Focus Group “Future Challenges for Pharmaceutical Supply Chains”

A Delphi-based Expert Assessment of Critical Trends and Prospects

Executive Summary

Our Approach

Extensive review of future trends and prospects for

pharmaceutical supply chains

Conduct Delphi Study to reveal likelihood, impact and

moderators of future trends and prospects

Establish Focus Group and research cluster to develop

concepts for robust and efficient pharmaceutical supply chains

Your Benefit

Benefit from our expertise and broaden your perspective on

key strategic challenges

Bundled expert knowledge accomplishes time- and cost

savings and the ability to prioritize strategic challenges

Knowledge transfer from other fields, learning effects, avoidance of pitfalls, individual solutions

Identify

Assess

Manage

Agenda

Delphi Study

Future Trends

Introduction

Focus Group

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Joint European Pharma Centre 5

Agenda

Delphi Study

Future Trends

Introduction

Focus Group

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Joint European Pharma Centre 5

1. Introduction The Managing and Scientific Team

Prof. Dr. Constantin Blome University of Sussex, UK Professor of Operations Management

Prof. Susan Newell University of Sussex, UK Professor of Information Systems

Dr. Des Doran University of Sussex, UK Senior Lecturer Operations & Supply Chain Management

Dr. Thanos Papadopoulos University of Sussex, UK Senior Lecturer Information Systems

Dr. Dimitra Petrakaki University of Sussex Senior Lecturer in Information Systems

Dr. Martin C. Schleper EBS University, Germany Lecturer and Project Manager

Dr. Hannes Hofmann EBS University, Germany

Prof. Dr. Michael Henke Technical University Dortmund / Fraunhofer IML Professor of Corporate Logistics

1. Introduction Project Timeline

Focus Group

!  Real time expert assessment of future trends and challenges for pharmaceutical supply chains

!  Clustering, analysing and synthesizing results

!  Anonymous feedback to participants

!  Conception and preparation of project

!  Identify upcoming trends and challenges for pharmaceutical supply chains

!  Contact and acquire participants from key European pharmaceutical companies

!  Analyse and synthesise results

!  Write executive report and disseminate results

!  Identify key research topics

!  Meeting of all participants and presentation of results

!  Kick off of Focus Group

Launch Compile Report Delphi

Mar - Apr 2015 May - June 2015 July - Aug 2015 Sept - Oct 2015 Tbd.

Research Cluster

!  Engage in joint practice-oriented research projects

!  Joint conferences

!  Access to and visibility in key European markets

Agenda

Delphi Study

Future Trends

Introduction

Focus Group

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Joint European Pharma Centre 5

2. Delphi Study Introducing the Delphi Technique

!  Developed at the RAND Corporation in the 1950s

!  Widely accepted method to achieve convergence of opinion concerning real-world knowledge solicited from experts within certain topic areas

!  In contrast to surveys (“what is”), the Delphi technique addresses future states (�what could be/should be”)

The Delphi Technique can be used for achieving the following objectives:

1.  Determine or develop a range of possible program alternatives

2.  Explore or expose underlying assumptions or information leading to different judgements

3.  Identify information that might lead to a

consensus on the part of the respondent group 4.  Correlate informed judgements on a topic

spanning a wide range of disciplines 5.  Educate the respondent group as to the

diverse and interrelated aspects of the topic

2. Delphi Study The Delphi Technique - Characteristics

!  Delphi applies multiple iterations of questionnaires to create consensus of opinion concerning a specific topic among a panel of selected subjects

!  Applying multiple iterations, Delphi offers a feedback process allowing participants to reassess their initial judgements about information given in previous iterations

!  Delphi provides anonymity to participants

!  Delphi is suitable to various statistical analysis techniques

These characteristics are designed to offset the shortcomings of conventional means of pooling opinions obtained from group interactions (i.e., influences by dominant individuals, noise, and group pressure for conformity).

2. Delphi Study The Real Time Delphi Process

Phase 1 !  Integrate practical and academic

knowledge to create views on the future of Pharma’s SC

Phase 2 !  Invite participants to online

questionnaire !  Real time evaluation of answers

Phase 3 !  Participants’ responses are put

into context of whole group !  Reassessment of responses

Identify areas of agreement and disagreement

Real time feedback to

increase level of consensus

2. Delphi Study Selecting Participants

Who are we looking for to join the Delphi Study? 1.  Top management decision makers who will utilise the outcomes

of the Delphi Study

2.  Professional staff members together with their support team

3.  Highly trained and competent experts from strategic and operative supply and operations functions

" Size of final panel should be between 30 to 50 participants

Agenda

Delphi Study

Future Trends

Introduction

Focus Group

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Joint European Pharma Centre 5

3. Future Trends Overview

New product types Due to the rise of new product types, pharmaceutical supply chains need to be orchestrated to tackle associated complexity and cost pressure.

