Supply Chain Management in the Drug Industry

Delivering Patient Value for Pharmaceuticals and Biologics

Hedley Rees, Hedley Rees

• Publisher: Wiley
• Year: 2011
• Print ISBN:
  9780470555170
• eBook ISBN:
  9780470922842
• Edition: 1
• Topic: Medicine
• Subtopic: Pharmacology

This book bridges the gap between practitioners of supply-chain management and pharmaceutical industry experts. It aims to help both these groups understand the different worlds they live in and how to jointly contribute to meaningful improvements in supply-chains within the globally important pharmaceutical sector. Scientific and technical staff must work closely with supply-chain practitioners and other relevant parties to help secure responsive, cost effective and risk mitigated supply chains to compete on a world stage. This should not wait until a drug has been registered, but should start as early as possible in the development process and before registration or clinical trials. The author suggests that CMC (chemistry manufacturing controls) drug development must reset the line of sight – from supply of drug to the clinic and gaining a registration, to the building of a patient value stream. Capable processes and suppliers, streamlined logistics, flexible plant and equipment, shorter cycle times, effective flow of information and reduced waste. All these factors can and should be addressed at the CMC development stage.

PART I

Surveying and Mapping the Territory

Chapter 1

Setting a Transformational Agenda

1.1 AIMS AND ASPIRATIONS OF THE BOOK

The skill and coordination required of scientific, technical, and business experts in bringing new medicines to market is immense. There is, however, the potential to make those efforts significantly more productive by thinking in supply chain management (SCM) terms from the earliest stage of drug development. Our intention in this book is to help readers to reach that potential by working on a number of levels.

1.1.1 A Practical Guide for the Industry

First, the book aims to be a practical guide to the application of SCM processes and practices in a pharmaceutical setting. The objective is to provide information to those in the industry wishing to contribute to improved supply chains. The key aim, therefore, is to help individuals and teams appreciate the impact they have on working supply chains; experience shows that this is a far broader spectrum of involvement than may initially be appreciated. Then, armed with that appreciation, readers can identify specific ways in which they can make a vital contribution to an organization’s success in supporting patient needs for pharmaceutical products and services. With enhanced understanding among all the stakeholders, there is a real opportunity to help reduce the astonishingly high attrition rates with which this industry lives on a daily basis.

1.1.2 Understanding Constraints for SCM Practitioners

The second aim of the book is to provide SCM professionals, both inside and outside the sector, with a deeper understanding of the special constraints that operate in this industry. The regulations that apply are designed specifically to protect the health and well-being of patients. There is often confusion, however, as to what is or is not acceptable to industry regulators. The default position often becomes “change nothing.” The message must be that although change is not straightforward and can be time consuming, it is necessary in order to continue to provide patients with products that are “fit for purpose” and meet their requirements as to quality, cost, and delivery lead time. To date, many talented supply chain professionals have avoided this sector or are not able to fully exercise their skills within the sector. This needs to change—and by providing more insight into the constraints, it is hoped that innovative ways of working can be adopted in a fashion similar to that of other safety-critical sectors. All the evidence suggests that industry regulators are now positively encouraging this approach through modernization initiatives, which we discuss in detail throughout.

The basis for achieving the two goals above is my own work, founded on everyday experiences of bringing drugs to clinical trial sites and markets. These experiences are based on work from early-stage drug development through to large-scale phase III and postmarket (phase IV) trials and commercial sale in global territories. The emphasis is on understanding and utilizing simple and effective ways to build, manage, and improve the performance of the supply chain. The simple approach is essential in that complexity abounds in both pharmaceuticals and SCM. Simplicity, in combination with effective working methods that focus on meaningful outcomes rather than on tools and techniques, can be extremely powerful.

I believe that these goals are achievable. There are, as well, several more ambitious goals that could be a by-product. The first of these is to help inspire and catalyze a step change in culture and attitude that must take place in the pharmaceutical industry.

1.1.3 Catalyzing Change of Culture

The manufacturing and distribution supply base of this sector has many issues before it, but this has always taken second place to the search for new blockbuster products and markets. The world is now changing its attitude to prescription medicines, with issues of cost, integrity (adulteration and counterfeiting), quality, efficacy, and safety all moving the supply chain center stage. The changes required are at the roots of the industry, and in this book we dig down deep.

