Supply Chain Management in the Drug Industry: Delivering Patient Value for Pharmaceuticals and Biologics

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 Procurement 213

10 Transportation, Storage, and Distribution 215

10.1 Defining the Core Mission 215

10.2 International Trade and Commerce 217

10.3 The World Trade Organization 217

10.4 Intermediary Arrangements 220

10.5 Terms of Trade: Incoterms 223

10.6 Ownership of Goods: Title 225

10.7 Third-Party Logistics Providers 226

10.8 Customs 227

10.9 Shipping Regulations Relating to Materials 229

10.10 A Finishing Note 230

11 Information Systems and Information Technology 233

11.1 Overview 233

11.2 Brief Lay History of Computer Systems Development 234

11.3 Important Perspectives on Information Systems 236

12 Improvement 255

12.1 Why Improve? 255

12.2 Improvement and Production Systems 257

12.3 The Improvement Journey 258

13 Bringing the Holistic Together 277

13.1 Setting the Scene 277

13.2 The Process Explained 278

13.3 Developing an Action Agenda 285

13.4 Case Study 289

III PLANNING AND EXECUTING SUPPLY CHAIN CHANGE 293

14 Improvement in Pharmaceuticals 295

14.1 Where Are We Now? 295

14.2 Subsequent Developments Since Inception 310

14.3 A Blueprint for Quality by Design 311

15 Exemplar Thinking in Organizational Improvement 335

15.1 Where Are We Now? 335

15.2 What Is Meant by "Exemplar"? 338

15.3 A Dialogue on Exemplar Improvement 338

15.4 An Approach to SCM Based on Systems Thinking 357

16 Building a Foundation for Sustainable Change 363

16.1 Focus on the Individual 363

16.2 Individuals as Leaders 368

16.3 Individuals as Motivators and the Motivated 370

16.4 Individuals as Group Members 372

16.5 Individuals as Participants in Cultural Change 376

16.6 Case Study: Miles Ltd., Bridgend, Glamorgan 378

17 A Cure for the Pharmaceutical Supply Chain 395

17.1 What Is the Disease State? 395

17.2 What Is the Label Claim for the Medicine? 396

17.3 What Will Life Hold Without the Medicine? 397

17.4 What Is This Better Way to Develop Drugs? 397

17.5 Full-Scale Production of Drugs 407

17.6 What Are the Barriers to Change? 410

17.7 What Are the Potential Benefits of Change? 413

17.8 Defining the Art of the Possible 414

17.9 Ending with the Beginning 417

END NOTES 419

INDEX 429