Supply chain

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Globalisation, regulation and changes in the product mix are reshaping the pharmaceutical supply chain

No chain, no gain

HEALTHCARE WRITER PETER MANSELL EDITED BY CL AIRE BOWIE/JENNY HONE

Whatever checks and balances may come into play, be they temperature control, real-time tracking, inventory management, quality assurance or randomised serialisation, the end goal is to ensure a safe and effective medicine gets to the patient.

At the same time, though, what happens in that supply chain is increasingly dictated not only by geography, manufacturing and

development costs or patient need, but by the physical nature of the medicines themselves.

So while logistics providers, transporters and storers are witnessing increased output

of low-cost generics from countries like India and Brazil, at the other end of the scale the market is shifting towards premium-value products such as biologics and vaccines.

The trend presents specific challenges to supply chains because these more sophisticated products come with an increased risk of instability and vulnerability.

Indeed product damage or spoilage was the number four ‘pain point’ cited by 43% of 441 global healthcare executives polled for the annual UPS Pain in the (supply) chain survey – ahead of access to global markets, new customer bases, and the shift in distribution and go-to-market channels. The large majority (84%) say they plan to invest in new technologies over the next five years, signalling the extent of concern over potential spoilage.

Additionally – and for the first time since the poll started in 2008 – product security overtook cost management as the second most pressing supply chain issue, cited by more than half of execs. Accordingly, 48% intend to invest in specific technologies to ensure the security of high-value shipments in the coming five years, including almost 60% who plan to invest in serialisation technologies.

But there was also a significant increase in intent to invest in cold-chain/temperature-sensitive technologies, underlining the role of product sensitivity to supply chain strategy, with 45% saying they are currently putting money into this area, rising to 52% who plan to do so in the next five years.

Another issue likely to gather momentum is personalised medicine, with its potential to streamline supply routes and allow for more direct routes to end-users. Indeed, 70% of respondents said they will be introducing new distribution channels over the next five years, such as going direct to healthcare providers, retailers and even patients themselves.

Direct to patients These strategies are, of course, also a function of cost management. Premium biologics or targeted therapies for smaller patient populations, along with growing pressure to track and validate medicines closely from plant to patient, reduce leeway for economies of scale in drug supply while loading additional costs into the system.

So executives are turning to a range of strategies to optimise their supply chain networks.

Top of the list are novel technologies, next is tapping into new global markets, increased reliance on third-party logistics providers and greater use of new distribution channels/models.

Access to medicines is not just about funding, politics, pricing, regulatory mechanisms, patient power or the postcode lottery. It is also to do with transporting medicines physically to where they need to be, in the right state, with the right labelling and at the right time.

In a rapidly expanding global market served by cost-efficient manufacturing hubs, that can mean negotiating a maze of time and temperature zones – not to mention a number of different carriers – before the product comes within reach of a patient.

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Supply chain

Outstripping all other points, though, are concerns about regulatory compliance – with the ability to navigate the various country regulations deemed to be the leading barrier to global expansion.

Illustrating this tighter regulatory climate for the pharmaceutical supply chain are the revised guidelines on Good Distribution Practice for medicinal products in the EU, enacted by the European Commission in September 2013.

The new guidelines include:• Maintaining a quality system setting

out responsibilities, processes and risk-management principles for pharmaceutical wholesale activities;

• Adequate premises, installations and equipment to ensure proper storage and distribution of medicinal products;

• Appropriate management of complaints, returns, recalls and suspected falsified medicines; and

• New transport rules designed to protect medicines from adulteration, breakage or theft, and to ensure temperature conditions during transport are kept within acceptable limits.

In the survey, a “murky, unstable or changing” legislative outlook was regarded as the most serious challenge in regulatory compliance, followed by new market complexities and the cost of managing multiple country requirements.

