Nitin Pathak PhD, MBA

1

Organization of Global Clinical Supply Unit
Roles and Responsibilities, Work Flow, and Global
Considerations

• Presented by
• Nitin Pathak PhD, MBA
• Richard Hwang PhD, MBA
• Pfizer Global Research Development

2
Scope

• Ethical Pharmaceutical Business Research and
  Development of New Chemical Entities
• Clinical Supply Unit Drug Substance, Drug
  Product, Clinical Packaging, QA, Materials
  Management Logistics
• Presentation Focus Drug Product Manufacturing
  Unit

3
Outline

• A. Introduction
• B. Pharmaceutical Market
• C. Clinical Supply Value Chain
• D. Organization Strategies
• Global Consideration
• E. Summary

4
A. Introduction
Source Med Ad News Feb 2003, New Medicines
5
A. Introduction

• Pharmaceutical R D (Knowledge driven)
• Discovery (conception of idea, animal studies)
  Time 2-4 yrs
• Phase I (First in human) Time 2-3 yrs
• Phase II (Efficacy small patient population)
  Time 3-4 yrs
• Phase III (Efficacy Large patient population,
  long term drug effects regulatory filings)
  Time 2-4 yrs
• Phase IV (commercialization) Time 2-3 yrs
• Successful Drug Commercialization 11-15 years
• Patent Life 20 years (Useful patent life 5-9
  yrs)
• Opportunity
• Reduce implementation time line
• Increase Useful Patent Life
• Reduce Cost to Market
• Sell standardized product in Global Market

6
A. Introduction

• Clinical Trials Material Clinical supplies (CS)
  Investigational trial material (ITM)
• Drug Development Phases for NCE
• Phase I evaluation of safety in healthy subjects
• Phase II evaluation of effectiveness safety in
  intended patient population
• Phase III large scale, more extensive studies
  for primary evidence of effectiveness
• Phase IV post-marketing studies supplement
  existing data and identify additional indications

7
B. Pharmaceutical Market

• Global Pharmaceutical Market
• Primary Pharmaceutical Markets
• Drivers of Global Economy
• Impact of Global Economy
• Regulatory Considerations

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Global Pharmaceutical Market
Source Med Ad News May 2004, Global Pharma
Market Grows
9
Global Pharmaceutical Market
Source P V Venugopal, WIPO Conference on the IP
economic development, Geneva, Switzerland, 3
June, 2002.
10
Primary Pharmaceutical Markets

• United States
• Europe
• Japan
• Emerging Markets Asia

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Drivers of the Global Economy
Market Drivers Common Customer Needs Global
Customers Global Channels Transferable
Marketing Lead Countries
Cost Drivers Global Economies of Scale Steep
Experience Curve Sourcing Efficiencies
Favorable Logistics Differences in Country
Costs High Product Development Fast
Changing Technology
Government Drivers Favorable Trade Policies
Compatible Technical Standards Common
Marketing Regulations Government-owned
Competitors Host Government Concerns
Competitive Drivers High Exports and Imports
Global Competitors Interdependence of
Countries Competitors Globalized
Transferable Advantage
Source Managing with a global mindset by
Jean-Pierre Jeannet, Prentice Hall
12
Cost Driver Influence of Changing Technology
Use of Internet in Industry and Its Key Country
Markets
Use of Global Strategy
Globalization Drivers
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Government Regulations Drivers of Deregulation
Privatization
Deregulation
Reduction in Industry Specific Regulation
Standardization of Regional/Global Regulations
Pharmaceutical Example European Directive
14
Impact of Global Economy
Expanded Competition
New Managerial Paradigm
Global Economy
Push for Efficiency
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Regulatory Considerations

• European Union Directive 2001/20/EEC
• Scope
• Clinical Trials Authorization of medicinal
  products for human use (CTA)
• Notification of substantial proposed amendments
• Declaration of the end of the clinical trials
• US FDA
• 21 CFR 312.23 IND content format
• 21 CFR Parts 210 211 cGMPs
• Japan Ministry of Health and Welfare
• National Institute of Health Sciences (NIHS)

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C. Clinical Supply Value Chain

• Definition
• Global Work Flow
• Objectives of Clinical Supply Unit
• Core Business of Clinical Supply Unit
• Clinical Supply Chain Management
• Supply Chain Evolution

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Definition
Clinical Supply Value Chain The set of
vertically related business activities is
clinical drug products value chain. Each stage
in a drug products value chain typically has
financial, physical, individual, and
organizational resources associated with it.
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Global Work Flow


