Outlook 2011

Industry executives share insight into the future direction of drug manufacturing and the supply chain. This article contains online bonus material.
Jan 02, 2011
Volume 35, Issue 1

Illustration by Dan Ward. Images by Lauren Burke/Getty Images
Beginning a new year merits examination of the key events of the past year and assessing what may come in the year ahead. Pharmaceutical Technology spoke with industry executives to gain their views on the crucial issues shaping pharmaceutical manufacturing and the supply chain. Participating in the roundtable were: Tony Maddaluna, president of Pfizer Global Manufacturing (New York); Wynn Bailey, partner in the life-science advisory practice at PricewaterhouseCoopers (PwC, New York); Guy Villax, CEO of the contract manufacturing organization (CMO) Hovione (Lisbon); and James Hamby, vice-president of business development at the CMO Ash Stevens (Detroit).

2010 in review

PharmTech: Looking back on 2010, what were the most important issues for the bio/pharmaceutical industry as a whole and for manufacturing specifically?

Figure 1: From left, James Hamby, vice-president of business development at Ash Stevens; Guy Villax, CEO of Hovione; Tony Maddaluna, president of Pfizer Global Manufacturing; and Wynn Bailey, partner in the life-science advisory practice at PricewaterhouseCoopers.
Maddaluna (Pfizer): As the industry moves away from vendor relationships and toward strategic partnerships, there is a greater emphasis on partnering with external suppliers to achieve strategic business goals. Investment in new technologies is on the rise. The industry is moving toward strategic collaboration in both research and manufacturing and is strongly focused on partnering closely with global regulatory agencies. All of these trends reflect an industry-wide awareness of the need to demonstrate stakeholder value. A number of factors are currently in play, and their combined impact will carry forward as the industry continues to evolve in response to current and emerging challenges. Chief among key issues affecting pharmaceutical manufacturing are supply-chain security, increased regulatory attention, overcapacity, and shifting demand as products go off patent.

Bailey (PwC): Understanding larger industry issues and macro-level business drivers is the right place to start for effective supply-chain executives, and we see several big-picture things happening that have significant implications for bio/pharma supply organizations.

First, companies are struggling with volume declines associated with weak pipelines, increasing generic competition, and price pressure from government and private buyers. For supply organizations, this heightens the need to create lean and adaptive cost structures that can preserve and improve gross margins at all points in a product's life cycle.

Second, the decline of the blockbuster and the emergence of ever smaller patient and market segments means that supply organizations have to build and manage multiple supply chains in parallel—each with unique product, channel, customer, and patient attributes—but all responsive from the end-customer back to the pharmaceutical company.

Third, shorter product life cycles create an even greater need to optimize economics during market exclusivity and to differentiate products at all stages of their life cycle. For supply organizations, this highlights the need to create more seamless alignment of activities not only across supply-chain functions, but between the supply chain and sister groups that touch all aspects of the product life cycle (research and development [R&D] and new product introductions most obviously).

Finally, heightened public and regulatory attention to risk and quality (and severe consequences for failure to act accordingly) means that supply organizations need to have robust risk-assessment and risk-management capabilities and practices that cover the entire extended supply chain (from your suppliers' suppliers all the way through to end customers).

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