This month my focus is on Supply Chain in Life Sciences. As we head towards the end of the year budgets are being planned and IT projects are being prioritized for next year. Many companies are reviewing their current IT investments in light of mergers and acquisitions and projects that will add to the company’s business ability. My discussions have been around how best to improve your operations at a minimal cost. No one seems to want to buy new IT systems and they want to extract ‘value’ from their current IT systems.
Time to ‘Tune-up’ your Supply Chain
Ask yourself if you are getting the most from your current Supply Chain? Do you feel you’re gotten significant return from your SAP or Oracle investment? It seems everyone had one of these IT solutions. I believe the reason most companies should be looking at their Supply Chain is as follows:
- Most firms have invested in IT solutions to help react quickly and expect demand. We now are moving to ‘collaborative’ business processes as a means for extracting added value from your partners.
- Companies need to give supply chain ‘visibility’ so that the organization can make faster and better decisions.
- Business process improvements need re-training for your people.
I get this now how do I get there?
The answer is to create a ‘road-map’ for your supply chain that includes opportunities (projects) specific to your business systems. The key is how to develop this road-map. You need to have the following:
- Supply Chain experts that can analyze your data and processes.
- IT ability to look at how your SAP or Oracle solutions have been installed.
- Our company has developed a unique set of tools that can analyze your Demand, Supply and Inventory.
We’ve created a project approach to this kind of analysis. Over the next few months I plan to promote this approach for Life Sciences and yet this approach is not just for this industry. I know this can be applied for any industry that is looking to get more value out of their IT investment in supply chain. As we gain traction in the market I hope to offer some proof points to this approach.
I would be interested in your comments and suggestions on this topic.
Most of us are excited about the changes occurring in healthcare around mobile applications, electronic health records and the advent of social media just to name a few examples. Yet there is a mounting concern with the rise of drug shortages now reported at “178 a 3x rise since 2005!” A look at the FDA web site for drug shortages shows a list of both generics and branded products with the reasons for the shortages (including manufacturing delays, increase in demand, etc.). We’ll look at the background of the industry, the traditional view of supply chain, current factors facing the industry, and what companies can do to ‘improve’ their operations. Recognizing the need to convert your improve your existing operations will be good business and the consequences will directly impact you and I.
Key facts about the industry
According to IMS Health pharmaceuticals sales in 2011 is expected to reach 880 to 890Billion USD, which is a growth of 5 to 7%, and is 1% higher than the 2010 expectations. The current view of the supply chain includes:
- In the US market the top 10 pharmaceutical companies give some 60% of the total US sales.
- As products come off patent Generics control the prices of these products.
- The wholesalers may also negotiate prices between the manufacturers and the Pharmacies.
The traditional view of the supply chain
The driver for any supply chain is to offer:
- Product at a ‘reduced’ cost
- Faster to market
- Delivered at a high quality
Apply this to the previous diagram and you can see the challenges that face healthcare. As the view of the patient and pricing for these products are disconnected. This diagram gives you the full view of the Healthcare supply chain:
Current factors influencing the industry and the Healthcare supply chain
The following factors have influenced the market:
- Mergers and Acquisitions – have reduced the number of manufacturers as companies have consolidated to make up for the loss in patent expiry and look to increase market share (Merck and Shering Plough, Pfizer and Wyeth, and Teva and Barr Labs are just a few examples)
- Regulatory issues – it is harder for manufacturing sites to recover from an FDA violation. This delay can lead to drug delivery delays.
- Government control over pricing – as the cost of healthcare rises many governments are dictating the price of drugs (Spain, Canada, Turkey and Greece). This puts the supplier at a disadvantage to be able to deliver products at these ‘reduced’ prices given the cost for raw materials.
- Globalization – in response to some of these factors many companies have already moved their operations to off-shore locations. India for API manufacturing.
- Risk Management – having the ability to ‘view’ any of these problems can lead to drug shortages. Supply chain operations must therefore give this visibility so the right changes can be made.
Taking these factors into account and with a view of the ‘future’ of the healthcare supply chain from Gartner:
How can I ‘improve’ my operations?
I now work with a variety of companies that look for solutions to ‘improve’ their processes. We began his discussion trying to understand why there are so many drug shortages, and I would suggest the following as a means of enhancing your supply chain operations:
- Refocus business growth and performance across the entire healthcare supply chain. This includes both the patient as providers of healthcare with a C level sponsor that understands that the aspects of healthcare lie outside of your companies boundaries.
