Good Karma from Big Pharma
The pharmaceutical
industry probably thinks Peter Jennings is a pill. ABC’s star anchorman
recently presented a news special called Bitter Medicine: Pills, Profit and
the Public Health. That
title alone should tell you how the industry was presented.
A key message of
this special was that pharmaceutical companies spend more money putting out new
versions of old drugs than on developing new wonder drugs. The implication is
that drug companies focus on maximizing profit to shareholders.
Nowhere in the special
was there any mention of the real profit opportunities in store for
pharmaceutical companies. Hey, Jennings, listen up: They’re going to come
from excellent supply chain management.
The ABC special was
right in reporting that the flow of new pharmaceutical products has slowed
dramatically. What it missed is the new flood of biotech research that’s
going to bring new cures and new profits — if the logistics are handled
properly.
Todd Applebaum, a
researcher and consultant to the biotech industry, told me that the nature of
the large molecules that make up biotech drugs is different from the
small-molecule, traditional pharmaceuticals.
“These
large-molecule proteins behave almost like living organisms and they’re
very sensitive to changes in environmental conditions and to changes in the
ingredients that go into producing them. Supply and distribution need to be
much more rigorously controlled.”
Take Enbrel, for
example — especially if you have rheumatoid arthritis. This new
blockbuster drug is made up of a large-molecule protein that is very difficult
to transport and distribute. The packaging and handling must be tightly
controlled. That presents challenges not only to the manufacturers, but also to
all the shippers and carriers throughout its supply chain worldwide.
The industry, in
commercializing these drugs, is capacity constrained, Applebaum told me.
There’s not enough production capacity in the world and the demand
outstrips the capacity. Some companies are looking to leverage an extensive
network of trading partners to meet the demand. Those partners include
third-party logistics providers. These logistics professionals will set the new
standard for the art of material handling in the pharmaceutical industry.
The challenges are
stiff. Pharmaceutical companies will be faced with finding new logistics
economies while maintaining and commercializing a pipeline of new products.
Meanwhile, there will be new and more stringent FDA mandates. Existing
facilities will need to be continually upgraded to stay in compliance.
Processes will have to be changed and re-validated. Material handling methods,
practices and standards will have to be consistent across global supply chains.
Product tracking
will be overshadowed by event and condition tracking. When did a shipment
leave, when did it enter customs and when did it arrive at the customer site?
All these conditions will be audited.
These are expensive
propositions, but necessary. On the plus side, as more pharmaceutical and
biotech companies invest in the enabling technologies, the price of these
technologies should come down, making it easier for other industries — or
even your company — to adopt them.
Of course, if the
cost of those technologies doesn’t come down, MHM will want to know why;
followed by Jennings, Rather and Brokaw.
Tom Andel, chief editor, tandel@penton.com
