Once the FDA provides positive feedback on Phase 2 trials, the path from Phase 2b/Phase 3 clinical trials to commercialization is fast and furious. Within months, the same entity that once had tens of employees researching and developing life-changing drugs can suddenly
experience a 300% increase in headcount, while needing to comply with federal regulations, adhere to Sarbanes-Oxley (SOX) accounting standards and meet the complexities of global operations.
It’s a lot to think about, and a lot to manage via the Excel spreadsheets and basic software systems that these nascent pharmaceutical firms cut their teeth on. Also missing is the supply chain infrastructure needed to start and sustain product manufacture and distribution.
In this white paper, we explore the key challenges that these enterprising companies encounter on the path to commercialization and show how the AdaptaLogix supply chain models built on NetSuite enables a streamlined, end- to-end supply chain that starts at the point of production and ends at the patient.
During the startup phase, most pharmaceutical companies spend anywhere from $150 million to $300 million per year to lay the groundwork for getting their new drugs to market. Relying on 40-50 employees, these firms are sharply focused on developing new cures.
The industry-specific supply chain challenges that surface once a pharmaceutical company begins its journey down the path to commercialization include:
Based on years of experience working for and supporting the pharmaceutical industry, the AdaptaLogix team has taken the NetSuite platform and built functionality and workflows into it that meet the unique requirementsof pre-revenue pharmaceutical companies. Called NetSuite SuiteSuccess for Pharma, the solution includes:
Financials for pharma is the base functionality provided to all clients, providing financial automation and controls. Supply Chain 1 and Supply 2 represent the logical progression of new pharmaceutical firms as they make their way down the path from trials to commercialization and beyond.
With Supply Chain 1, companies can also effectively manage their worldwide partners, issue purchase orders, coordinate with raw material and API suppliers, work with packaging suppliers and build out the work orders to capture costs. This lifecycle gets the pharma company right to the door of the 3PL that will subsequently get the product to market—a process that’s handled by Supply Chain 2. It manages the inventory, storage, sales, returns and “everything to do with finished goods,” Neal said.
Supply Chain 2 also manages regulatory requirements and AdaptaLogix is currently working with one pharmaceutical company whose PDUFA date was approaching and they decided to implement Supply Chain 1 & 2 concurrently. Working with Austin, Texas-based ICS, AdaptaLogix determined which data and transaction sets would be housed in the pharma company’s system, and then worked with the company to build out its inventory model to match that process. There were roughly six supply chain links between the company and its 3PL, with raw materials coming from various sources in Europe. For example, the API and raw materials were sourced from 2 different countries, API produced in a third, shipped to a fourth and fifth country for manufacturing and, finally, packaging/labeling was completed by a sixth vendor in the US.
“They basically had six different countries involved in the process,” said Neal, whose team used Supply Chain 1 to develop a logical process for the flow of goods. “There were seven different steps to get each product from raw materials to an ICS warehouse. At each step, we also created formula-based assemblies that brought those disparate pieces together for costing and lot-tracking purposes.”
In most cases, Supply Chain 1 takes about four months to implement while Supply Chain 2 requires between four to six months. The longer implementation time of the latter is due to the fact that it’s implemented alongside a 3PL which generally dictates the duration of the project.
Once in place, the AdaptaLogix Supply Chain 1 & 2 solutions provide a host of benefits for growing pharmaceutical companies. For example, when one commercial pharmaceutical company required a replacement for its homegrown inventory system and manual processes used in manufacturing, it turned to AdaptaLogix for help. The company’s digital transformation to a cloud- based solution had to include quality approvals, lot tracking, and track and trace requirements unique to the pharmaceutical industry.
“The solution had to be FDA-validated and fit within the company’s budget,” Neal said, noting that the company chose AdaptaLogix and implemented its NetSuite SuiteSuccess for Pharma solution. “Our pharma-specific implementation model enabled the efficient
deployment of the inventory and manufacturing solutions,” he explained, “while our FDA validation expert was able to prepare the testing protocols required for the FDA validation.”
Along with streamlining of the end-to-supply chain, Supply Chain 1 & 2 also enable accurate cost tracking in an environment where many different entities play a role in bringing the products to market. A company that outsources manufacturing and has multiple collaborations within its own industry, for example, may work with a larger pharmaceutical company that pays a portion of its costs (in return for a portion of future revenues).
“Knowing this level of detail across the entire supply chain, and without the help of a large accounting firm or IT department, is a big plus for growing pharmaceutical firms,” Neal pointed out. Another major benefit is the ability to track costs from country to country on a global operational scale—something that no spreadsheet or basic business software can achieve.
Having worked on dozens of SuiteSuccess for Pharma implementations over the years, Neal tells the leaders of emerging pharma companies to get their systems and IT professionals involved in the supply chain development process early.
Don’t assume that just because your PDUFA date is two years out that you have ample time to put the product manufacture, distribution and logistics end together; start thinking about it now before the suppliers are in place.
For example, you’ll want to make sure that the contracts you’re signing with your 3PLs and other business partners will scale up as your drug is approved and brought to market.
Ignore this step and you could find yourself scrambling to get these important elements in place at the 11th hour.