What’s next? Supply Chain Trends in the European Pharmaceutical … · 2016-11-16 · •Lean...

Challenges ahead!

Supply Chain Trends in the European Pharmaceutical Industry

Miebach Pharma Study 2016 June 2016

Miebach Consulting

1

Agenda

1. Company presentation 1

2. Management Summary 6

3. Study Design 10

4. Study Results 12

5. Recommended Actions 20

6. Discussion about serialization: Plenty of open issues 26

7. References 32

Miebach Consulting – 1. Company presentation

2

Offices Worldwide

Bangalore

Barcelona

Berlin

Bogota

Buenos Aires

Dammam

Frankfurt

Guatemala City

Indianapolis

Katowice

Representative Offices

Maidstone (UK)

Leuven (Belgium)

Company Profile

Supply Chain Engineering

in an International Environment

Lima

Madrid

Milan

Mexico City

Montreal

Munich

Santiago de Chile

Sao Paulo

Shanghai

Zug


3

Company Profile

Supply Chain Engineering

in an International Environment

Company Figures Worldwide (2015)

Founded 1973

Employees 320

Sales 42 Mio. €

Offices 20

Legal status Partner Model (GmbH)

Certification (Germany) DIN EN ISO 9001:2008


4

Miebach Services

From Supply Chain Design to Planning and

Implementation of Production and Logistics Systems

Concept

finding economic and

practical solutions

Realization

getting the job done

on time and in budget

Implementation

assuring success by

staff integration

Strategy

reaching company´s

targets by supply

chain optimization

• Supply

• Distribution

• Distribution Centre

• Production Systems

• Transport

• Planning Process

• Organization

• Controlling

Fields of Activity

Miebach Services

• Net (Working Capital)

• Cost

• Availability

• Cycle Time

• Delivery Service

• Flexibility

• Invested Capital

• Transparency

Targets of Optimization


5

Miebach Clients in Pharma

Miebach has worked succesfully for many

pharmaceutical companies

Rank Name Rank Name

1 Pfizer 9 Abbott

2 Novartis 10 Eli Lilly

3 Merck 11 Teva

4 Sanofi 12 Amgen

5 Roche 13 Takeda

6 GlaxoSmithKline 14 Bayer

7 AstraZeneca 15 Boehringer Ingelheim

8 Johnson & Johnson 2013, Source: IMS Health

Miebach Client Miebach Consulting – 1. Company presentation

6

Agenda



3. Study Design 10

4. Study Results 12



7. References 32

Miebach Consulting – 2. Management Summary

7

Growth, takeovers, and high volatility

shape the development of the global

pharmaceutical market.

Facts • Global pharmaceutical market has more

than doubled in the past ten years

• 20 pharmaceutical companies generate

40 % of the global market volume

• Industry remains highly segmented

• Mergers and takeovers in pharma and

biotechnology sector on record level

Industry Overview

Greater importance of supply chain and logistics due to

globalization of the pharma industry 3

,6%

11

,8%

7,9

%

4,5

%

5,7

%

7,8

%

11

,7%

10

,5%

10

,2%

7,8

%

2,4

%

4,1

%

4,9

%

1,9

% 4,3

%

10

,0%

9,1

%

10

,0%

12

,4%

9,9

%

3,0

%

1,4

%

3,0

%

2,0

%

2,2

%

4,9

%

8,4

%

6,0

%

5,4

%

4,8

%

2013

2014

2015

2009 - 2014

2014 - 2019

Annual growth of pharma market

North America Europe

South America

Asia, Africa,

Australia

World

Japan

Source: IMS Health – May 2015 – www.imshealth.com


http://de.statista.com/statistik/daten/studie/76352/umfrage/top-10-pharmamaerkte-weltweit-wachstum

8

Developed countries: expecting growth due to ageing

population

Developing countries: expecting growth due to raising

middle class

Industry Overview

Pharmaceutical market continues to grow

Revenue development in worldwide pharmaceutical market

from 2008 to 2014

Source: IMS Health – December 2014 – www.imshealth.com


http://de.statista.com/statistik/daten/studie/76352/umfrage/top-10-pharmamaerkte-weltweit-wachstum

9

Management Summary

Today, the pharmaceutical supply chain is more

professionally managed than in the past

Result highlights • Distribution networks are becoming more European focused, and less national

