Ask The Board April 2011

Q: How can drug development be conducted more efficiently in a capital-constrained world?
One way to do so is to implement strategies that accelerate milestones. Development must get to decision points more quickly, use fewer subjects, and spend less money. Plans need to be built to ask the key questions early in validating a drug concept, investigating those issues that lead to quick go/no-go decision points.

Today, there is also more emphasis on optimizing efficiency by limiting internal infrastructure and outsourcing development activities. Outsourcing allows companies to keep costs variable. However, out-sourcing has its risks. The work efforts of contractors must be aligned and the product well-integrated. Sponsors must ensure that all aspects of the project are well coordinated.

Another way to do more for less is to calibrate the timing and magnitude of project activities. Traditional development plans often require up-front investments in down-stream activities before it’s known if a drug shows promise. Investing prematurely in later stage work can be an overallocation of resources and undermine efficiency. Alternatives that wait to undertake down-stream activities can make good sense in certain cases.

Mark Pykett, Ph.D., has over 15 years of pharma industry executive management experience. He has been a senior executive at multiple public and private companies and is currently chairman at Talaris Advisors.

Q: What are the most vulnerable areas of the pharma supply chain, and what steps can I take to minimize the risk?
The integrity of raw material supplies — both quality and availability — is the single biggest vulnerability. This risk can be reduced by approving multiple sources, with at least one being a domestic source, if possible. The pharma companies, which have ultimate liability, need to specify raw materials as completely as possible; identify suppliers who are reliable as well as cost-effective; educate their suppliers in the quality process, including the ability to use substitute sources or materials; audit their suppliers on a regular basis with either internally trained quality auditors or by using a certified outside organization, especially for offshore sourced raw materials; and extend this process backwards through suppliers to the various tiers of raw materials. An understanding of all the raw materials involved in all steps of the supply process as well as the logistics/transportation/importation factors should allow the pharma company to better anticipate supply disruptions and proactively take action to avoid supply issues.  Developing “partnerships”with suppliers and actively managing those relationships will help ensure integrity in the supply chain.

Norman Klein is the principal at Core Results, LLC, which offers consulting in the areas of purchasing and supply chain optimization. He has more than 35 years of experience in purchasing, engineering, finance, manufacturing, and distribution.

Q: Without investing heavily in technology, how can I achieve better “end-to-end orchestration” in my drug development supply chain?
An integrated supply chain planning process will help improve end-to-end visibility significantly. First, establish a clinical supply chain planning meeting with cross-functional representation. Roles and responsibilities for each party should be clearly defined and expectations well understood by each party. Second, make sure planning assumptions, such as dosage range, batch size, lead time, and process yield are clearly documented and agreed. The entire organization needs to be planning on the same set of numbers. Keep monitoring your assumptions, and see how accurate they predict the actual. Finally, facilitate meetings between your suppliers, including drug substance and drug product contract manufacturer.

Once you have a robust process and collaborative environment, you might want to consider the application infrastructure that will further improve data exchange and visibility. Let your process define your tool selection, not the other way around.

Yingming Yue is the associate director of supplier management at Nektar Therapeutics. Prior to Nektar, he was an operational consultant with Deloitte Consulting and PRTM. 

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