Clinical Supply Chain Management Driving Operational Performance

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Clinical Supply Chain Management

Driving Operational Performance July 2010

PwC

Your presenters…

Ellen Reilly Managing Director Pharma & Life Sciences Advisory Services Advisory Services

400 Campus Drive Florham Park, NJ 07932

Tel: 973.236.5297 Mobile: 201.988.2802

Email: [email protected]

Sivakumar Rajagapalan

PricewaterhouseCoopers 2 June 2010

Director

Pharma & Life Sciences Advisory Services

400 Campus Drive Florham Park, NJ 07932

Tel: 973.236.5057 Mobile: 609-721-3260

Email: [email protected] EER1

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Discussion items for this session

Managing clinical trial supply chains is already growing increasingly difficult because of geographic expansion (primarily into emerging markets) and the complexity of pharmaceutical and life science products, including combination therapies diagnostics biomarkers and specialist drugs such as biologics therapies, diagnostics, biomarkers and specialist drugs, such as biologics.

Following strategies are emerging to be critical for managing the local/ regional partnerships and global logistics that will be necessary to operate clinical supply chains successfully over the next decade as healthcare become more outcomes- focused.

• Successful partnerships, alliances and contracts

• Risk mitigation tactics

• Tax effective supply chain management

• Labeling and packaging for emerging markets

g p g g g g

• Self service and collaborative supply chain model

The current supply chain – Significant opportunity to reduce complexity, release cost and be more responsive to the patient

Raw Materials/ Secondary/

Raw Materials/

Intermediates API Secondary/

Packaging Distribution Service Patient

Pharma Co 1

Pharma Co 2 API site

API site API

2^osite/

packaging 2^osite/

packaging

2^osite/

packaging

2^osite/ 2^osite/

API

Customer 1 Customer 2 Customer 3

Customer 4 Customer 5

Customer 1

Customer 4

Pharma Co 3 API site

API site API site API site

2^osite/

packaging

2^osite/

packaging 2^osite/

packaging

2^osite/

packaging packaging API

site Customer 2

Customer 3

Customer 5

Customer 1 Customer 2 Customer 3

Customer 4 Customer 5

Safety Stock is Built in at various stages of the process

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2020 The Future of the Pharmaceutical Supply Chain

Supply chain models will polarize depending on product type

D l t API Secondary/

Di t ib ti

P k i P ti t

Development API

manufacture

Secondary/

Packaging Packaging Distribution Patient

• Cost most important driver

• Efficiencies driven by economies of scale

• Simpler formulation types (liquid on tablet etc)?

M f i l d ill h h

• Speed/efficiency to market most important driver

• Development of virtual product and virtual process – in-silico factory and equipment design

• Link with marketing becomes important factor

NPI/’Specialist’ products Mass Market products

PricewaterhouseCoopers Slide 5 June 2010

Pharma & Life Sciences University

• Manufacturing landscape will have to change to meet payer demands – network consolidation essential, growth of manufacturing power-houses, working for all major players in one network

• Link with marketing becomes important factor

• Link to R&D paper (virtual man, live licensing)

• Smaller, specialist manufacturing facilities, high degree of flexibility, automation, PAT

2020 Packaging and distribution services will change to support changing primary healthcare model

D l t API Secondary/

Di t ib ti

P k i P ti t

Development API

manufacture

Secondary/

Packaging Packaging Distribution Patient

• Needs to respond to changing primary care model – virtual consultation with direct delivery of required prescription.

• Growth of regional packaging hubs to respond to e-orders.

• Distribution to patient by Fedex? Specialist courier? Companies like UPS/Wincanton etc. moving into this space?

Pharma & Life Sciences University

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• Late product customization, multiple medications in same packaging, patient specific

• Overall – management by 4PL. Will need to be true partnership between Pharma

company and service provider

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What are the key issues facing the clinical supply chain ?

Planning

managing the overall risk what partnerships you need in place

effective planning Sourcing Making

delayed labelling strategies /regional hubs Shipping

moving goods into emerging markets

tax /customs impacts, alternative valuations cold chain issues

• Globalization of Trials • Outsourcing/Contract

Challenges Opportunities

• Reduced budget

• Increased lead times

• Demand – Supply window of response getting smaller

• Regulatory Challenges in emerging markets

• Country specific labeling requirements

Manufacturing

• Enterprise integration

• Postponement Strategies, On- demand/JIT labeling

• Integrated (Trial and

Operations Planning) including Tax SME

• Supply Chain Risk

requirements

• Infrastructure challenges in emerging markets

• Global Trade compliance

Supply Chain Risk management

• Global Trade Management

Managing Partnerships

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To support this Virtual Model what do you need to focus on for the future ?

