Webinar Hosted by Pharmaceutical Manufacturing Wednesday, November Presented by Hedley Rees, Biotech PharmaFlow

Agenda What is behind the ‘supply chain heat’ Where do contractors fit in? Management strategies based on segmentation The procurement cycle Building a foundation for the future

Where is the heat coming from? Shortages…… Economically motivated adulteration…… Recalls….. Cost of Goods issues… Counterfeiting….. Theft….. Diversion…..

The fall-out…. Crippling impacts in the areas of patient safety, brand image and reputation, costs of remediation, customer service and investor confidence. A UNIVERSAL CRY FOR CHANGE! From regulators, governments, other competent authorities and patient advocacy groups. 5

Stakeholders pile in…. …EU implements Falsified Medicines Directive. …EMA consults on dramatic tightening of GDP/GMP …FDA pens “Pathway to Global Safety and Quality”. …President Obama wades in on drug shortages. …US HELP Congressional Committee consults. …US Pharmacopeia consults on new Chapter. …PEW Charitable Trust writes report “After Heparin”. …GS1 Global Traceability Standard for Healthcare (GTSH). …FDA Safety and Innovation Act (FDASIA), Title VII

Roles in the Pharma Supply Chain Responsible for supply chain

The Scope of Contractual Relationships Qualification/validation work for premises Maintenance /calibration of equipment Storage and distribution Artwork generation and print ready material Assessment and sourcing of starting and packaging materials QP and other professional services such as GMP audits of suppliers Washing/depyrogenation/sterilisati on of packaging materials used in manufacture. Hosting of IT functions Document archiving and storage Ref: GMP/GDP INSPECTORS WORKING GROUP GMP/GDP IWG Document Ref: EMEA/INS/GMP/648678/2009

Dis-integration of the supply chain Outsourcing begins in earnest…..

Contractor Management in Context Immensely complex interactions. Relationships are 3 rd party. Contractually driven. Power and dependence. Management by Segment.

Procurement Portfolio LeverageStrategic RoutineBottleneck Portfolio Many SuppliersSingle Supplier Complexity of Supply Market Financial Relevance High Low Based on Kraljic Matrix, HBR 1983

Procurement Portfolio Management Leverage Exploit Negotiate hard Regular tendering Strategic Build relationships Seek innovation Joint investments Routine Automate Standardise Empower users Bottleneck Mitigate risk Change design Alternate source PORTFOLIO Many SuppliersSingle Supplier Complexity of Supply Market Financial Relevance High Low Figure 1 A segmentation approach based on Kraljic Matrix

The Procurement Cycle – Strategic Segment Specify User Driven Team based Request for Proposal Select Involvement of stakeholders Decision making process Business benefits Commit Agreements – Supply, Quality & Technical, Service level Processes for working together Information sharing Perform Regular reviews Metrics Continuous improvement

It starts in early stage development…

Building successful contractor partnerships Robust Supply Base cGXP compliant Capable processes Commercially viable Organisationally mature Culturally congruent Inclusive planning process Defined envelope of uncertainty Adequate capacity Appropriate scale Thorough risk assessments Sourcing and Inventory policy Sound Agreements Procurement cycle Supply QTA Service level Process Driven End-to-end Allocation of responsibilities Change control Metrics

Thank You