• Need for more efficient management of suppliers and service providers

• Tools (like KPIs and audits) need to be developed

• Lean approaches and general optimization of logistics in manufacturing and

packaging are being introduced in many pharmaceutical plants

• Forecasting and end-to-end supply chain visibility are still major topics

New Challenges • Cold Chains are becoming increasingly important, many pharmaceutical plants

are not prepared for it. Although GDP-guidelines are in place for over 2 years

• Serialization to prevent counterfeiting, tight timeline for companies to meet

requirements of European regulations


10

Agenda



3. Study Design 10

4. Study Results 12



7. References 32

Miebach Consulting – 3. Study Design

11

Study Design

Worldwide online survey,

with focus on

• Procurement

• Production

• Warehousing

• Cold Chain

• Distribution structures

A total of 256 participants

Germany 53%

Switzerland 8%

France 10%

Spain 12%

Italy 6 % Eastern Europe

11%

Origin of European participants

Miebach Consulting – 3. Study Design

12

Agenda



3. Study Design 10

4. Study Results 12



7. References 32

Miebach Consulting – 4. Study Results

13

“

Supply chain management in the pharmaceutical industry has

become much more professional. We are talking about the

European market in this study and it involves all steps from

supplier to the final distribution. Plenty of challenges but also

plenty of opportunities to improve lie ahead!

Study Results

“ Miebach Consulting – 4. Study Results

14

Study Results: Overview

Top challenges are supply chain visibility and network

optimization

• Counterfeiting, grey markets and illegal

imports/ exports remain a serious problem

of pharmaceutical supply chains

• Serialization might solve some concerns,

but requires a great workload involving all

departments

• Optimization of the distribution network

has grown very much in importance

(76% → 86%)

Not in the ranking, but mentioned by several

participants:

• Temperature controlled supply chains,

number of products requiring certain

temperature conditions is increasing

significantly

• Reduction of costs in supply chain network

Variante 2 Excel

Graphik (Text ist etwas

besser lesbar)

2016 2012


15

Procurement and production logistics

Challenges in supplier management, forecasting and

lean approaches

41%

79%

64%

60%

88%

88%

88%

39%

40%

45%

67%

70%

73%

84%

86%

I see no special challenges regardingprocurement logistics and production

logistics

Installation of VMIs (Vendor ManagedInventory) with suppliers

Outsourcing to contract manufacturers

Optimization of production logisticswithin the facility

Implementation of supply chain visibilitysoftware for early identification of supply

chain problems

Optimization of processing time throughlean approach

Improvement of forecast accuracy byoptimizing SCM processes

Improvement of supplier management• Improving supplier management, along

with forecasting and optimization of the

SCM processes are considered top

priorities

There are some lessons to be learnt from

the fast moving consumer goods and

automotive industry

• Potential optimization of processes

through lean approaches, and logistics in

the production facilities are seen as

essential to come closer to a real 24/7

operation

• Outsourcing to contract manufacturers and

installation of VMI are considered much

less important than in previous studies

2016 2012


16

Warehousing and cold chain

Optimizing warehousing remains a routine task of

Logistics Management

2016 In three years

Expansion, optimization and

outsourcing have become routine tasks

of the pharmaceutical industry.

Development of current warehousing

structures is a major task of most

participants

Optimization through automation,

outsourcing and constructing new

warehouses compliant with GxP-

guidelines are in the same range

32%

59%

43%

64%

43%

63%

42%

49%

54%

62%

64%

64%

I do not see any challenges

Simulation of automated and manualwarehouse processes to identify possibile

weaknesses

Construction of new warehousesconsidering of GxP conformity and

sustainability

Outsourcing of warehouse functions to aservice provider

Optimization of current warehousestructure through automation

Expansion of current warehouse structure

Challenges in warehouse logistics


17

Warehousing and cold chain

Strong focus on implementing cold chain

Refrigerated and frozen products are

growing, but also have different

requirements. Biotech and vaccines, but also

other components and products require

specific temperature conditions.

Many pharmaceutical companies do not

follow a complete cold chain, which is

mandatory in the food sector. Even though

the GDP guidelines are in place since more

than two years.

Mean Kinetic Temperature is no longer

allowed to be used as compensation for

insufficient temperature control. It can be

used as a tool to decide if temperature is

critical. The impact depends on stability of

the API and can be influenced by plateau or

peak deviation. Percentage increase from today until 2019

100%

50%

20%

3%

-26% Products not depending on

temperature

Today (2016) 23 %; in three years 17 %

Products with controlled temperature (15°C

to 25°C, ambient)


Cold Chain products


Frozen products (-18°C to -40°C


Deep frozen products (down to -70°C)


Growing products requiring specific temperature conditions


18

Distribution

Pharmaceutical industry is moving from national to

European structures

Most pharmaceutical companies see Europe as a slowly but

steadily growing market. The results show:

• A significant shift from national to European distribution

structures can be observed

• Little reason to maintain a regional structure, when customers

can be served within 48h from a national central warehouse

• Cross-docking operations are becoming a potential substitute

to regional warehouses

Reasons • Cost reduction & less complexity

• Simplified management and control

• Ease of regulatory compliance on European level

2016 In three years

Central

Warehouse

Regional

Warehouse

Cross-

Docking

National European

Development of European and National distribution structures


19

Optimizing outbound and

inbound transportation to

ensure:

• Compliance

• Control

• Responsibility

• Management of different service

providers

rather than only cost savings

Major tasks

• Optimizing the current

distribution network and

installation of cross-dock

solutions

• Optimizing transportation, regular

tendering of these services 2016 2012

Optimization of the current distribution network and transportation

are key for developing an efficient European supply chain structure.