- Collaboration. Look to improve demand from both your suppliers as well as your customers. Provide visibility and metrics that you can mutually share.
- Leverage IT as an enabler to meet the first two points. Make investments that promote organizational visibility. Specifically analytics solutions that provides management with a view the business as a result of this investment.
- Governance. This process does not happen overnight. Change management is an ongoing process and you will need leadership and support to sustain these processes as they evolve over time.
- Invest in skills and talent within your organization. I’m in the IT services business and you would think this takes away from my opportunities. There is a tendency to think that these processes can be solved through off-shore support capability. While this is true I am taking about the need to enhance your folk’s ability to understand the entire healthcare supply chain.
I am convinced healthcare can improve yet the threat of drug shortages can impact any course of treatment if the right products are not available. What I hope to do with this blog post is a summary of the problem and possible solution. I welcome your suggestions or comments to improving this blog post.
Aligning Life Sciences and Healthcare IT. Part 2 A Practical Mobility Solution for Doctors and Nurses.
In Part 1 of Aligning Life Sciences and Healthcare IT – I introduced the ‘value chain’ for these industries, and discussed lessons learned from Life Sciences IT to help Healthcare IT in the use of technology. In Part 2 I am providing a practical application on the use of handheld (mobile) devices being used by doctors and nurses. The healthcare providers leverage this technology for patient care, and this provides Life Sciences manufacturers with a market ‘differentiation’ against their competition. At the end of this article I will provide a link to this ‘case study’ which we have named Patient Monitoring System (PMS).
As a background to this blog post I have been researching this topic. In an article by Jacob Goldstein, Can Technology Cure Health Care? , WSJ.com, April 13, 2010 (the main search title is “Can Digital Medical Records Fulfill Their Promise?). The theme of this article was on how hospitals can leverage the promise of technology. In this case the focus was on digital medical records. What I got out of this article was that technology, when misapplied, can be time consuming and take away from patient care. This got me thinking about the strategy behind the use of technology that supports our caregivers in putting the ‘patient first.’ The use of ‘change management’ is the key for any new technology. Especially when it is intended to reduce the workload for those involved. The last thing you need to worry about is how frustrated the users can be with new technology. This article did a nice job of going through lessons learned when implementing new hospital systems.
I find the Information Week Global CIO articles by Bob Evans to be very useful. In The Golden Age Of IT Has Begun: 6 Reasons Why by Bob Evans, Information Week May 24, 2010, this article summarizes the new opportunities available to CIOs. While IT vendors are coming out with functionality to help CIOs with their current IT landscape. I was very interested in the use of mobile handheld devices that can be used as strategic tools with access to analytics in order to make key business decisions.
Which leads me to the following….
The story which led to this solution
Our client is a global medical supplies company. They provide products for Ostomy and Continence care; Urology, Wound and Skin care. These are products that are sold to hospitals, institutions, as well as wholesalers and retailers. They are products that healthcare workers use to make life easier for people with medical conditions that are very personal. I have heard them describe this as “intimate healthcare.” As you can imagine there are competing products in this market. What our company provides is expertise in application development, maintenance and testing services. We were asked to help provide a “value added” service for their customers (targeting doctors and nurses) in order to help differentiate their products over the competition. This solution had to work in a hospital and home care environment. Doctors and nurses wanted to balance scheduling supplies, and services in their delivery of intimate healthcare to their patients.
The solution provided operates on both a personal digital assistant (PDA) and any desktop. Doctors and nurses are free to go about their daily routine since the application takes care of synchronizing patient information across these devices. The technology was delivered as an ‘integrated’ application including:
- GPS navigation – so when a nurse plans to visit a patient they can enter the address and the devices provide directions from that location.
- Calendar functionality – so that nurses can schedule visits, doctors can arrange appointments with nurses to discuss patient results, nurses can also schedule supplies to be delivered on the date of a patient visit.
- Photographic audit and document capability – these days a picture can tell you a lot about the patient’s healthcare outcome. This also allows for easy documentation for regulatory and financial purposes.
I would say we spent considerable amount of time working with the nurses and administrative staff to ‘fine tune’ this solution. Our client feels that this use of technology adds value in differentiating their products in this market. They currently bundle this solution with their products. Currently, they are being used in hospitals and for home care providers throughout the UK region in over 67 locations.
