1. Triumph Pharmaceuticals Risks and Supply Chain choices Nikita Atal Surendra Cherukuri Prasenjit Datta Alex Sterdjevich Viren Tulsian

2. Implementation Current Situation Problem statement Analysis 2 Agenda Recommendation Risks and Mitigation Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

3. Current Situation 3 Manufacturing Process Structure Company considerations ▪IP leakage considerations ▪Supply chain disruptions ▪Supplier’s dependency on the volatility of other industries ▪Competitive advantage- a) sourcing strategy, b) patents and data protection Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

4. Problem Statement 4 Triumph Pharma is challenged with strengthening their Global Supply Chain by developing a sourcing strategy, mitigating risks of- a) Disruption losses b) IP losses Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

5. Recommendations 5 Cost and Risk based sourcing strategy Accept 10-year data protection deal Obtain process patent for API-SM and API Intermediate 1 2 3 Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

6. 6 Recommended sourcing strategy Expected cost: $5457 / Variance $1404 per kg Recommendation 1- Sourcing Strategy Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

7. Country analysis 7 Recommendation 1- Sourcing Strategy Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

8. ▪Using Risk efficient frontier to analyze cost-risk trade-offs for single sourcing vs dual sourcing 8 Assumptions- There is no correlation of disruption risk between two countries Efficient Zone- Recommendation 1- Sourcing Strategy Dual Sourcing- Vietnam & Peru Allocation Risk Cost 0% $ 83 $ 208 10% $ 76 $ 210 20% $ 71 $ 213 30% $ 68 $ 215 40% $ 68 $ 218 50% $ 71 $ 220 60% $ 77 $ 222 70% $ 84 $ 225 80% $ 94 $ 227 90% $ 104 $ 230 100% $ 115 $ 232 RISK COSTCOST Stage II Reaction Intermediate CountryBase priceP(Disruption)CostVariation Vietnam $ 200.000.2 $ 208.00 $ 83.45 Peru $ 200.000.4 $ 232.00 $ 115.27 Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

9. Recommendation 1 Sourcing Strategy 9 Prioritizing stages for source selection 1.Starting Material for Synthesis (Alpha raw material) - Critical in the supply chain to limit supply shortages 2.API SM & API Intermediate- After source selection both these stages are important to mitigate risk for IP loss 3.Reaction Intermediate- Based on previous decisions, suppliers for this stage can be selected to minimize cost and risk Assumptions- No two stages originate in the same country due to an increased risk of IP leakage Starting Material Reaction Intermediat e API SM API Intermediate Overall Cost/kg95% limit Cost $ 194 $ 215 $ 2,063 $ 2,985 $ 5,457 $ 7,767 Risk $ 62 $ 68 $ 1,052 $ 926 $ 1,404 Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

10. 10 Recommendation 2 and 3- 10-Year Data Protection and Process Patent Keeping the Patent with process patent Data protection deal with process patent Assumptions In 5 years, Selling Price goes down by 50% after generics enter market In 5 years, Selling Price goes down by 30% after new entrants release their product in market Validity7 years10 years Composition IP Loss  N/A Process Patent Loss  Clinical Trials for CompetitorsN/A  Total Revenue from years 6 - 10 $ 87,499.90/kg $ 124,992.39/kg Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation Assumptions- Profit margin of 80% to estimate revenue

11. 11 Obtain competitive advantage through implementation of sourcing strategy Medium-Term (1-5 yrs) Single sourcing implementation Obtain process patent for API-SM and API Intermediate Dual sourcing implementation Local Supplier management capabilities Long-term contracts for USA, Singapore Develop USA with dual technology model for alpha-raw material stage Short-Term (0-1 yr) Ramp-up production Develop unique API intermediate-cost reduction project Develop dual sources to mitigate disruption costs Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation Implementation Re-assess market for new entrant Long-Term (5-10 yrs) Re-evaluate pricing strategy