Supplier management and integration with fewer suppliers but deeper relationships maximizing:

Risk Management of an Agile manufacturing operations to support pull based system that include:

Distribution Manufacturing Suppliers

Demand Fulfillment

Demand Creation Information

Systems

Information Systems

• Quality and Reliability

• Collaborative Planning, Replenishment

• Systems Integration

p y

• Higher productive time and plant efficiency

• Quicker changeovers and higher utilization

• High Quality and reduced waste

Dynamic warehousing and logistics networks

PricewaterhouseCoopers June 2010

Customer Sales

Marketing

Information Systems

9

Integrated demand management to ensure high

• Demand visibility

• Demand Fulfillment

• Lower Inventory

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• Distribution Optimization

• Pooled Supplies

• Just in time labeling /e-Labeling

Establish an Enhanced Supplier Relationship Function

Supplier Network Governance Categorize (segment) supply base to

Supplier Performance Management Close gap between company

Critical Elements of Supplier Relationship Management Categorize (segment) supply base to

determine importance to product strategy and supply. Define objectives and apply required resources for each segment of the supply base.

Supplier Integration Risk Management

Close gap between company

expectations/requirements and supplier performance to drive continuous improvement.

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Integrate & align with suppliers, leveraging their capabilities across the value chain and establishing structured strategic &

operational review meetings. Capitalize on supplier capabilities for new product development.

Risk Management

Systemically assess, track and mitigate potential supply risks, IP risks and service disruptions in order to achieve supply chain agility & resiliency.

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Vendor managed inventory - VMI

BUYER

API Inven-

tory

Data Analysis

Inventory Information

API Mgmt Strategy

PO/ Service Level Agreement

API Inventory Performance Data Aggregation

and Analysis Remote Data

Collection Data Analysis

Clinical Supplies VENDOR

API Logistics Resupply

• Ensure high forecast accuracy

• Establish Supplier trust and integration

• Create demand profiles

• Joint monitoring of inventory levels

• Develop a robust replenishment program

• Implement performance measurement and analytics

Risk Management

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Understanding Supply Chain Risk Requires Greater Visibility

Knowledge of Risks

Context “Mature” RM Programs Risks

Known Knowns Issues

“Realized” risks

Issue management

process typically, but not always, mature

Known Unknowns Potential Issues you are aware of (unrealized risks)

Risk management

process varies, mature in many Pharma companies

Unknown Knowns Risks someone knows—

b t d ’t

Risk management

i l i H h i

but you don’t process is evolving. Heavy emphasis s/b on communication

w/employees/suppliers Unknown

Unknowns

Unknown, yet to be discovered risks

Risk management process is typically ad hoc. Need strong process for Risk ID.

Getting To The Unknowns/Knowns & Unknowns/Unknowns – Effectively And Realistically Integrate Existing Supplier Intelligence

PwC Point of View

• “Mature” RM Models have blind spots

• Supply chain risks are program risks

S li d h l ith t i i k

Risk “Radar” Must be Enhanced

Unknowns

Shipment

D • Suppliers need help with certain risks

• Need to tap into supplier intelligence to develop a better “Risk Radar” (further reaching/expanded view, early warning of changing risk profile)

• An objectives-based approach will result in better alignment of objectives with suppliers,

discovery/communication of more

“unknowns”, and will assist in discriminating risks (reduce clutter)

• Employees and suppliers s/b involved Challenges

ch

Program Identified Risks

Unknowns Unknowns

Unknown Knowns

Documen tation

Cold Chain Shipment

Regulatory Knowledge

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Challenges

• Change mindset of PM’s, SCM’s & SC

• Engaging suppliers of varying sophistication and cooperation

• Leverage current processes & enablers

Bottom’s Up Risk Identification Approac

Working Team Identified

Risks IPT Identified Risks

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Tax

Global Tax regulation

Impact on Global Clinical Trial and Supplies

• Integration of key Clinical Supply Chain functions can be leveraged to improve

• Risk Management

• Lower landed costs

• Optimal lead times

• Enhanced Compliance

• Locating management and control of key Supply Chain functions makes a big

Operational Savings

Risk Management and Data Visibility

Reducing landed cost by better managing indirect taxes

Reducing income taxes with proactive transfer pricing

Supply Chain functions makes a big difference.