In this case information technology is used to align the needs of Life Sciences companies who want a advantage over competitors. Healthcare providers want to use technology that does not interfere with their goal of patient care. In order to reach critical mass on any new technology there has to be some iteration of the solution. We have the experience and proof that it can be done. I will offer to you a link to this case study. A brief document that covers some of the same detail I provided as well as some pictures of the desktop and PDA application. Please follow the link and download the pdf called Patient Management System (PMS).
I would be happy to help you learn more about this solution. Please feel free to leave me a comment regarding this blog post.
What lessons can Healthcare Information Technology (IT) take from the Life Sciences IT? My background has been in Life Sciences and looking into Healthcare I can’t help but notice the similarities and differences in the use of technology. Over the past few weeks I’ve been engaged with rolling out a new business unit to cover the full value chain for Healthcare. Like most of us we are well aware of the cost for healthcare and the promise of “personalized medicine.” So how do we ‘evolve’ from our current position to fulfill this new ‘model’ of healthcare? In this posting I will focus on the Life Sciences portion of the value chain.
Last week I was in Orlando, Florida to attend the SAP conference @SapphireNOW. I came away with the following key points:
- Acquisition of Sybase brings mobile computing into a ‘strategic’ offering for SAP.
- In-memory resident database will help solve customer issues with legacy systems.
- SAP is making an effort to enter into cloud computing for key applications.
My perspective includes both being a user of technology – providing technology to solve business problems – and now adding value via IT services. IT executives within Life Sciences are under pressure to add value by leveraging IT to support the business. Unlike other industries that are more ‘customer centric,’ Life Sciences suffers as a result of being ‘disconnected’ from the end-user, the patient. The change in moving to a ‘patient centric’ model is part of the challenge. Yet their hands are tied because a large portion of their budget is spent on maintenance and internal IT operations. So when recent articles highlighting messages about Oracle by Bob Evans, Global CIO: Oracle’s Phillips Says Standardizing On Oracle Is The IT Cure, Information Week, April 23, 2010, and most recently on SAP by Bob Evans, Global CIO: Oracle Hammered By SAP For Stifling Customer Choice, Information Week, May 20, 2010 where does this leave you? How to solve this dilemma of minimal funding and yet provide unique “value-added” solutions that can bring the organization closer to the end consumer?
Providing IT Services for Life Sciences IT
Service providers offer “integration” and an increase use of IT. Since the challenge for Pharmaceuticals and Medical Device companies has been to leverage their existing technology. Here is the graphic that I use to convey what we mean by this, and I have several a very real customers who are looking for support across this ‘value chain.’ In a perfect world we would look across each department and leverage one common IT solution, yet within Life Sciences this is not the case. There a few companies that can standardize on one IT solution for the whole organization. (Some Generic companies have opted for one vendor solution since there is a limited R&D requirement for clinical trials.) IT must be the enabler for an organization’s ability to change in today’s market. To me this means looking into advances in technology that can improve agility.
Let’s see how the available solutions have an impact on Life Sciences IT and where IT services companies can add value:
- R&D to Operations – Oracle’s Agile solution is widely used for product development and with their recent acquisition of Phase Forward and Relsys they now have solutions for clinical trials and drug safety. SAP ERP and Supply Chain are de-facto solutions within Operations. Effectively connecting these solutions can accelerate products to market.
- Operations, Services to Sales & Marketing – Within Life Sciences the ability to gather pertinent customer information (more than just sales orders) is relevant to supply chain, and to new product development. Oracle and Salesforce.com are key solutions for Sales and Marketing. There is value in understanding how ‘patients’ are using your products.
- Analytics – Underlying all of these solutions is a workforce that utilizes IT applications and Microsoft Office products for their daily work. Databases that gather application data across the value chain must be made available to the workforce and ‘served up’ so that data can be transformed into information for business decisions. There are Business Intelligence (data ‘cubes’) applications installed across the organization. Documentum is widely used for storing ‘compliance’ documents while Microsoft SharePoint is used to process data across a variety of sources. Users do not want complicated systems and most of all they want their data fast.
Next Steps in achieving alignment
The economy has impacted Life Sciences in terms of:
- The high cost of healthcare which is driving need for ‘efficiency’ (from new product development to supply chain). Life Sciences now see the relevance of ‘patient’ feedback.
- Lack of new products (either from R&D or enhancements to existing products) have forced the industry into M&A, realignment of existing resources, and IT investments to fuel new business.