12. 12 Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation RisksMitigation Measures Probability/ Impact Market Risk: Market exposure due to quality inconsistencies/ non-compliance as a result of dual sourcing Stringent Quality control standards Develop local supplier management capabilities medium/high Implementation Risk: Supplier implementation lead time and production/performance ramp-up Ramp new suppliers more quickly, ensuring visibility into any risk factors at an early stage low/medium Performance Risk: Ongoing supplier quality and financial issues Dual sourcing Develop local supplier management capabilities low/high Demand Risk: Demand and inventory fluctuations and challenges due to single sourcing at API-SM stage Enter into a long term exclusive contracts with legal implications for vulnerable suppliers- USA, Singapore low/high Catastrophic Risk: Natural disasters/ political instability Develop a contingency plan for all vulnerable supplierslow/high Risks and mitigation

13. Conclusion 13 Cost and Risk-based Sourcing Strategy 10-Year Protection Deal Process Patenting Robust Global Supply Chain for Triumph Pharmaceuticals Current Situation Problem Statement Analysis Implementation Risks and mitigation Recommendation

14. THANK YOU!

15. Cost of Sourcing = Base Price*Price Multiplier*(1+Disruption Probability) Expected Cost and Risk - Using Discrete Probabilities for “No Disruption” and “With Disruption” scenarios to assign expected cost and risk for each country. Sample calculations for Malaysia in Phase-1- Starting Material: 15 Assumptions- The probabilities of disruption risk between different industries are mutually exclusive Expected cost of sourcing= 125*(1-(0.2+0.3))+187.50*(0.2+0.3)= $156.25 Risk of sourcing- Is interpreted as the standard deviation= $ 79.67 Appendix- 1a

16. Appendix- 1b 16 Stage I Starting Material Country Base price per kg Price multiplier P(Disrupti on) P(IP loss)E(X)(X-μ)^2)*μSD Malaysia $ 100.001.250.50.2 $ 156.25 $ 6,347.66 $ 79.67 USA $ 120.0020.20.005 $ 249.60 $ 10,027.01 $ 100.13

17. Source Selection and allocation distribution: a, b are allocation percentages, co-variance=0 ▪Cost for stage- ▪Risk for stage- ▪Using Risk efficient frontier to analyze cost-risk trade-offs for single sourcing vs dual sourcing 17 Company Overview Problem Statement Recommendation Analysis Conclusion Assumptions Assumptions- There is no correlation of disruption risk between two countries Efficient Zone- For same risk cost incurred is low, the allocation should be in this region Appendix-2a AllocationRiskCost 0%83208 10%76210 20%71213 30%68215 40%68218 50%71220 60%77222 70%84225 80%94227 90%104230 100%115232

18. Appendix- 2b 18 Stage II Reaction Intermediate Country Base price per kg Price multiplier P(Disrupti on) P(IP loss)E(X)(X-μ)^2)*μSD Malaysia $ 200.001.250.50.2 $ 312.50 $ 25,390.63 $ 159.34 Vietnam $ 200.0010.20.3 $ 208.00 $ 6,963.20 $ 83.45 Singapore $ 200.001.50.30.03 $ 327.00 $ 22,812.30 $ 151.04 USA $ 200.0020.30.005 $ 436.00 $ 40,555.20 $ 201.38 Peru $ 200.0010.4 $ 232.00 $ 13,286.40 $ 115.27

19. Appendix- 3 19 Stage III API starting material Country Base price per kg Price multiplier P(Disruptio n) P(IP loss)E(X)(X-μ)^2)*μSD Singapore $ 1,200.001.250.50.03 $ 1,875 $ 914,063 $ 956 Malaysia $ 1,200.001.250.2 $ 1,560 $ 391,680 $ 626 Australia $ 1,200.001.750.50.01 $ 2,625 $ 1,791,563 $ 1,338 USA $ 1,200.0020.40.005 $ 2,784 $ 1,913,242 $ 1,383 Mexico $ 1,200.0010.10.4 $ 1,212 $ 132,322 $ 364