Time to Market
Firm Infrastructure (general management,
accounting, finance, strategic planning)
Human Resources Management (recruiting, training,
development)
Support Activities
Technology Development (R D, product and
process improvement)
Procurement (purchasing of raw materials,
machines, supplies)
Drug Substance Manufacturing (NCE)
Materials Management (raw materials DS /
DP warehousing Inventory Mgmt)
Clinical Supply Manufacturing (Drug
Product) (Phase I IV))
Clinical Packaging (Clinical Study
Protocol)
Clinical Trials Sites
Primary Activities
Based on Porters value chain model Competitive
advantage by Michael Porter, Free Press, 1985
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Objectives of the Clinical Supply Unit (CSU)

• Drug Product Manufacturing
• To provide cGMP compliant developmental
  manufacturing capability that is designed to
  deliver on-time clinical supplies that meet or
  exceed customer needs in support of clinical
  trials.

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Core Business of Clinical Supply Unit

• Active Drug Product
• Phases I II
• Phases III IV
• Placebo
• Comparators

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Clinical Supply Chain Management

• Supply Chain Management is defined as a
  collaborative - based strategy to link
  interorganizational business operations to
  achieve shared market opportunity.
• Planning, implementing, and controlling the
  efficient and effective sourcing, production,
  and delivery processes for a final drug product,
  and related information from the point of origin
  to the point of consumption for the purpose of
  conforming to customer requirements.

Source Supply Chain Logistics Management by
Bowersox, Closs Cooper McGraw-Hill
22
Prior to 1980 Functional Management
Supply Chain Evolution
Materials Control
Purchasing
Sales
Production
Distribution
Material Flow

• Characterized by uncoordinated internal
  activities split among different organizational
  departments
• Long production runs, high inventory levels, low
  levels of customer satisfaction

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Supply Chain Evolution
1980s Internal Integration
Source
Make
Deliver
Material Flow

• Coordination between internal activities
  facilitated by single/compatible information
  systems and shared planning and performance
• Short production runs, lower inventory levels,
  total internal system performance optimized
• External relations still not optimal

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Supply Chain Evolution
1990s External Integration/SCM
Internal Supply Chain
Customers
Suppliers
Material Flow

• Information shared with suppliers/customers to
  manage resources more efficiently
• Economies of scale and enhanced bargaining power
  lower cost structure
• Customer satisfaction increased

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D. Organization Strategies Global
Considerations

• Organization of Clinical Supply Unit
• Types Strategies of Supply Chain
• Agile Supply Chain Model
• Lean Supply Chain Model
• Demand Management
• Forecast
• Waste Management

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Organization of Clinical Supply Unit
Site A Site B Site C
Global Vision
Standardized Processes
Seamless Work Flow Across-Sites
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Types Strategies of Supply Chain

• Agile Supply Chain (Just-in-time approach)
• Short product life cycles (Fashion industry)
  low-volume products with changing demands
• Lean Supply Chain (Cost focused Build-to- stock
  approach)
• Anticipatory manufacturing approach based on
  demand forecast and high-volume products with
  stable demand (Consumer products, OTC DP etc.)

Source Supply Chain Logistics Management by
Bowersox, Closs Cooper McGraw-Hill
28
Types Strategies of Supply Chain

• Push System work in advance of need
• Traditional approach
• Move the job on when finished
• Problems - creates excessive inventory
• Pull System need drives work
• Coordinated production
• Driven by demand (pulled through system)
• Extensive use of visual triggers

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Types Strategies of Supply Chain

• Maximize Value in the Clinical Supply Value Chain
• Phases I II
• Attrition is high
• Time is important than cost
• Phases III IV
• Attrition is low
• Cost is increasingly as important as time

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Types Strategies of Supply Chain

• Active Drug Product
• Phases I II Agile Supply Chain
• Phases III IV Lean Supply Chain
• Placebo Lean Supply Chain
• Comparators Lean Supply Chain

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Agile Supply Chain Model

• Just-in-time (JIT) approach eliminating
  variances from day-to-day life in the Supply
  Chain system
• JIT is a subset of Lean Manufacturing

Source Supply Chain Logistics Management by
Bowersox, Closs Cooper McGraw-Hill
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Why JIT Now?

• Evidence of performance
• Less floor space for the same level of output
• Fewer steps to produce the same level of output
• Less inventory
• Timely response to demand

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What is JIT?