IT services can connect the ‘dots’ within Life Sciences. Customers need to ask their service providers:
- What can they offer to resolve the problem between applications within the value chain? Look for vendors with multiple technology expertise and a delivery model that is a mix of off-shore and near-shore resources. Low cost does not guarantee success if you’re not able to diagnose the problem area.
- Are we leveraging our IT to the ‘maximum’ within our organization? I speak to customers who tell me they have multiple IT vendors for application support. Again while this may curb costs you may miss out on a ‘strategy’ that improves your business processes.
- Are you within ‘compliance’ to the regional regulations? Can you improve operations and still be in compliance? When was the last time you had your regulatory group and IT processes reviewed?
Healthcare IT can learn from Life Sciences IT since there is no ‘one’ solution for the industry. SAP and Oracle are the dominant players in the market for Life Sciences. There are ‘excellent’ smaller niche players are likely to pose a problem for IT from an ‘integration’ perspective. Within Life Sciences IT we hear about the 80/20 budget crisis (80% is spent on maintenance and IT operations, and 20% for new projects) and with the advent of ‘cloud computing’ IT will need to see how they can leverage this technology. What I heard at the SAP conference that was quite interesting is that ‘in-memory’ databases could be applied to legacy systems. Given the current need for fast access to data this is very encouraging. I’m sure when I head to the Oracle conference we’ll hear of even more technology improvements.
In the next blog post I will share my perspective (that of an IT service provider) for Healthcare. There are some new business processes that can add value as Life Sciences and Healthcare IT move closer to each other.
While at the same time continuing to learn and strategize more about Healthcare IT solutions.
Online webinar was held on March 25, 2010.
As I was preparing to attend this call I remembered an article that appeared in Pharmaceutical Executive by Emmanuel Le Poul (November 18, 2009) entitled: “Rising to the Challenge in R&D.” So while the country was in the midst of discussing healthcare, the article started off by describing, that the pharmaceutical industry has not been able to improve the number of new molecule entities (NMEs) approved by the FDA. With the debate on healthcare focused solely on costs. The bigger issue is around productivity and innovation and why is it that we have not been able to improve the success rate for new NMEs? Many of you are well aware of the billions of dollars invested and countless clinical trials being performed each year. Is there a better model for drug development?
I had expected this webinar to focus on the ‘science’ aspects of drug development. Instead the focus was on improving the ‘process’ and for me that was truly enlightening. The presentation highlighted the growing ‘disconnect’ between academia and the pharmaceutical industry. We are well aware of the pending patent issues within the industry. The investment costs of $50 billion per year being spent on R&D, and the lack of ROI in terms of new products. The speakers covered the history for how we got to this point, and introduced the Accelerated Research Collaboration (ARC) model developed by the Myelin Repair Foundation (MRF). http://www.myelinrepair.org/research_model/
The ARC model is a holistic approach that spans the entire drug discovery and development value chain. This offers Pharma the means to make decisions when to license the discovery. I see it as improving the odds for success by closing the gap shown in the graphic on the right.
I’ll summarize the model as follows:
- The first step is target discovery. This is the basic science conducted in university laboratories. For the most part, the NIH and other disease research organizations simply fund basic science that results in the publication of results in peer review journals. The result is hundreds of thousands of such articles published each year. The ARC model identifies the best scientists, requires them to share data in real time, manages the scientific process to a strategic research plan designed to discover therapeutically relevant targets, and then file patent applications on their discoveries.
- The second link in the value chain is target validation. The ARC model establishes and manages a network of contract research organizations, better known as CROs, tasked with validating the basic science from the MRF labs to industry standards.
- The third step in crossing “the valley of death” is drug discovery. The ARC model identifies and engages commercial partners to conduct drug discovery research. The MRF accomplishes this step in the process by entering into partnerships with multiple pharmaceutical partners, each established to move multiple targets through drug discovery and clinical trials.
The sports equivalent of the ARC model is to achieve as many shots on goal as possible, and thus overcome the high attrition rates inherent in getting a treatment approved and available to patients. An essential component of the ARC model is coordinating and being involved with all the players and participants in the value chain, from the academics, other non-profits, patients, physicians and various government agencies, like the NIH and the FDA. The MRF invests and is involved in every step of the process.
If better treatments can be found using this model then we will have achieved success. We have spent too much attention on the cost of healthcare rather than focusing on the patient and developing new treatments through process innovations like the ARC model. I would recommend visiting their site to learn more about this model and the success they have had so far.
For more information on the webinar including the transcripts and slides these can be found on: http://myelinrepair.org/myelincures/