astra zenicaoperations

8/8/2019 astra zenicaoperations

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Investor Rel Macc ful l pack 31017v2.ppt: Investor Relations visit to Macclesfield 17-Oct-03 Proprietary and Confident ial AstraZeneca 2003 19/04/2004

AstraZeneca - OperationsFriday, 17 October 2003

Barrie Thorpe Executive Vice PresidentOperations


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2- 2 -Investor RelMacc full pack 31017v2.ppt: Agenda Investor Relations visit to Macclesfield 17-Oct-03 Proprietary and Confidential AstraZeneca 2003 19/04/2004

AstraZeneca

A creative, fast and effective company withthe global sales and marketing strength to

realise the full potentialfrom productive R&D thereby deliveringsustainable top tier financial growth


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Clear priorities

Create a single unified company

Portfolio transformation


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Delivering sustained performance

TM


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Supporting the Portfolio Transformation

Expiry Growth Launch

1999

Base

2003


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Clear priorities

Create a single unified company

Portfolio transformation Improve efficiency and effectiveness

What role does the Supply Chain play?


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Dimensions

32 plants in 20 countries + contractors

15,000+ employees 2002 Budget about $2.5bn Inventory level circa $1.8bn 2002 Capital

- Business ~$1000m

- Operations ~$450m


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Our customers and ourcompetitors will recognise us as

the best

Supply System Vision


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Supply Chain Development

To date:

Merger Maintain supply Synergies Secure new product launchesNow:

Drive performance Leverage the supply chain

Throughout: Business as usual


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AstraZeneca: Translating Company

Priorities to Supply

EPS

Supply

Confidence

Licence to Operate

Enabling Capabilities

Create enduring shareholder value

Fast effective organisation

Growth through key productsWin globallySecure flow of new productsFirst choice for customers

Build the talent base


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AstraZeneca links Supply Chain activities

to business priorities

EPS

Supply

Confidence

Licence to Operate

Enabling Capabilities

Supply Chain priorities

Manage COGS through lifecycle

Balance investment in fixed & working capitalSourcing strategy

Time to marketResponsive supply chains

Supply chains adapting with lifecycle

Development of capabilitiesPeople, technical & IS/IM

GMP compliance

SHE


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Simple value chain

Primary(DS or API) Secondary(DP) Packaging


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Strategic focus for supply

Typically close to R&DPilot

Regional or localPackaging

Regional and GlobalTechnology based

Secondary(Deliverable dosage form)

GlobalPrimary(Bulk chemical active)

Supported by appropriate Outsourcing


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Using supply to deliver maximum benefit

via: Excellent customer service, shortened lead times and

responsiveness giving Increased stock turns, lower stock-holding costs &improved productivity

Product lifecycle management integrated with otherbusiness processes giving

Cost of goods improvement through lower materials costs,improved yields and lower cost sourcing

1% point COS $150-200m ; 3 Stock Turns $500m


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Strategic supply: key factors

Global decision making Close linkages to R&D

- Time to market

Risk management- High uncertainty

Licence to Operate- Regulatory- Safety, Health & Environment

Outsourcing

- Early production stages for primary- Emerging high competence / low cost sources

Tax


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Industry issues from a Supply and

Manufacturing perspective Regulatory environment in the industry

- Approval times- Constraining vs. Science based

- Adoption of new technology

Adapting to future R&D and portfolio base

Intellectual Property Movement of goods

- Parallel trade EU & Importation USA

- Future channel evolution- Anti-counterfeiting

Macro trends


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AstraZeneca

A creative, fast and effective company withthe global sales and marketing strength to

realise the full potential

from productive R&D thereby deliveringsustainable top tier financial growth..

Underpinned by world class supply!


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AstraZeneca - OperationsFriday, 17 October 2003

AstraZeneca Supply System

Julian Amey Vice President Supply Chain


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Historically, Pharma manufacturing not

seen as a source of competitive advantage

Stay out oftrouble

Top level

View

OperationsManagement

Focus

Operating

Consequences Outcome

Delivery

performance

Productquality

Avoid processchange

High inventories

Buffer stocksLong lead times

High investment

and infrastructureLack of process

improvement

PoorProductivity

PoorProductivity

Source: Derived from Doug Dean, IBM


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Pharma Manufacturing therefore evolved

to be "internally neutral"

Externally Competitive - Drive Business Strategy

Externally Supportive - Customer Service Advantage

Internally Supportive - Cost Advantage

Internally Neutral - Cause No ProblemsInternally Neutral - Cause No Problems

Internally Negative - Quality & Delivery Problems

Source: Prof. S. Wheelwright, The Harvard Model of Manufacturing Competitiven ess