• A corporate system designed to produce output
  within the minimum lead time and at the lowest
  total cost possible by continuously identifying
  and reducing all forms of corporate waste and
  variance.
• A corporate strategy
• A philosophy
• Focus of JIT
• Optimize efficiency
• Minimize variance waste

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Objectives of JIT

• Produce only the products the customer wants
• Produce products only at the rate that the
  customer wants them
• Produce with perfect quality
• Produce with minimum lead time
• Produce with no waste of labor, material, or
  equipment -- every movement must have a purpose
  so that there is zero idle inventory
• Produce with methods that allow and encourage the
  development of people

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JIT Principles

• Create flow production
• One piece flow
• Machines in order of processes
• Multi-process handling workers
• Easy moving/standing operations
• Standard operations defined
• Establish needs
• rate at which the clinic needs a drug product
• Build Pull Production

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Lean Supply Chain Model

• Lean Manufacturing is doing more with less
• Materials, time
• Overhead, people
• Waste
• Money

Source Supply Chain Logistics Management by
Bowersox, Closs Cooper McGraw-Hill
37
Demand Management
AggregateProductionPlanning
Long-TermCapacityPlanning
DemandManagement
MasterProductionScheduling
Rough-CutCapacityPlanning
Material Requirements Planning
Final Assembly Scheduling
CapacityRequirements Planning
Production Activity Control
Purchasing
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Demand Management

• Demand management involves recognizing demand for
  products, from all sources, and matching supply
  with demand
• Major activities
• Forecasting
• Order processing Fulfilling CS needs
• Order promising On-time delivery

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Forecast
A forecast is a statement or inference about the
future, usually based on historical information
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Forecast

• Forecast
• Statement or inference about expected future
  demand
• Plan
• Statement of expected actions for dealing with
  the forecasted demand
• Plan doesnt necessarily equal forecast
• Goal
• Target to strive toward
• May exceed forecast, especially longer-term

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Forecasting as a Process
Iterate
1
2
3
4
5
Select Method/ Model
Establish Purpose
Gather Data
Generate Forecast
Monitor Control
Feedback
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Forecast Accuracy and Time Horizon

• Forecasts of the near future are generally more
  accurate than forecasts of the distant future

Good
Accuracy
Poor
Short
Long
Horizon
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Forecast Accuracy and Level of Aggregation

• Forecasts for groups of items are generally more
  accurate than forecasts of individual items

Good
Accuracy
Poor
Group
Item
Aggregation
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Forecasting Methods

• Qualitative Methods judgment- or opinion-based
  approaches
• Quantitative Methods mathematical or statistical
  approaches
• Extrinsic Techniques (also called associative
  or causal methods)
• Relate demand to some other variable or indicator
• Intrinsic Techniques (also called time series
  methods)
• Project patterns found in historical demand data
  into the future

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Extrinsic Technique

• Focus is on relationships or associations between
  variables
• Dependent variable -- what we want to forecast
  (usually demand or sales)
• Independent variables -- what the dependent
  variable is related to
• Approach
• Find correlation between variables
• Quantify relationships

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Extrinsic Technique (contd)
Regression analysis helps us to find and
describe the correlation
Y a bX
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Extrinsic Technique (contd)

• To be useful for forecasting purposes, an
  independent variable must be either
• Known or easily predictable
• Controllable we can set it where we choose
• A leading indicator its changes precede
  changes in the dependent variable

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Intrinsic Technique

• Base forecasts solely on past history of demand
• Approach
• Identify patterns in the past data
• Quantify these patterns
• Project the patterns into the future

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Time Series Components

• Average the underlying base level of demand
• Trend persistent upward or downward tendency in
  demand
• Seasonality regular short-term (a year or less)
  fluctuation pattern
• Cycle regular long-term (multiple year)
  fluctuation
• Random pattern less, unpredictable fluctuation
  in demand

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Waste Management

• Waste from overproduction
• Waste from waiting times
• Transportation waste
• Process waste
• Inventory waste
• Waste of motion
• Waste due to product defects

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Common Causes of Waste

• Layout (distance)
• Long setup time
• Incapable processes
• Poor maintenance
• Poor work methods
• Lack of training
• Inconsistent performance measures
• Ineffective production planning
• Lack of workplace organization
• Poor supply quality/reliability

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E. Summary

• Manage Clinical Supply Unit (CSU) with Global
  Mindset
• Internal efficiency and effectiveness is
  imperative for success
• Transparency across organizations CSU (smart
  scheduling, leveraging capacity and capabilities,
  developing core competencies through structure
  and work processes)
• Alignment with companys overall strategies
• Effective involvement of vendors (contract
  manufacturers) and share risks

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E. Summary

• Active Drug Product
• Phase I II Just-in-time SC
• Phase III IV Lean Supply Chain
• Placebo Lean Supply Chain
• Comparators Lean Supply Chain