Supply Chain Management in the Drug Industry

"A recommended read for all wishing to shift performance to greater levels." (Supply Management, 1 February 2012) "This book is ideal reading for those entering or currently working in the field of supply chain management, such as clinical supply managers, or those in operations or production and planning ... This book would be an excellent resource for small pharmaceutical companies that may have limited experience of supply chain implementation or outsourcing, giving a thorough overview of the process and plenty of food for thought." (The Pharmaceutical Journal, 16 November 2011) "This is a solid text that is equally suitable for the newcomer or experienced profesional in the pharmaceutical/biologics industries . . . Overall, I recommend the book for its educational perspective on the industry and the significance of effective SCM for its future success." (Quality World, 1 July 2011)

Hedley Rees runs the independent consulting company Biotech PharmaFlow, which specializes in pharmaceutical supply chain management. He has been actively building, managing, and continuously improving supply chains in biotech for the last fifteen years.

CONTRIBUTORS xiii PREFACE xxi I SURVEYING AND MAPPING THE TERRITORY 1 1 Setting a Transformational Agenda 3 1.1 Aims and Aspirations of the Book 3 1.2 Book Format 5 1.3 Intended Readership 6 1.4 A Book About Two Worlds in Contrast 8 1.5 The Pharmaceutical Lottery 8 1.6 Supply Chain Management in Context 17 1.7 The History of Supply and Value Generation 22 1.8 The Development of Processes to Manage the Supply Chain 24 1.9 Life in SCM 25 1.10 Moving Forward 26 2 Plotting a Course to Patient Value 29 2.1 Why Focus on Patient Value? 29 2.2 Where Does the Patient Currently Fit? 29 2.3 Why Is It Necessary to Plot a Course? 33 2.4 Understanding How the Course Is Presently Set 39 2.5 Capturing Value for Patients 42 3 Pharmaceutical Drug Development 45 3.1 Drug Development's Role in the Supply Chain 45 3.2 Introduction to Drug Development 47 3.3 The Medicinal Product 48 3.4 Clinical Trials 49 3.5 Related Development Programs 52 3.6 Managing Clinical Programs 57 3.7 Regulatory Affairs and Authorities 58 3.8 Supply Chain Management in Development Programs 65 3.9 Manufacture and Supply of Commercial Products 68 3.10 Supply Chain Management for Commercial Products 69 4 End-to-End Pharmaceutical Supply Chains 73 4.1 Introduction 73 4.2 Where Does Responsibility for the Supply Chain Lay? 74 4.3 Sponsoring Companies, License Holders, and Their Supply Chains 75 4.4 Supply Chains for Small-Molecule Products 76 4.5 Starting at the Final Destination 78 4.6 How Drugs Enter the Body 78 4.7 Design of Drug Delivery Systems 79 4.8 What This Means for the Supply Chain 82 4.9 Key Aspects of GMP and GDP in Relation to SCM 82 4.10 Overview of the Stages on Route to Patient Delivery 86 4.11 Manufacture and Supply of Biological Entities 90 5 Why Pharma Supply Chains Don't Perform 103 5.1 Supply Chain Underperformance 103 5.2 Is There a Case to Answer? 103 5.3 Birth to Infancy: The Supply Chain Critical Stage 104 5.4 Commercial Supply Under the Patent Protection Umbrella 111 5.5 What This Means for the Pharmaceutical Supply Chain 116 II BUILDING A KNOWLEDGE FOUNDATION IN SCM 125 6 Supply Chain Management as a Competitive Weapon 127 6.1 Competition and Business Strategy 127 6.2 The Marketing Mix 128 6.3 Porter's Five Forces 128 6.4 Porter's Generic Competitive Strategies 129 6.5 Porter's Value Chain 129 6.6 Competitive Strategy and Customers 133 6.7 The Japanese Experience 142 6.8 Total Quality Management 142 6.9 Lean Thinking 143 6.10 Focusing on Value for Money 146 6.11 SCM Processes in Competitive Strategy 148 6.12 SCM in Biotech and Virtual Companies 150 6.13 Competition in Pharmaceuticals 152 7 Supply Chain Management Holistic 155 7.1 The Relevance of SCM to Pharmaceuticals 155 7.2 Production Systems and the SCM Holistic 155 7.3 The Core of SCM 156 7.4 First Principle of SCM 156 7.5 Supply Chains as a Series of Interconnected Systems 158 7.6 Processes to Manage the Supply Chain 160 7.7 A Word About Processes 161 7.8 How the SCM Processes Should Mesh Together 163 7.9 Production and Inventory Control 163 7.10 Strategic Procurement 163 7.11 Transportation, Storage, and Distribution 164 7.12 Information Systems and Technology 164 7.13 Improvement 165 8 Production and Inventory Control 167 8.1 Core Mission 167 8.2 First Principles of Production and Inventory Control 167 8.3 The Wholesome Trinity in P&IC 174 8.4 The Wholesome Trinity and Customer Expectations 177 8.5 Leveraging the Wholesome Trinity 179 8.6 The Impact of Variety on Supply Chains 180 8.7 Designing Appropriate Production Systems 183 9 Strategic Procurement 187 9.1 Core Mission 187 9.2 The Purchasing Portfolio 188 9.3 The Process of Procurement 195 9.4 Strategic Sourcing and Planning 198 9.5 Outsourcing 201 9.6 Basic Principles in Contracting for Supply 206 9.7 Finally, Typical Organizational Tension over Proc