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Competitive Advantage from the supply

chain

Profitable growth

Cash generation


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Governance

ResponsiveSupplyChains

SupplyNetwork

Technologies

Consistent

Ways ofWorking

Supply ChainPrinciples

IS/IMPeople

Life CycleManagement

of Supply

AstraZeneca supply system

Excellence in customer service and supply performanceExcellence in customer service and supply performance


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Developing AstraZenecas supply chain

Consistency

Aligned goals Customer focus

Supply mindset Inter-dependent network


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Common ways of working

Schedule push to demand pull Life cycle management

Governance and decision framework Capability development

Essential steps


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AstraZeneca supply system

supply system

Excellence in Customer Serviceand Supply Performance

Lifecycle ManagementSupply Chain Design

Supply Leadership

Supply PointsDemand Driven Supply


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!

"

#

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%

&

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Demand Driven Supply: learning from

other industries


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Demand Driven Supply is changing the

way our supply chain operates Uses demand triggers, KANBANs and visual planning A consistent way of working

Means of driving lead time and stock improvement ..and its simple

W W

Formulation

Finished Packs

Bulk Packing

K

MarketDemand

Inter-siteKanban

TabletRIP

KK

IPKBulkRIP


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DDS covers:

Creation of Flow lines Intra and inter site planning Suppliers Facilities design & layout

Demand Driven Supply

DDS ensures that material and supporting information flowthrough the supply chain at a ratedetermined by demand.

D d D i S l l


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Demand Driven Supply supply supports

lead time reduction

Benefits of lead time reduction

Lower safety and policy stocks Lower stock holding costs

Reduced stock write-offs Improved resource allocation

- e.g. particularly potential bottle-neck areas

S l h i d h th h th


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Launch Growth Post-Patent Expiry

Uncertainty

of forecastsResponsiveSupply

Global

Coordination

Keeping up

capacity vs demandIncrease pack

range

Line extensions

Asset management

outsource

Dual sourcingcontingency plans

Patent expiry,generics, price

Managing complexity

Lean Supply chain

Maturity

Mana

gefor

Grow

th

Manage for

Profit

ManageforCash

Range rationalisation

Divestment

Product withdrawal

Cash Cow

Defender

Supply chain needs change through thelife cycle

New product introductions

rapid launches Speed to market

U i l t d li i b fit


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Using supply to deliver maximum benefitvia:

Excellent customer service, shortened lead times and

responsiveness giving Increased stock turns, lower stock-holding costs &

improved productivity

Product lifecycle management integrated with otherbusiness processes giving

Cost of goods improvement through lower materialscosts, improved yields and lower cost sourcing


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The AstraZeneca supply system


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The Compliance Environment


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Compliance: The legal framework

Highly regulated

- Licences Products and Facilities

- Regulations GMP (Good Manufacturing Practice)GDP, GLP, GCP


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What is Good Manufacturing Practice (GMP)?

GMP is that part of QA which ensures that

products are consistently produced andcontrolled to the quality standards appropriateto their intended use and as required by the

marketing authorisation and/or productspecification


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GMP covers:

Quality Management

Personnel Premises and Equipment Documentation

Production Quality Control Contract Manufacture and Analysis Complaints and Product Recall

Self-inspection

What is GMP?


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History

1820 US Pharmacopoeia - Colleges of Pharmacy established

1848 First federal drug law (Import Drug Act) -Bureau of Chemistry

1902 Diphtheria antitoxin contaminated with tetanus - 12 children die

1902 Biologics Control Act - Public Health Services

1906 First Food and Drug Act -Drugs must not be MISBRANDED orADULTERATED

1927 Formation of the Food and Drug Administration

1937 Sulphonamide elixir tragedy - 107 people die

1938 Federal Food Drug and Cosmetic Act - Factory Inspections

1959 Thalidomide tragedy in Europe

1962 Kefauver - Harris amendments First USA GMP regulations (CFR)

1963 Formation of Dunlop Committee in UK voluntary controls


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History

1968 The UK Medicines Act controls manufacture, supply and sales

1971 First UK Guide to GMP published

1972 Devonport Hospital disaster 6 patients killed with contaminated IV fluid

1973 2nd UK Guide to GMP published

1975 EC Directive 75/319 QPs, Inspections,.Manufacturers Licences

1988 Generic Fraud scandal in USA

1989 UK Medicines Control Agency formed

1989 Barr Judgement in USA

1991 EC Directive 91/356 Compliance with GMPs legalised in EU

1992 FDA Pre-Approval Inspection Programme

1998 TSE controls introduced

2003 FDA Quality Ini tiative GMPs for the 21st Century

most legislation has been reactive.