While there is no doubt the landscape for drug supply is increasingly difficult, it also presents opportunities for providers such as UPS Healthcare or freight experts like IAG Cargo, which recently expanded its service for temperature-sensitive pharmaceuticals with a new constant climate centre at Heathrow Airport in the UK.

These operators are also feeling the regulatory pinch. While the onus is on the marketing authorisation holder to ensure compliance with the EU’s revised GDP guidelines, biopharmaceutical companies also need carriers to understand the implications for product handling.

It takes four to five months, for example, to secure clearance to operate as a constant-climate station, including operations training and appointing a designated quality manager, notes David Shepherd, head of commercial at IAG Cargo.

All of this care and attention comes into focus when the end-patient enters the picture. One of IAG’s biggest constant-climate products is insulin, in keeping with the growing burden of diabetes worldwide.

As Alan Dorling, global head, pharmaceuticals and life sciences at IAG Cargo, observes, diabetics rely on daily injections, while an injector pen is a

temperature-sensitive product prone to crystallisation if not properly handled.

And ensuring a smooth transfer is all the more of a challenge if, say, the product is shipping from a 33˚C climate in Singapore to 5˚C at Heathrow, and then on to 23˚C in Chicago, says Dorling.

Indeed there are broad trends driving new dynamics in the supply chain. Trade in medicines from the US and the EU, for example, is slowing in the face of patent expiries on blockbuster products, while there was an 87% surge in pharma exports from India to the rest of the world in 2010-2012.

Whereas patent loss used to be a “dream for lawyers”, now R&D-based companies

are facing the reality of instant generic competition, Dorling observes.

In response, they are adjusting their focus worldwide from a stream of new chemical entities towards late-stage development and biotechnology – in other words, lower-volume, higher-value products.

Underlining the appeal of low-cost generics to emerging markets, Latin America is emerging as the most important export destination for medicines from India, with an increase of 30% in shipments from the country to LatAm markets in 2011-2012 (Argentina +418%, Uruguay +408%).

At the same time, heritage pharma centres remain fundamental to output, with exports from the USA to other drug manufacturing hubs actually on the increase, IAG Cargo notes – a phenomenon that may be down to shipments of active pharmaceutical ingredients for finished generics. In 2010-2011, for example, India saw a year-on-year

“Ensuring a smooth transfer is all the more of a challenge if, say, the product is shipping from a 33˚C climate in Singapore to 5˚C at Heathrow”

To fi nd out more about our unique capabilities please contact:Shaun Chilton, Chief Operating Offi cer: Shaun.Chilton@clinigengroup.com+44 (0)1283 494328 www.clinigengroup.com

Delivering the right drug to the right patient at the right time

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APRIL 2014 PHARMATIMES.COM/SUBSCRIBE 45

rise of 718% in medicines imports from the USA. Moreover, premium products such as vaccines, biopharmaceuticals and biosimilars are making their presence felt in the chain.

Large-scale government prevention programmes are helping to drive vaccine shipments, especially in the paediatrics segment, Dorling explains. All of these vaccines need to be flown at protected temperatures of 2-8˚C, while biotechnology product growth is being led by high-end immunotherapies such as monoclonal antibodies.

The trend mirrors increasing polarisation in the pharmaceutical market – between advanced medicines and vaccines for targeted patient populations on the one hand, and high-volume, low-cost generics addressing chronic disease and large-scale public health programmes on the other.

Healthcare trails other sectors For all these shifting dynamics – and against a background of continuing trade globalisation and growing logistics challenges – the healthcare sector has been a latecomer to outsourcing supply chain competencies, trailing industries such as cars and aviation.

According to Daniel Gagnon, UPS Europe’s marketing director for healthcare logistics, the segment has been “by far the fastest-growing” within the company. And the risk-based approach of the revised GDP guidelines in Europe is likely to boost specialised activities such as temperaturesensitive handling. Previously, he notes, only around 10%-11% of the market was treated as temperature sensitive.

