Supply Chain Excellence in Biopharmaceuticals A New Frontier

1
Supply Chain Excellence in Biopharmaceuticals A
New Frontier

• Oct 2007

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Outline

• Biopharmaceuticals Industry Overview
• Current Challenges in Biopharmaceuticals
• Supply Chain Excellence

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Biopharmaceuticals Industry Overview

• Very high P/E High expectations of future value
• Relatively low market cap Significant
  opportunity for MA by Big Pharma

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Biopharmaceuticals Industry Overview
IPO Focus
MA Focus

• Increasing realization that just having a great
  product is not enough, the company needs to have
  the means of consistently delivering product to
  customers to materialize the revenue potential

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Biopharmaceuticals Industry Overview

• Better RD strategies and execution have resulted
  in lower ratio of IND to NDA
• With this improved certainty, comes the
  imperative for flawless commercial operations
• Difference between those who can deliver vs those
  who cant is clear
• This is the new edge in Biopharmaceuticals as
  most of the low hanging fruits in terms of novel
  therapies have been claimed in terms of NCEs/NBEs

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Pharmaceutical Industry Perspective as the key
MA agent in Biopharmaceuticals
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Current Challenges for Biopharmaceuticals

• RD Effectiveness How to terminate non-promising
  projects and refocus resources
• IP Landscape How to ensure comprehensive IP
  landscape to maximize the revenue potential,
  minimize biosimilar threat and avoid RP
• MA Effectiveness How to acquire/sell the total
  package of Biotech drug/platform technology so
  that the transition has minimal impact on time to
  market
• Operations Reliability How to build
  biopharmaceutical operations (plants,
  technologies, processes and personnel) that are
  as robust as API plants in traditional Pharma
• Cost Effectiveness How to minimize cash-to-cash
  cycle time along with unit cost of the
  Biopharmaceutical drug

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Supply Chain as a vehicle to address these
challenges

• Supply Chain is the nervous system for business
• Flow of materials (from raw materials through
  finished product offering in customers hands)
• Flow of information (across all functions
  internal and external)
• Flow of decisions (across managerial hierarchies
  internal and external)
• A well functioning Supply Chain implies
  robustness of the business
• For customers (right product at right time at
  right price in right quantity)
• For employees (workload optimization, sense of
  purpose, ability to focus on value addition
  instead of fire fighting)
• For shareholders (better RoI, better capital
  utilization, better profitability)

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Supply Chain as a vehicle to address these
challenges

• Supply Chain is about inventory management
• Cost effectiveness (how to better utilize every
  dollar/euro/yen/pound)
• Flexibility (how to accommodate new requirements
  on the business)
• Modularity (how to seamlessly integrate and
  separate from other functions)
• Responsiveness (how to deliver products to
  customers despite of variability and uncertainty)
• There are three dimensions of Supply Chain
  Management
• Organizational Structure (Roles
  Responsibilities, Job Descriptions)
• Business Processes (SCOR, APQC or other
  standards)
• Systems and Tools (IT, documentation, MCRS)

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Genesis of Supply Chain Excellence _at_ Bayer

• Kogenate-FS Growth
• gt 2X volumes and 3X variety
• Change from supply driven paradigm to demand
  driven
• Cost pressures (lower inventory) and efficiency
  pressures (Same organization catering to gt 4x
  planning workload)
• Schering Integration
• Single-product to multiple products
• Single supply center to multiple supply centers
• In-house manufacturing to contract manufacturing
• Different organizations, different cultures and
  different systems need to work together

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What is Supply Chain Excellence (SCE)?

• Portfolio of projects spanning organization,
  systems, tools and business processes of Biotech
  value chain
• Cross functional teams with members from GSCM,
  QU, TO, PMO, IT and BPA groups across different
  geographies and business units
• Reengineering the Biopharmaceuticals Supply Chain

Customer focused, cost-effective, responsive and
flexible supply chain for PS-Biotech
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Some of the Supply Chain Challenges
Changing regulatory landscape impacting
restrictions on material usage
Weak Supply Chain, Quality and Financials Linkage
Reliance on tribal knowledge instead of systems
Planning Master Data Deficiencies
Lack of Visibility to country level Demand and
Inventory intelligence
Lack of coordination and processes for product
launches
SOURCE
MAKE
DELIVER
SUPPLIERS
CUSTOMERS
Weak understanding of unexpected demand
(Surgeries, Tenders)
Lack of organizational alignment
Weak KPIs that cant provide visibility to key
issues
Varying usage of standard ERP systems across
value chain
Weak business processes for Inventory and Data
Management
Very high degree of manual efforts and reliance
on Excel
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We have solved some of these issues and have
approaches in place for others and more but it
is a story for another day, another time
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We have solved some of these issues and have
approaches in place for others and more but
that is a story for another day, another time
Thank you!
Customer focused, cost effective, responsive and
flexible supply chain for PS-Biotech
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OPERATIONS How does SCE work?
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Annual SCE Planning Cycle

• PS-GSCM Strategic Objectives
• SCE Vision Goals
• SCE Dashboard (Current Year)

• GSCM SCE Priorities for next year
• Draft SCE resourcing from GSCM

• Aligned business SCE priorities
• Draft SCE resourcing from non-GSCM business
  functions

• /- from current year for SCE
• Current functional gaps and needs
• Draft prioritization

Nov
Oct
Nov

• ITBP Roadmap for next year
• OI priorities for next year

• Aligned SCE-OI priorities
• OI Resourcing for SCE
• PRMS identification

Dec

• SCE Initiatives List
• GSCM Lead
• OI Rep
• PRMS Needs
• Draft Charter

• Approved SCE Initiatives List
• GSCM Lead
• OI Rep
• PRMS Needs
• Draft Charter

• PS-B PMO Alignment Check
• Resources
• Priorities

Dec
Jan
17
Individual SCE Project Life Cycle
Pre-project
Buy-in w potential team and stakeholders
Identification
Feasibility Check w SCE PM
Draft Project Charter
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2
1
4
5
6
7
Project
Project Planning
As-Is Analysis
To-Be Design
Business Process Implementation
Software and Systems Implementation
Training Execution
Support Structure Establishment
SCE Dashboard
Signed BRD
Go-Live
User Manuals, Job Curricula
Post-Project
Recognize Celebrate Success
30-d Review
60-d Review