20. Appendix- 4 20 Stage IV API Intermediate CountryBase price per kgPrice multiplierP(Disruption)P(IP loss)E(X)(X-μ)^2)*μSD Australia $ 2,000.001.250.20.01 $ 2,600 $ 1,088,000 $ 1,043 New Zealand $ 2,000.0010.70.01 $ 2,980 $ 1,951,320 $ 1,397 USA $ 2,000.0020.10.005 $ 4,040 $ 1,470,240 $ 1,213

21. 21 Company Overview Problem Statement Recommendation Analysis Conclusion Assumptions Alpha raw materials strategy- AllocationRiskCost 0%100250 10%90240 20%82231 30%74222 40%68212 50%64203 60%62194 70%63184 80%67175 90%72166 100%80156 Based on the analysis for Alpha Raw material stage- We require lowest risk for this stage- hence, we chose Malaysia- 60%, USA-40%, for 95% cases, cost will be lower than $ 296 Appendix – 5a

22. 22 Company Overview Problem Statement Recommendation Analysis Conclusion Assumptions API SM strategy & API Intermediate Strategy ▪IP loss should be minimized for API SM stage- hence, we eliminate Malaysia and Mexico from consideration as probability of IP loss is 0.4. Also, we need to incorporate long-term exclusive contracts at this stage- at 20% extra price ▪Cost is highest for these 2 stages- so cost minimization is important ▪Out of the other suppliers- USA has already been allocated in stage-1, so we need to choose between Singapore, Australia and New Zealand for these 2 stages Appendix – 5b

23. 23 Company Overview Problem Statement Recommendation Analysis Conclusion Assumptions Analyzing the 3 different combinations- Based on the analysis for API SM strategy & API Intermediate Strategy – API SM strategy- Singapore to be used for sourcing 100%, with long term exclusive contract API Intermediate Strategy – Australia- 70%, New Zealand- 30%, for 95% cases, cost will be lower than $ 6,684 Scenarios Source SelectionStage 3Stage 4 Combined- Stage 3 & Stage 495% Scenario 1 Only Singapore Cost $ 2,228 $ 2,860 $ 5,088 $ 7,477 Only Australia Risk $ 891 $ 1,147 $ 1,453 Scenario 2 Singapore & Australia Cost $ 2,063 $ 3,278 $ 5,341 $ 8,403 New Zealand Risk $ 1,052 $ 1,537 $ 1,862 Scenario 3 Only SingaporeCost $ 2,063 $ 2,985 $ 5,048 $ 7,353 Australia & New ZealandRisk $ 1,052 $ 926 $ 1,401 API SM strategy & API Intermediate Strategy Appendix – 5c

24. 24 Company Overview Problem Statement Recommendation Analysis Conclusion Assumptions Reaction Intermediate ▪Sourcing cost and disruption risk optimization is the primary focus ▪Out of 5 sources- Only Vietnam and Peru are available as the other countries have been used as a source for the other stages AllocationRiskCost 0%83208 10%76210 20%71213 30%68215 40%68218 50%71220 60%77222 70%84225 80%94227 90%104230 100%115232 Based on the analysis for Reaction Intermediary phase- Optimal Allocation is Vietnam- 70%, Peru-30%,for 95% cases, cost will be lower than $ 327 Appendix – 5d

25. 25 Sourcing Strategy ▪Combining all of the decisions from all of the 4 stages Appendix – 5e Starting Material Reaction Intermediat e API SM API Intermediate Overall Cost95% limit Cost $ 194 $ 215 $ 1,875 $ 2,714 $ 4,998 $ 7,099 per kg Risk $ 62 $ 68 $ 956 $ 842 $ 1,277

26. 26 Appendix-6 Discrete distributions Probability- PATENT= IP loss*Process patent loss - Data Protection= Process patent loss