The scientific community of pharmaceuticals has historically held innovation in manufacturing at arm’s length, focusing attention on discovery research. Jon Clark, associate director of policy at the U.S. Food and Drug Administration’s (FDA’s) Center for Drug Evaluation and Research, observed at the Marcus Evans Summit Manupharma conference held in 2005: “The pharmaceutical industry has one of the most technically advanced discovery organizations, but remains more conservative when it comes to using ‘cutting edge’ technology in manufacturing.” This quotation from Clark’s presentation at that summit is a suggestion of ways in which the pharmaceutical industry could improve by adopting process analytical technology and quality by design approaches. There will be more on those subjects later in the book, specifically in Chapter 14, but for now, readers should simply understand them to be methods of introducing improvements into the supply chain using principles founded in best manufacturing practices.

1.1.4 Engaging Pharmaceuticals in Supply Chain Management

My last aim or aspiration, call it what you will, is to encourage engagement of the huge intellectual resource within pharmaceuticals and SCM in a search for increasingly effective processes to manage complex supply chains. That scientific attention in discovery research has resulted in rapidly developing technologies in the modeling and analysis of complex biological systems. As will become clear throughout the book, supply chains are less complex subjects than humans but have the added complication of the more unpredictable “person” component. The discipline of SCM could benefit significantly from the intellectual rigor of the pharmaceutical sector. As readers new to the discipline will begin to understand, SCM is by no means well defined or fully understood, even by the many “experts” operating in the territory. There is a dire need for continuing research and discovery of ways that are sustainably better, rather than chasing tools, techniques, and “information system” gimmicks that add little or no value, yet still attract the attention of many.

1.1.5 Examining the Two Worlds

To stand a chance of achieving these goals, it will be necessary to examine the two very different worlds of pharmaceuticals and SCM in some detail. I do not apologize to experts in either or both fields for striking a baseline at fundamentals. When visiting these settings, the level is pitched at first principles to provide a foundation for further research or investigation. It will be for the reader to follow an interest or curiosity into further depth beyond the needs of understanding SCM in pharmaceuticals.

1.2 BOOK FORMAT

The focus of the book is on factual information about the pharmaceutical industry and SCM. To aid readers’ understanding of some of the less straightforward concepts or issues, the presentation is supplemented by three distinct types of auxiliary material.

1.2.1 Guest Contributor Slot

The guest slots are inputs of varying length that aim to inform and underscore the messages in the text. There is no particular pattern to the inclusion of these speakers other than the fact that I encountered them at some point and recognized that they had valuable tales to tell in relation to the book’s content (as an aside, see Section 16.4). The speaking panel includes long-term colleagues and friends of the author, eminent professors, industry colleagues, and contacts made in the course of doing business, where a particular shared view or interest has prompted dialogue. They are taken from a broad spectrum of industrial, academic, and consultancy backgrounds. The unifying theme is that they have particular insights or expert knowledge that is of direct importance to the aims of this book. The style is particular to each speaker, but the messages are clear and consistent. After each slot, I emphasize an important point or points for reinforcement, but each slot stands alone as a learning opportunity. It should also be noted that the contributors do not necessarily subscribe to all the views that I express throughout the book.

1.2.2 Observations, Views, and Experiences of the Author

In these sections I include particular findings, experiences, and insights of mine during many years of operating in pharmaceutical supply chains and through personal and professional development. This is not to suggest that these views are any better or worse than anyone else’s. We all have a tale to tell and valuable knowledge to impart. The perspective that I bring is from one who rather than entering academia or career consultancy has remained a practitioner. This means that I have been “doing” throughout my working life, aside from the time taken to study. I have been able to apply that valuable study and use it to determine what works and what does not work in practice. The doing has kept me grounded in the gray mists of ambiguity that pervade all modern organizations.

Some of these sections are recountings of actual events in the form of practical case studies. In the main, they are anonymous, so that, as a colleague used to say, we may “protect the innocent.” The serious aspect of this is that searching for guilty parties can be a major inhibitor to organizational learning, as people fear for their jobs or career prospects. This circumstance is studied further in chapters on improvement and exemplar thinking, but it is important here to note that the vast majority of participants in organizational “mistakes” are innocent parties trying to do their best under difficult circumstances.