In Gagnon’s view, the most important take-out from the Pain in the chain survey, is that “manufacturers are looking to do things differently”.

Unified strategies and direct distribution in some markets reflect the sometimes wide disparities in supply chains between national and regional markets. Italy, for example, has some 200 pharmaceutical wholesalers while the Nordic countries have three between them.

One reason to focus on healthcare, he explains, is simple need. In many other industries with mature supply chains, “we can’t add a whole lot of economic value”. By contrast, healthcare in the 1990s presented

“tremendous opportunities”, with higher-value, perishable products as well as supply chains “with a lot of hands in them”.

Moreover, Gagnon adds, many healthcare manufacturers are “willing to take a look at the whole solution”, from taking the order right through to storage, packing, shipping and transportation. An integrated solution creates opportunities to maximise efficiencies in the chain.

If a medicine “doesn’t need all those hands on it”, because it addresses a very specific condition with a very specific stock-keeping unit – “and you’re the only one who sells it” – then it “intuitively starts to make sense for that product to take a more direct route”, Gagnon comments.

So the traditional big pharma model, with its large sales teams and more slowly evolving relations with physicians and patients, “absolutely has to change”, acknowledges Shaun Chilton, chief operating officer at Clinigen.

More acute conditions are being addressed with generics and OTC medicines, while chronic and rare diseases call for a “totally holistic” package of care in which the supply chain is a key element and product data may be as important as the product itself, he says.

“How the supply chain functions is crucial to delivering on that commitment,” Chilton adds. Often the patient may be paying for the product out of his or her own pocket, plus the products supplied are for life-threatening and/or very rare diseases – so the chain needs to be “rock solid”.

These chronic and rare diseases are increasingly characterised by strong patient influence. In cancer, for example, as soon as patients receive a diagnosis, they become “expert pretty quickly” about the available treatment options. In future, he believes, home-based treatment is the “obvious potential next step” for chronic conditions, starting with those requiring round-the-clock care.

That implies further disruption to a supply chain already trying to take on board new regulatory standards and to ratchet up efficiency while maintaining product integrity and keeping counterfeits out.

What should hopefully emerge is a system geared more explicitly to meeting highly localised patient need with tailored therapies on a global scale – one where, increasingly, the niche is the norm.

WITH STEVE HOBBS Chief Business Development Officer, UnicheckWhat do you see as the biggest concerns of pharmaceutical supply chain executives?Regulations, product security and managing costs. Many companies intend to address regulatory compliance with IT investment, coding and serialisation. Product security is now of more concern than managing costs with the ever-increasing threat, sophistication and reality of pharmaceutical counterfeiting. There are more counterfeit pharmaceuticals than ever in Europe, including high value specialised medicines.Counterfeit pharmaceuticals harm or kill hundreds of thousands of people every year globally because they are often substandard and ineffective, or they are made using substances, which can harm.

What do customers want from pharmaceutical suppliers?Like customers everywhere; payers, healthcare professionals and patients now want more from the products they are purchasing and using, they want to be assured of the product’s quality and safety and that it has been handled and supplied correctly. They want to be confident that the product is genuine and from a reputable source, they want their experience of buying/obtaining the product to be the best, and their experience of using the product to be excellent. Increasingly customers also want great service.

Can supply chain systems do more for payers, healthcare professionals and patients?Yes, supply systems can provide services ‘beyond the pill or pharmaceutical’. For example, sophisticated and secure technologies are available so that patients and healthcare professionals can scan a unique code on the pharmaceutical packaging/label with their smartphone to instantly access information and download Apps to help improve health outcomes.

Unicheck has a Secure Global Platform for Individual Product Tracking & Tracing, Authentication and Anti-Counterfeiting and 1:1 Customer Communication

For more information please call Steve Hobbs on +44 (0)1753 272 031 or email steve.hobbs@polyhedragroup.com

www.unichecksrl.com

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