MANAGING CONTRACT PARTNERSHIPSWebinar Hosted by Pharmaceutical Manufacturing

Wednesday, November 7 2012

Presented by Hedley Rees, Biotech PharmaFlow

Agenda

What is behind the ‘supply chain heat’Where do contractors fit in?Management strategies based on

segmentationThe procurement cycleBuilding a foundation for the future

Supply chain ‘heat’

Where is the heat coming from?

Shortages……Economically motivated adulteration……Recalls…..Cost of Goods issues…Counterfeiting…..Theft…..Diversion…..

The fall-out….

Crippling impacts in the areas of patient safety, brand image and reputation, costs of remediation, customer service and investor confidence.

A UNIVERSAL CRY FOR CHANGE!From regulators, governments, other

competent authorities and patient advocacy groups.

5

Stakeholders pile in….

…EU implements Falsified Medicines Directive.…EMA consults on dramatic tightening of GDP/GMP…FDA pens “Pathway to Global Safety and Quality”.…President Obama wades in on drug shortages.…US HELP Congressional Committee consults.…US Pharmacopeia consults on new Chapter < 1083 >.…PEW Charitable Trust writes report “After Heparin”.…GS1 Global Traceability Standard for Healthcare

(GTSH).…FDA Safety and Innovation Act (FDASIA), Title VII

Where do contractors fit in?

Roles in the Pharma Supply Chain

Responsible for supply

chain

The Scope of Contractual Relationships•Qualification/validation work for premises• Maintenance /calibration of equipment• Storage and distribution• Artwork generation and print ready material• Assessment and sourcing of starting and packaging materials

•QP and other professional services such as GMP audits of suppliers Washing/depyrogenation/sterilisation of packaging materials used in manufacture.• Hosting of IT functions• Document archiving and storageRef: GMP/GDP INSPECTORS WORKING

GROUP GMP/GDP IWGDocument Ref: EMEA/INS/GMP/648678/2009

Dis-integration of the supply chain

PatientsOutsourcing begins in earnest…..

Contractor Management in Context

Immensely complex interactions.Relationships are 3rd party.Contractually driven.Power and dependence.Management by Segment.

Strategies based on segmentation

Procurement Portfolio

Leverage Strategic

Routine

BottleneckPortfoli

o

Many Suppliers Single SupplierComplexity of Supply Market

Financial Relevance

High

Low

Based on Kraljic Matrix, HBR 1983

Procurement Portfolio Management

LeverageExploit

Negotiate hardRegular tendering Strategic

Build relationshipsSeek innovation

Joint investments

RoutineAutomate

StandardiseEmpower users

BottleneckMitigate risk

Change designAlternate source

PORTFOLIO

Many Suppliers Single SupplierComplexity of Supply Market

Financial Relevance

High

Low

Figure 1 A segmentation approach based on Kraljic Matrix

The procurement cycle

The Procurement Cycle – Strategic Segment

Specify

•User Driven•Team based•Request for Proposal

Select •Involvement of stakeholders•Decision making process•Business benefits

Commit

•Agreements – Supply, Quality & Technical, Service level•Processes for working together•Information sharing

Perform

•Regular reviews•Metrics•Continuous improvement

Building a foundation for the future

It starts in early stage development…

Analytical Methods

Supply chain

thinking?

Building successful contractor partnerships

Robust Supply Base

• cGXP compliant

• Capable processes

• Commercially viable

• Organisationally mature

• Culturally congruent

Inclusive planning process

• Defined envelope of uncertainty

• Adequate capacity

• Appropriate scale

• Thorough risk assessments

• Sourcing and Inventory policy

Sound Agreements

• Procurement cycle

• Supply• QTA• Service level

Process Driven

• End-to-end• Allocation of responsibilities

• Change control

• Metrics

Thank You