufacturer of injection needles. You have to consider not only the distance and making sure that you get your team over there, which is a cost, but you'll also arrive at the site, and, in many cases, nobody will speak English.
How does the language barrier impact audits specifically?
It's a significant issue. If you have scheduled a day-long audit, which is common with a supplier audit, and you have an interpreter, you're immediately down to half or less of the time you expected to have. Everything you say, you have to stop and wait for the interpreter to say it again. Sometimes, interpreters get hired by interpreting agencies and know nothing about life science or regulatory rules. So you're translating not only between languages but between fields. That's a big challenge.
What strategies can companies use to overcome these challenges?
One effective approach is to use firms like the FDA Group that have resources on the ground. This immediately eliminates the need for transoceanic travel. If they have the language ability, you don't need an interpreter.
In my experience, it's been really helpful when I can go into a place and start speaking to them in Japanese about FDA regulations or ISO standards. The auditee is usually happy because they can just show their quality manual or CAPA procedure in Japanese. For the auditor or client side they're happy because I can look at the documents without any language barrier to hide problems. I do all of that in Japanese at the site but write the audit report in English for the client. There's zero friction between cultures and languages.
Can you tell us about some cultural aspects that impact audits in Japan?
First off, whenever you talk about cultural differences, I think it's easy to get too far down the road of people being different or generalizing too much. Just like anywhere, there are good people, bad people, honest people, dishonest people — people are humans.
But what you'll typically see at a Japanese company that you might not expect as much in the US or Europe is very long-term employees. Companies here tend to see far less turnover of employees, which is good for the company in some ways, but it also can make a company very insular and unique in its approach to quality and regulatory compliance.
You'll still see companies hesitate to open CAPAs because a CAPA is seen as a sign that you failed. That can sometimes still be the culture in some companies. You might run into cultural barriers where a person is hesitant to throw another employee's work under the bus. For example, if I say a CAPA didn't really get to the root cause, a person might hesitate to agree because somebody else did the CAPA, and they don't want that person to be embarrassed.
Are there any specific issues related to data integrity in Japanese companies?
Yes, there are. Systems are often based on the assumption that everybody involved is honest. You might run into Part 11 requirement problems where a company has everybody logging in on the same computer. A company might trust its employees too much for the regulatory body to really accept the systems. Everybody's logging in with the same account and password. That kind of thing still exists more here.
There's a little bit more of a collective mindset where it's like, "Hey, we did it. Who cares who did it? We did it." But that's not to say that companies are fools. They understand the rules for the most part. But every once in a while, that kind of situation occurs, and you have to explain that there have been incidents where Japanese companies have falsified testing results. It's not a foreign thing to this country or any country.
What are some strengths of Japanese suppliers?
There are quite a few strengths. That low turnover I mentioned earlier can be really helpful. If you end up auditing the same company multiple times, it's sometimes the same people for ten years. Every year, you're back with Tanaka-san, who is still the management representative or head of QA.
You'll often find clean, well-organized facilities. Companies here are pretty strong about keeping things organized — they call it 5S: sort, set in order, shine, standardize, and sustain. Quality is a focus, even beyond just the regulatory compliance side. There's a pride in quality that's really nice.
A ton of companies here have ISO certification. So the basic principles are there in many, many cases, even for very small companies. Around the year 2000 and beyond, many started to get ISO certified. FDA investigators often say that they find the facilities to be really well organized and clean, which always makes a really good impression.
How often does the FDA conduct inspections in Japan?
It's less frequent than if the company was located in the US. It's obviously more of a hurdle internally, I think, for FDA to schedule and get investigators out to Japan. My experience with device companies, if you discount COVID, which of course prevented almost any inspections from happening, is maybe every three, four, even five years if it's not a high-risk or high-problem facility.
With pharma, it's maybe a little more frequent, especially if it's risk-based. I would say it's a little closer to the stated every two years routine inspection schedule. But companies feel sort of on edge because there isn't as much of a cadence as some American companies might experience. In other words, the FDA might not come for eight years, and then they might come every two years for a while. It can be really hard to predict, so you kind of just have to be always ready, as you should be.
How do FDA inspections in Japan differ from those in the US?
The biggest and by far most impactful aspect is the timeframe the investigator has. They have a hard stop - they have a flight to catch. Whereas from my understanding of a US facility, if things go bad or things need to be checked, it can go on and on.
