Optimizing the Pharma Customer–Supplier Relationship

How can pharmaceutical companies and suppliers best partner to achieve cost-efficiencies and drive value? A preview of DCAT Sharp Sourcing, to be held June 26, highlights best practices.

The program features collaborative approaches with insight from Pfizer, Johnson & Johnson, Merck & Co., and Teva Pharmaceuticals. The program will also examine how digital tools, such as blockchain technology, artificial intelligence, and advanced analytics, are changing the way companies interact with customers and suppliers.

Best practices

DCAT Sharp Sourcing provides peer and pharma customer insight to optimize the customer–supplier relationship by addressing ways companies are partnering to manage all-important cost considerations while driving value to the mutual benefit of both parties. The program will share best practices and lessons learned from pharmaceutical companies and industry experts. The program is organized into two main parts. First are concurrent morning sessions, respectively for sourcing, procurement, and supply management professionals (the Buyers’ Forum) and for contract development and manufacturing organizations (CDMOs), contract manufacturing organizations (CMOs), and other suppliers (the Suppliers’ Forum) followed by a Joint Afternoon Session for all attendees.

The Buyers’ Forum will examine strategies for partnering differentiation, investment in manufacturing capacity and technology, and examine how an emerging digital technology, blockchain, will potentially impact sourcing and procurement functions. Nuria Ramirez, Procurement Program Lead and Senior Director, Janssen Supply Chain Procurement, Johnson & Johnson, will provide insight from a recently implemented supplier partnership program by the company focused on enhancing value-chain performance and reliability of supply while achieving total cost reductions. She will discuss the partnership process with an emphasis on a differentiated partnering program that identifies and realizes sustained benefits along the nodes in the supply chain.

Investment by pharmaceutical companies and suppliers in manufacturing capacity and technology represents a fully strategic partnership, but when is it right to make such a move? In a second presentation, Pfizer and GE Healthcare Life Sciences will provide their approach in partnering on bringing to fruition a new $350-million Global Biotechnology Center in Hangzhou, China that features an advanced modular manufacturing facility based on single-use biomanufacturing technology.

Part of the changing landscape for sourcing, procurement, and supply management professionals are the tools that can be used in their partnerships with suppliers. One emerging tool for supply-chain governance is blockchain. Ben Aylor, Partner and Managing Director, The Boston Consulting Group, will explain the use of blockchain, how it is now being used in the pharmaceutical industry and other industries, and its potential in sourcing and procurement functions.

The Suppliers’ Forum will provide pharmaceutical customer insights on outsourcing strategies and also provide a financial/market overview of the CDMO/CMO market. One issue facing CDMOs and CMOs is what is the optimal business model and capabilities set that they should be employing. For example, is an end-to-end (both active pharmaceutical ingredients and drug products) service model within one CDMO/CMO an optimal model or is the traditional model of CDMO/CMOs provided segment-specific development and manufacturing capabilities still a preferred approach? Also, what specialized capabilities are important in a CDMO/CMO’s toolbox, and what specialized considerations are taken into account by pharmaceutical companies when seeking partners for those capabilities. The Suppliers’ Forum will provide insight from two pharmaceutical companies in that decision-making: QED Therapeutics (end-to-end service capabilities) and TESARO (specialized technologies, including high-potency manufacturing). The session will also provide a market/financial outlook of the CDMO/CMO market from William Blair & Company.

The strategic partnerships taken by pharmaceutical companies and their suppliers to drive value can take many forms, and DCAT Sharp Sourcing will examine some of those partnerships in the Joint Afternoon Session. Prashant S. Savle, PhD, Director, Commercialization Projects, Global Procurement, Merck & Co., Inc. and James R. Gage, Chief Scientific Officer, Asymchem, will discuss how they achieved cost-competitive manufacturing through collaboration and relationship management. They will provide a case study involving Merck’s antibiotic portfolio, which  requires compliant, cost-competitive manufacturing of beta-lactam intermediates that are hard to source due to stringent segregation requirements. Merck looked early on, beyond loss of exclusivity, to create a cost-competitive manufacturing center of excellence that also provided regulatory, quality, and environmental, health, and safety (EHS) compliance. Merck and Asymchem will look back and share the details of this journey, from reconfiguring a CMO site into a beta-lactam facility and the initial challenges to the evolution of collaboration and relationship management that expanded this initial opportunity into a future collaboration.

In another presentation, Teva Pharmaceuticals will discuss a partnering strategy to achieve security of supply. The success of a business’s global supply chain depends on managing and mitigating risks and working with partners to achieve security of supply. Teva Pharmaceuticals and Amcor will provide lessons learned on how they resolved a potential disruption in supply of packaging materials using an advanced sourcing approach with upstream suppliers. Daniel J. Hoey, Senior Vice President, Teva Supply Chain, Teva Pharmaceuticals, Graham Degn, Site Head, Procurement, Teva Pharmaceuticals, and Art Castro, Vice President, Global Pharma, Amcor, will discuss how they addressed short-and longer-term supply needs, enabled qualification of alternative product choices, and managed inventory and cost.

Partnering for specialized technologies, such as high-potency manufacturing, and meeting accelerated development timelines provide both opportunities and challenges. George Wu, Vice President and Presidential Fellow, Pharmaceutical Sciences, TESARO, Inc., and Tangqing Li, Executive Director, Project Management STA Pharmaceutical, a WuXi AppTec company, will provide their experience in developing a small-molecule oncology drug and the approaches they took for a project requiring specialized technologies in potency manufacturing under rapid timelines from development to commercial launch.

Fully strategic partnerships involve innovation, so what does it take to bring supplier-enabled innovation to fruition? In a keynote address, Wendell P. Weeks, Chairman and Chief Executive Officer (CEO) of Corning Incorporated, will share his insights and lessons learned from his 35-year career with Corning with examples from the company’s work with partners such as Apple Inc., Samsung Electronics Co., Ford Motor Company, Verizon, Sharp Corporation and most recently, Pfizer, Inc. and Merck & Co., Inc.

In 2017, Corning announced a planned investment of $4 billion with the introduction of a new product, Corning Valor Glass, for parenteral drug packaging that was the outgrowth of its partnership with Merck & Co., Inc. and Pfizer, Inc., which provided insights on pharmaceutical formulation and manufacturing processes. As a result of the companies’ common goal to improve glass quality and promising results from initial testing, Corning is making an initial investment of $500 million as the first part of planned investment of $4 billion. Mr. Weeks will discuss the structure and governance of the collaboration and how the companies partnered in new product development, including addressing ways to lower systems costs and improve manufacturing efficiency, in order to bring the product to market.

Digital strategies in sourcing and procurement

Finally, DCAT Sharp Sourcing will further explore digital strategies in sourcing and procurement. In an era when chief procurement officers (CPOs) are trying to unlock the next gear of productivity, a key question for CPOs is how can Big Data capabilities be used to transform procurement and sourcing practices? Walter Charles, Senior Vice President and Chief Procurement Officer, Allergan, will share experience, including from his role as CPO at Biogen, Kraft, and Kellogg’s on how Big Data tools and a new methodology, “constraintless bidding,” can be used to drive savings and value. He will discuss how Big Data analytics strategy is a gateway to transition “analog” procurement practices into “digital” practices by enabling the application of robotic process automation (RPA), machine learning, natural language processing, and artificial intelligence.

Information on DCAT Sharp Sourcing, including how to register, may be found here.

Note: This article was updated on June 12, 2018 to provide further information on the program.

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