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GMP and Pre-approval inspections (PAI)

Inspections

-GMP

Annual updates

CBEs

sNDA

Change- Single batch variation

- Type I and II

CFR 210 and 211GMP regulations 91/356/EEC

_Licences

-Manufacturers:Wholesalers:Specials

New Drug Application (NDA)Marketing Authorisation Application (MAA)

-Mutual recognition and centralised approval

USA - FDAEU - EMEA

EMEA v FDA


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Making changes is highly legislated and often requires

regulatory approval before it can be introduced

Do

Tell and do

Tell, wait and do

Change

DISCOURAGES INNOVATION

FDA E f R E l


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Abbott Laboratories- Warning letters, consent decree several locations

- $100m fine, loss of sales, share price drop- Estimated total costs $200m

Wyeth Ayerst- $30m fine

- Consent decree sterile drugs / vaccines

Schering Plough- Warning letter related to US and Puerto Rico sites

- Major new product launch delayed

- Consent decree - $500m fine

- Share price drop, CEO resignation

FDA Enforcement Recent Examples

FDA E f t R t E l


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Eli Lilly- Warning letters Indianapolis

- Delayed US launches new products- Plant shut 30 days

Pharmacia- Warning letters two major Swedish sites- Major corporate reorganisation / improvement plans

Aventis- Site of API manufacture not notified

- $33m fine

Merck- Warning letter two sites- Plant shut for a time

FDA Enforcement Recent Examples

I ti P ti k t


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Inspection Preparation key concepts

Site co-ordination

Core team (QA, Production, Development, Engineering)

Pre-inspection audits Front people identified and in place for all areas 4 week plans for areas Expert package library Checklists Coaching

H d k ith th i ?


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How do we work with the agencies?

MHRA- Through UK Marketing Company Regulatory Department- Licence renewals

- Licence variations

Type 1 minor changes requiring notification (tell and do)

Type 2 major changes that may require inspection (feel, wait, do)- Inspections

Dialogue on quality issues, changes and audit programme

Build relationship with inspectors

- Defective Medicines Reporting Centre Complaints

Major Quality Incidents and potential product recalls

Ho do e ork ith the agencies?


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How do we work with the agencies?

FDA inspections- Handled corporately- Many inspectors

- Not necessarily specialists in drug manufacture

- Credibility built centrally in Washington rather than with

individual inspectors- Compliance-oriented

Other agencies- Very variable expectations

- Handled on an individual basis

Medicines & Healthcare products


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pRegulatory Agency (MHRA)

An approval Agency

Sanctions-Letter detailing non-conformances as Critical, Major or Other

-Recall of product

-Revocation of Licence

-Prosecution of individuals

MHRA inspections (on behalf of EMEA)-GMP surveillance inspections

-Focus on changes and quality issues

-Facilities

The Food and Drug Administration (FDA)


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The Food and Drug Administration (FDA)

An Enforcement Agency

Sanctions-Observations (Form FD 483 a non-conformance report) - VAI

-Warning Letters for serious violations - OAI-Seizure of product

-Consent Decrees

-Fines

Inspection-Regular general GMP inspection (2 years)-Pre-approval inspection (PAI) for NDAs and sNDAs

-Systems based (Quality Management System + selected others)

-Focus is on documentation

Wheres AstraZeneca?


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Where s AstraZeneca?

Culture of quality and compliance.

R&D - manufacturing - supply Good record with agencies worldwide. Respected by regulatory inspectors.

Influential with governments and industryorganisations.

Recognises importance of compliance to maintainLicence to Operate, and acts accordingly.

Summary


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Heavily regulated industryBut inconsistency globally FDA/EU/WHODeveloping markets

Brazil, Argentina, Taiwan, China, Korea

Summary

Cost of compliance is highBut cost of non-compliance is much higherSuccess depends on

Robust Quality Management SystemsRegular audits/inspections

Maintaining credibility with the regulatory agenciesActive involvement with opinion forming groupsCulture

Future


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Bilateral agreements (MRAs)Canada, Australia, New Zealand, Japan, USA

EU enlargement another 10 states FDA 21st Century risk-based GMPs

Science based PAT (step change)

EU Directives and Guidelines:Clinical Trials

APIs

Sterile manufacture

Future

Thought


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TODAYS DECISION IS TOMORROWS HISTORY

Thought

HISTORY IS DOCUMENTED !


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life inspiring ideas

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