The limited time is a massive factor. And then you put on top of that that interpretation will take away at least half of the time. So a medical device inspection of a Japanese medical device facility is going to be scheduled for four days, Monday through Thursday usually, and the investigator is going to have two days to work with, essentially. That's going to reduce what they can look at drastically, and they'll just have to go straight to the highest risk, highest importance items, and never get to some others.
What issues commonly arise during FDA inspections in Japan?
We often run into situations where something should have been a CAPA, and it wasn't. Companies often have these little backwater systems created so that they don't have to do a CAPA. Retraining is always one that you hope not to see in the CAPA as the main thing done to remove the root cause.
You'll have things where they have an internal audit procedure, and that procedure includes a whole process that is equivalent to CAPA, but they don't call it a CAPA. So when the FDA asks for their CAPA list, it's not on there. That's a problem that definitely occurs.
With data integrity, you run into communal logins, communal passwords, and communal results. There's a ton of Excel sharing — Excel files are being used to calculate test results that haven't been validated, that aren't necessarily locked, and that aren't placed in a protected folder.
There's also a general hesitancy of Japanese companies to adopt expensive software that would create the data integrity, the Part 11 compliance easily, because the cost is too much of a hurdle for management. So you often run into problems that if the FDA were to really drill down, they would find that there are insufficient resources being provided by management.
When evaluating suppliers, how do Japanese companies typically balance price, quality, and speed?
I think that often, it'll be price and quality, and speed will be the one that gets sacrificed. Organizations in Japan, in general, tend to focus a little more on getting internal consensus and feeling like they have their ducks in a row before proceeding with a project or proceeding to the next stage of something. So the price might be well controlled, and the quality will generally be there, but it might take a lot longer than you would expect for something to happen. I would say that's the most common scenario.
Any final advice for companies working with Japanese suppliers?
Well, I would just say again, everybody in Japan is a human being, just like the rest of the world, but there are certainly aspects that you have to figure out. By figuring these out, you can save a lot of time and money and headaches, I think. Finding resources on the ground here, working in a smarter way more than just throwing money at the problem, is really helpful to have long-term, effective, and profitable supplier relationships here. You get great quality from companies here, and so it's well worth it, as long as you can structure things that way.
Gary's key takeaways:
Recognize the impact of language barriers on audit efficiency. The need for interpretation can effectively halve the time available for audits. Budget accordingly and consider using bilingual auditors or local resources to maximize efficiency.
Understand the cultural nuances affecting quality management. Long-term employment and collective mindset in Japanese companies can influence quality and regulatory compliance approaches. Be aware of potential hesitancy in opening CAPAs or criticizing colleagues' work.
Be prepared for data integrity challenges. Common issues include shared logins, unvalidated Excel files, and a reluctance to invest in compliance software. Encourage the adoption of robust data integrity practices that meet FDA requirements.
Leverage the strengths of Japanese suppliers. Appreciate their focus on cleanliness, organization (5S principles), and quality. Many Japanese suppliers, even small ones, have ISO certifications, providing a solid foundation for quality management.
Adapt to the unique aspects of FDA inspections in Japan. Understand that these inspections are less frequent and more time-constrained than in the US. Help suppliers stay prepared at all times, as inspection schedules can be unpredictable.
Address the 'insular' nature of some Japanese companies. Many firms have primarily done business within Japan. When auditing, be prepared to guide them through international regulatory expectations and practices.
Use local resources for more effective audits. Consider partnering with firms or consultants who have on-the-ground experience in Japan. They can navigate language barriers, cultural nuances, and regulatory landscapes more efficiently.
Be mindful of the time investment in Japanese audits. Japanese organizations often prioritize internal consensus, which can extend timelines. Factor this into project planning and supplier management strategies.
Recognize the trade-offs in the 'price, quality, speed' triangle. Japanese suppliers often prioritize price and quality over speed. Adjust expectations and planning accordingly.
Invest in cultural competence. Understanding Japanese business culture can save time, money, and prevent misunderstandings. This investment is crucial for building long-term, effective supplier relationships.
Balance regulatory requirements with cultural sensitivity. While ensuring compliance, be aware of and respectful towards Japanese business practices. This approach can lead to more cooperative and transparent audit processes.
Stay vigilant about 'hidden' quality processes. Some companies may have internal audit procedures that are equivalent to CAPAs but not labeled as such. Ensure these processes are properly documented and aligned with regulatory requirements.
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Navigating Supplier Audits in Japan with Derek Wessman