New modes of healthcare delivery As healthcare will be increasingly delivered to patients’ homes, efficient ‘final mile’ distribution networks have to be designed.

Emphasis on outcomes As proving cost-effectiveness of medicines will become imperative, pharmaceutical supply chains need to deliver novel health management services.

Regulatory/Government Gradual licensing and incremental launching require supply chains to be agile and adjustable to rapidly altering demands.

Importance of emerging markets The growing importance of emerging markets make great demands on pharmaceutical supply chains’ governance mechanisms.

Environmental pressures New and eco-friendly processes will require re-organisation and substantial investments into pharmaceutical supply chains.

Greater public scrutiny Greater public awareness stresses the need for risk management across the extended supply chain and greater supply chain transparency.

Big Data New interface technologies to collect detailed patient data will enable personalized medicine, improved forecasting and demand information.

Consolidation and integration Consolidation among pharmacies, wholesalers and hospitals demands integration of pharmaceutical, medical devices and healthcare service supply chains.

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3. Future Trends New Product Types

!  Specialist treatments (e.g. biologics, gene and tissue based therapies, human cell therapies) require innovative production and shipping standards

!  Personalised medicine and poly pills have to be finished at pharmacy or ‘point-of-care’)

!  Product life-cycles will get shorter and increased competition reduces periods of exclusivity

Fixed dose combinations

Imaging

Tissue engineering

Nano-pills

Therapeutic monoclonals

Pharmaco- genomics

Biomarkers

Gene-based therapies

Nano-carriers

Human cell therapies

2010 2012 2015 2020

KEY Mainstream technologies already happening Gene/Cell/Tissue technologies Nanotech-related technologies Source: PwC

Prevalence of new product types will put pharmaceutical supply chains under pressure for innovation.

3. Future Trends Regulatory / Government

!  In contrast to current binary practice, future launch processes will become more incremental as new methods for assessing, approving and monitoring medicines emerge

!  ‘Live licensing’ and phased approaches will displace big-bang launches resulting in a longer interval between initial launch and peak sales, a slower climbing revenue curve and a more protracted payback period for investments

!  Instead of large upfront investments into supply chains designed to cope with peak volumes, new product launches will require supply chains that can be rapidly adjusted as licenses alter

Rev

enue

Time

Peak Sales

80% 40%

In light of gradual licensing and adapted launching processes, pharmaceutical supply chains will have to reach new levels in agility and responsiveness.

3. Future Trends Emphasis on Outcomes

!  Financially stretched governments and health insurers increasingly demand clear evidence on effectiveness of medicines

!  Pharma has to move from manufacturing and distributing medicine to ensuring that patients get the most from therapies by supplementing their products with supporting services

!  Supply needs to tap into diagnostics and health management services

Future pharmaceutical supply chains not only have to deliver high quality products but also services to prove their efficacy.

3. Future Trends New Modes of Healthcare Delivery

!  Instead of relying on hospitals and specialists, patients will self-administer their medicines and take a more active role in managing their own care management

!  Many diseases currently cured in hospitals will be treated at home !  Healthcare delivery will increasingly need to cover a diffuse network of nurses

and community carers !  Final mile distribution networks, use of electronic health records, e-prescribing

and remote monitoring will stimulate demand driven supply chains

www.compuware.com

Trends and Directions in Healthcare Delivery Illness Wellness

Acute Care Primary Care

Inpatient Outpatient

Individual Health Community Well-Being

Fragmented Care Managed Care

Independent Institutions Integrated Settings

Service Duplication Continuum of Services

Future pharmaceutical supply chains will be characterized by patient-centred and demand driven structures.

3. Future Trends Importance of Emerging Markets

!  90% of incremental growth in the global pharmaceutical market over the next five years is expected to come from emerging countries

!  Manufacturing sources in emerging countries already account for 15% of the formulated drugs sold in the US

!  How to select the right supply partners albeit fragmented market and unreliable data on supplier reliability?

!  How to pick appropriate governance and contract models?

!  How to manage quality, product safety, and delivery risks?

!  How to ensure that intellectual property is appropriately protected?

New supply chain governance mechanisms will be required to establish efficient buyer relationships in emerging markets.

3. Future Trends Greater Public Scrutiny

!  Both, FDA and EMA report a progressing increase in the number of product quality problems leading to record recalls

!  Other administrations tighten their rules as well (e.g. Indian government mandates track-and-trace barcodes on all export-intended drugs)

Parallel distributionIn May 2013, a new procedure – the annual up-

processed.

A new procedure was developed to handle urgent

Number of quality defectsThere has been a progressive increase in the number of quality defects over the years. Causes for this increase are multifactorial and the Agency is studying the root causes in order to draw general lessons from these incidents which can be used to further improve the quality of medicines.