Distribution

Challenges in distribution logistics


20

Agenda



3. Study Design 10

4. Study Results 12



7. References 32

Miebach Consulting – 5. Recommended Actions

21

Recommended actions

Supply chain transformation projects

Most companies have started or even completed the

transition from national to European supply chain and

distribution.

Goal • Simplification of network

• Improve control and compliance

• Improve service

• Reduce costs

Such major projects should be undertaken every 5 – 7

years

Warehouse and distribution audits should be performed

on a more regular base. Similarly for outsourcing and

tendering of transport, warehousing and other logistics

activities.

Positive experience has been made by performing

these activities every 2-3 years.


22

Recommended actions

Efficient management of suppliers and service

providers

Some pharmaceutical companies have 20, 30 or

more logistics service providers. Activities are often

outsourced, especially:

• Transport

• External warehouses

• Contract manufacturing

To manage all these partners, efficient tools are very

high in demand. Essential is the ease of gathering all

relevant data, since analysis and improvement is time

consuming.

KPIs should be gathered on regular basis and audits

need to be performed on a regular base


23

Recommended actions

Lean approaches & optimization of logistics in

manufacturing and packaging

Working more than one shift makes automation of

material flows and material handling very attractive.

The key to all of this automation is to connect the

logistics with all the other work areas, such as

sampling, kitting, dispensing, transport, palletizing, etc.

The gain in velocity, safety and efficiency can be

remarkable.

To evaluate the potential to automate logistics in the

manufacturing and packaging, a Feasibility Study is a

first step in this direction


24

Recommended actions

Cold Chain and Serialization

Serialization Initiatives and projects along the pharmaceutical

operation mean complex work for management and

staff.

The implementation of serialization into production and

especially IT systems might be an underestimated

challenge.

Cold Chain • Limited experience available in most companies

• Discontinued cold chain is common

• Work-arounds to meet GDP

• Implementation of cold store and monitoring of time

out of refrigeration (TOR) are solutions of the past but

not the future

• Regulations might require a complete cold chain in

the future


25

Recommended actions

Miebach Pharma Study 2016

With so many challenges ahead, it is

probably wise to enhance the internal

expertise with some external experts.


26

Agenda



3. Study Design 10

4. Study Results 12



7. References 32

Miebach Consulting – 6. Discussion about serialization: Plenty of open issues

27

Pharmaceutical industry POV on serialization directive

Why is the global pharmaceutical industry concerned

with the new EU directive on serialisation?

• Process governance / responsibilities handover is

unclear …

• Who decides hierarchy / rules to (access / upload /

verify) data in the systems?

• At which point data must enter / leave system (i.e.

finish goods, when product passes control)?

• … however there are clear penalties (civil and penal)

for “those” stakeholders responsible for non

compliance with the normative

RESPONSIBILITY vs. PENALTIES

New serialization directive while trying to keep a high level of flexibility has left serious gaps

to be closed by national legislations or in the future which is causing concerns in the industry

• Standards for serialization

differ among countries

(GS1 is used in Europe,

Argentina …) but others

have their own standards

(i.e. China)

• Implementation lead-times

also vary (EU 2019, US

2023, Turkey, China, Brazil

already apply it)

SERIALISATION ≠

STANDARDISATION

• Serialisation is increasing

manufacturers production

costs due to higher

packaging costs and more

expensive technology

• Products in scope –different

packaging requirements for

the same product in the EU

• Serialisation for slow

moving, low-cost products is

not cost efficient - is worth

keep producing them?

• Aggregation (yes / no)

• Longer production lead-time

• Systems: technology

provider able to create

codes for different country

requirements

REGULATIVE DISPARITY

ADDING COST

Manufacturers Wholesales / Distributors Pharmacy

3rd party

manufacturers? Importers?


28

• What products are included?

• Inclusion criteria is decided at country level

• Same product sold within EU might need to have

a serialization code to be merchandise in a

country and not need it in another

• This is an additional complexity in the SC and

production process

Scope of products

Serialization impact within the SC

Directive must be defined to the next level to close

gaps and address SC complexity

3

2

1

4

5

1

• Who is involved in the process / which are their

responsibilities?

• Global SC have become more sophisticated and

complicated with many agents involved in the

E2E

• What about other agents involved such as 3rd

party manufacturers or importers?