Cash Flow Improvement Lead time consistency

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Case Study – VAT Savings

Key factor in Clinical Trial Design

• Site and Depot selection can influence the savings in taxes during clinical trials

• Savings can be realized by actively involving Tax SME in the early stages of trial design

Labelling

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Labeling Challenges

Impact on Clinical Trial (Lead times and compliance)

• Labeling approval during the early stages of Clinical Trial is a tedious and time consuming process

is a tedious and time consuming process

• Changes to contents in the label impact the critical path in the clinical trial

• Global Clinical Trials with country specific needs further impact the label development and approval times

• Postponement strategies involving on-demand /JIT labeling dictate agility and automation in the clinical

supplies labeling process

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Major Benefits - Delayed / Postponement of Labeling

Eliminate

Packaging Constrictions

• Language Requirements

P k D i

•Improved agility and reduced cycle time for labeling creation, updating, approval and publishing

•Improved visibility into the labeling

• Package Design

Speed to Market for new products and updates to labels

• Real time updates of adverse events or additional benefits gathered from post market surveillance of the device

Improved visibility into the labeling management process

•Minimize risk of labeling non-compliance (higher conformance based on

harmonized processes, information and technology)

•Increase supply chain flexibility with support for generically labeled product made to stock, with market specific labeling made to order

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Postponement - Labeling

Source Systems

Publishing Labeling Application

Web Content

M t

Product Development

Solutions that support Label Management Processes from Content Creation to Publishing

Product Data PLM Foundation

Mgmt.

eLabeling/

Submission Assembly Product

Registrations Engineering

Change Control Specifications

Management Product and Process Design

Labeling Information Manufacturing

Graphics

Marketing Labeling

All product information, including labeling, managed as part of a comprehensive production information model

Capitalize on PLM Foundation to manage product data, integrate with source systems, and support engineering change control

Employ Technical Publications technology integrated to PLM to render label information in various forms

Employ Web Content Management and Engineering Change Control to ensure appropriate labeling content published

Comprehensive Product Information Model Training

Collaborative Supply Chain model

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Define a Collaborative supply chain

Source Supply Make Ship Reconcile Return/ Patient

Destroy

Collaborative Demand and Supply Planning

Collaborative Demand Processes Collaborative Supply Processes

Collaboration Arrangement is the process of setting the business goals for the relationship, defining the scope of collaboration

The Joint Business Plan then identifies the significant events that affect supply and demand in the planning period,.

Clinical Demand Forecasting projects clinical supplies demand at the site.

Order Planning/Forecasting determines future clinical supplies ordering and delivery

Continuous Performance and Risk Management

requirements

Order Generation transitions forecasts to firm demand.

Order Fulfillment is the process of producing, shipping, delivering, and stocking products for site consumption.

Exception Management is the active monitoring of planning and operations for out-of-bounds conditions.

Performance Assessment calculates key metrics to evaluate the achievement of trial goals

Clinical Supplies – Process Flow

Setup Study Structure

Build Forecast Analyze Study

Forecast (rollup) Study Manager

Forecast Parameters

Forecast

Supply Planning

IVRS (randomization

engine)

WODCentral

Distribution Any Site

Subject Supply Order

Disbursement

Return Return Order

PackagingWOD

Actual Enrollment DistributionPlan

ManufacturingPlan Enrollment

Initiated Transfer Order

Business Business Intelligence Intelligence OPM

Inventory Movements

WMS Inventory Movements

Siebel CTMS Inventory Movements

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Forecast Parameters

Forecast

Monte Carlo Simulation

CRO TPL

Supply Planning

IVRS (randomization

engine)

WODCentral

Disbursement

Return Return Order

PackagingWOD

Inventory Movements

Siebel CTMS Inventory Movements

Clinical Supplies – Supply Management

Forecast Parameters

Forecast

Supply Planning

IVRS (randomization

engine)

WODCentral

Disbursement

Return Return Order

PackagingWOD

Data visibility using Portals

Inventory Movements

Siebel CTMS Inventory Movements Sitemonitors

TPL

Inventory Collaboration Hubs

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