This is the spirit in which the case studies are examined. They aim to get at the fundamental lessons from situations where things did not appear to turn out well, were handled less than effectively, or did not involve the correct course of action or involvement; and specifically, to extract every last ounce of understanding from examples that demonstrate exemplar ways of working.

1.2.3 A Helpful Metaphor

The aim of using metaphors is to draw out the reader’s identification with unfamiliar concepts. Sometimes, the only way to really identify with another person’s pain or pleasure is to imagine an analogous situation that has similar implications. As with all metaphors, they are not perfect analogies, and the reader could spend time picking out differences that distinguish them from the case in point. They will, though, be close enough to convey a sense of identity with the essence of the concept. Although at first glance it may seem patronizing toward the many highly educated and scientifically gifted people reading the book, it is not, of course, my intention and hopefully, will not be taken that way.

1.3 INTENDED READERSHIP

Most readers will be in one or more of the broad categories described below.

1.3.1 Operating in Pharmaceuticals or Biopharmaceuticals Outside SCM

The responsibility areas involved include the following:

• Research chemistry and biochemistry
• Chemical and biochemical engineering
• Chemistry, manufacturing, and controls
• Preclinical development
• Clinical development
• Regulatory affairs
• Quality assurance
• Finance
• Marketing
• Informatics and information systems
• Business development
• Licensing
• Pharmacovigilance
• General management

See Chapter 3 for a definition of some of the technical terms.

1.3.2 Working in SCM Outside Pharmaceuticals or Biopharmaceuticals

Areas of responsibility include the following:

• Purchasing
• Procurement
• Supply management
• Operations
• Production management
• Inventory management and control
• Production and material planning
• Demand planning
• Logistics
• Warehouse management
• Import/export
• SCM
• General management

1.3.3 Occupying a SCM Role in Pharmaceuticals or Biopharmaceuticals

For example, readers may have the responsibility for planning and management of inventory in a clinical trial supply environment. Their background may be technical, such as in pharmaceutical sciences, and they may have moved into clinical supplies as a career development step. There may well, therefore, be gaps both in aspects of the drug development process and in common practices in SCM.

1.3.4 Off-Label Use

In pharmaceuticals, there is the well-known concept of off-label use, where a medicine is prescribed by a physician for conditions that were not part of the original approval to market and sell the drug. Possibly, there will be an analogous element of off-label use for this book, as prospective readers become aware that some of the principles apply in a complementary sense to their specific interests. This may include some additional categories:

• Academia outside SCM, such as marketing, finance, and human resources
• Venture capitalists (someone suggested that they would lose interest after the first page!)
• Industrial, non-supply chain responsibility areas outside pharmaceuticals (e.g., product design, marketing, finance)
• People looking to discover sound principles of SCM, not the surrounding baggage
• Others of a curious nature with regard to all things organizational

1.4 A BOOK ABOUT TWO WORLDS IN CONTRAST

It is time to look more closely at these different worlds. The world of pharmaceuticals is complex even on the simplest plane. It is a world populated with some of the most intellectually gifted people on the planet. It is a place of ethics, scientific rigor, personal challenge, human caring, and highly professional standards, but also a world of blockbuster drugs, huge gross profit margins, captive markets, and patent protection—a place where business and science often collide.

The other world, that of supply chains and SCM, is equally complex, although perhaps not immediately obvious to the uninitiated. It is a relatively young discipline, challenged by risk and uncertainty, constant need for innovation, quality improvements, customer choice, cost containment, and delivery deadlines; also often a place of wild demand fluctuations, dysfunctional relationships, problematic defect rates, departmental silos, and customer complaints. Ironically, in many respects, it too is populated by equally talented and intellectually bright and committed people.

So begins a voyage through these worlds in the hope that each can learn from the other to leverage better outcomes for the central character of this book: a patient—the ultimate consumer of pharmaceutical medicines.

1.5 THE PHARMACEUTICAL LOTTERY

1.5.1 Failure Is Never Far Away

Probably the number one preoccupation of anyone working in the world of pharmaceuticals is the risk of failure, and it is this aspect that differentiates it from other industry sectors. Figure 1.1 tells th...

Table of contents

• Cover
• Half Title page
• Title page
• Copyright page
• Dedication
• Contributors
• Preface
• Part I: Surveying and Mapping the Territory
• Part II: Building a Knowledge Foundation in SCM
• Part III: Planning and Executing Supply Chain Change
• End Notes
• Index