• Will 3rd party manufacturers have to upload

data into the hub? Will importers need to

label packs with new codes?

SC complexity (physical / transactional

flows, agents, etc.) is not fully

addressed

2


29

• EU has adopted standard GS1 for serialisation

creating a global and unique identification for each

pack

• However national health systems within the EU work

with their own references which manufacturers must

include

• Adding the national code causes the code to lose its

global reach

• Once product is packed, it can only be

merchandised in a specific country

• This has a knock-on effect on industry since

manufacturers then will lose production and

planning flexibility

Countries specific requirements

Serialization impact within the SC

Manufacturers are losing potential benefits of having a

unique code due to national requirements for serialisation

3

2

1

4

5

3

National code or

reimbursement

number

Serialisation

standard (GTIN +

expiry date + batch

+ series number)


30

Not an end-to-end traceability system

In particular, traceability/ product visibility across SC is

going to become a challenge for logistics agents

3

2

1

4

5

• The system that has been designed for serialization

in the UE is not an end-to-end traceability system

• What are the upstream SC implications of

pharmacies finding out falsified products?

• EU directive only requires verification at

wholesaler / distributor point when at risk

• Without aggregation wholesalers / distributors

can´t trace individual products since only

manufacturers will have this information

• Then, how can wholesalers trace it back in their WH

or systems?

• Wholesalers / distributors will need to adapt

by implementing fit-for-purpose SGAs

Wholesalers / logistics agents lack of

product traceability / visibility 4


31

Serialization impact on multi-channel fulfilment

How is this directive going to accommodate diverse

national regulations on online medicines fulfilment?

3

2

1

4

5

• European legislative landscape on online fulfilment

is very heterogeneous, for example:

• From a Supply Chain perspective, with e-commerce

growing (specifically in the pharma industry for

certain categories of products), cross country

selling, etc., serialisation directive is adding an extra

complexity on the market that needs to be

addressed

What about multi-channel fulfilment? 5


32

Agenda



3. Study Design 10

4. Study Results 12



7. References 32

Miebach Consulting – 7. References

33

International Distribution Study (Europe)

Sales in Packs and Distribution ChannelMapping of Flows - October 20012 to September 2013


34

(Germany)

Conceptual study for deep-freeze logistics and

hazardous materials storage

Task

• Integration of decentralized storage units into a

new central Logistics center with frozen- and

hazardous goods storage on factory site

• Responsible for the planning of Logistics,

architecture, building services and refrigeration

technology

• Planning of different temperature zones

2-8°C, -20°C, -40°C, -70°C

Solution

• Facility with optimal space utilization

• Modular construction (Contingency planning)

• Expandability and high flexibility

Benefit

• Logistics concept

• Architectural representation

• Cost estimate Tiefkühlzentrum Tiefkühlzentrum

Gefahrgutzentrum

Tiefkühlzentrum


35

(US)

Detail Design for the New Materials Center

and Dispensing

AGV

Palletizing

Vertical

Carousel

s

AGVs

Dispensing AS/RS

Shelving &

Mezzanine

Task

• Detail design and Project Management of Material

Center and dispensing operations

• Comply with FDA and GMP requirements

Method/Proceeding

• Material handling and IT engineering

• Preparation of technical specification for logistics

automation and warehouse control system

• Preparation of RFP documents and managing

awarding process

• Defining Processes for SAP-WM implementation and

interface between SAP-WM & WCS system

Solution

• AS/RS for raw material, packaging components, and

finished goods (15,360 pallets, 32.6 mts. height)

• Automated transport system to link dispensing,

manufacturing and packaging areas (AGV,

conveyors)


36

Contact

© Copyright: All decorative graphic elements and graphic layouts of this presentation are the property of Miebach Consulting or registered licenses from Shutterstock. Any copying can cause

violations of copyright.

Martin Eckert München

Tel.: +49 89 2444210-22

Mobile: +49 152 08932748

[email protected]

Miebach Consulting GmbH www.miebach.com

Untermainanlage 6

60329 Frankfurt/Main

Tel.: +49 69 273992-0

Fax: +49 69 273992-20

Katharinenstraße 12

10711 Berlin (Halensee)

Tel.: +49 30 893832-0

Fax: +49 30 893832-90

Theresienhöhe 13

80339 München

Tel.: +49 89 2444210-0

Fax: +49 89 2444210-11

Miebach Consulting Group:

Bangalore, Barcelona, Berlin, Bogotá, Buenos Aires,

Dammam, Frankfurt, Guatemala City, Indianapolis,

Katowice, Lima, Madrid, Milan, Mexico City, Montreal,

Munich, Santiago de Chile, São Paulo, Shanghai, Zug

Pank Bedaux Móvil : +34 620 110 883

[email protected]

Xavier Farrés Móvil : +34 620 909 472

[email protected]


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