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In

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Number of quality defects

Quality defects and recalls (2013)

Quality defects reported

2013 178

2012 148

2011 154

Number of quality defects (2011-2013)

Quality defects

Recalls (total) 19

Class 1 recalls 5

10Class 2 recalls

Class 3 recalls 4

Quality defects reported 178

Initial notifications Notifications of change

2013

2012

2011

Parallel distribution notifications (2011-2013)

2,532

2,563

2,388

3,264

2,551

2,150

Requested Issued

2013

2012

2011

Certificates (2011-2013)

3,434

3,421

3,041

2,995

3,104

2,921

Requested

Issued

EMA Number of quality defects Fiscal Years 2011 - 2013

FDA Warning Letters Fiscal Years 2008 – 2013

445 474 673 1720

4882

6760

0

1000

2000

3000

4000

5000

6000

7000

2008 2009 2010 2011 2012 2013

FDA Warning Letters Fiscal Years 2008 - 2013

Pharmaceutical supply chains need to develop robust compliance and risk

management measures.

3. Future Trends Environmental Pressures

!  Population growth will increase pressure on natural resources (e.g. water shortage)

!  International drive to curb CO2 emissions

!  Environmental controls are likely to increase

!  Traditional centres of pharmaceutical manufacturing as well as logistic hubs will become more vulnerable to extreme weather events

Environmental pressures will require substantial investments into

pharmaceutical supply chains (e.g. eco-friendly production, relocating of plants).

3. Future Trends Big Data

!  Detailed patient data including genetic information will be available but require close compliance with legislation preventing data misuse at the same time

!  Revolution of inventory management

!  Shortages and expensive emergency orders can be prevented

Developing expertise in patient data mining will increase efficiency and enable

precise demand forecasting

3. Future Trends Consolidation and Integration

!  Consolidation of once fragmented industry segments (Originals, Generics, OTC, Bio-Pharma)

!  Consolidation among buyers (pharmacies, wholesalers, hospitals and physician practices)

!  Restricted health budgets, trend to tender offers and emerging two class health care further reduces profitability of pharmaceuticals

!  Thus, overcoming competition and greater integration of pharmaceutical, medical devices and healthcare service supply chains becomes crucial to curb new potentials

Future pharmaceutical supply chains will be characterized by a high degree of integration.

Agenda

Delphi Study

Future Trends

Introduction

Focus Group

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3

4

Joint European Pharma Centre 5

Time- and cost savings are accomplished applying bundled expert knowledge, transferring innovations from other fields, fast learning effects, individual corporate solutions, directly implementable operating instructions and avoidance of pitfalls others have already made or will do

!  Collaboration within the Focus Group

!  Develop benchmarks to identify individual strengths !  Practice-oriented conceptual advancements !  Develop use cases collaboratively

!  Identify corporate weak points !  Discuss and advance solutions in an expert forum !  Develop transferable knowledge and best practices

!  Practical input

!  Expert assessment of future trends and prospects !  Typical practical problems regarding trends and prospects !  Individually developed solutions

!  Scientific input

!  Latest academic research insights !  Generic conception and innovative ideas for designing

and organizing supply chains

4. Focus Group The Focus Group Approach

The focus group serves as practice- and science-driven forum to increase corporate supply chain competence

Realization at participating companies

Learning Process !  Identify immediate improvements and operating instructions for supply chains !  Individual discussions and tailored conceptions and measures for supply chains

Efficiently adapt pharmaceutical supply chains to critical trends and prospects

4. Focus Group The Focus Group Approach cont.

!  Advance supply chains

!  Practical and scientific expertise !  Innovative ideas and concepts !  Prevention of potential pitfalls

!  Learning effects !  Individually tailored solutions !  Immediate operating instructions

!  Know-how of participating firms

!  Know-how of scientific partners

!  Time and cost savings !  Efficient process development

Initiating a mutual learning process of corporate practice and academia generates several benefits

Agenda

Delphi Study

Future Trends

Introduction

Focus Group

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3

4

Joint European Pharma Centre 5

5. Joint European Pharma Centre Excellence in Practice-Oriented Research

Launch Research Cluster: „European Pharma Research Centre“

!  Joint research projects with qualified researchers on challenges of highest practical relevance

!  Joint conference visits and representation at highest academic level !  Access to and visibility in key European pharmaceutical markets (Belgium,

Denmark, Germany, Switzerland)

Corporate Experts NGOs

Further Questions? Contact Information

Dr. Hannes Hofmann EBS University for Business and Law Institute for Supply Chain Management- Procurement and Logistics (ISCM) + 49 1638631236 Hannes.Hofmann@gmx.com

Prof. Dr. Constantin Blome Professor of Operations Management University of Sussex School of Business, Management and Economics, Jubilee Building 302, Falmer, Brighton, UK, BN1 9SL +44 1273 876509 C.Blome@sussex.ac.uk