As Business Intelligence consultants we always aim to help clients overcome the operational inefficiencies, find gaps in their current processes, enable cost curtailment and better decision making. My last business intelligence implementation was for a leading pharmaceutical company in the US. The biggest challenge pharmaceutical companies face today is to reduce the cycle time involved to bring a new drug into the market. Before a drug reaches the consumer it must go through the following phases:
Discovery > Clinical Trials > Approval > Manufacturing > Marketing
It takes an average of ten years for a new drug to enter the market. The patent term for most of the drugs in the U.S. is 20 years, after which the drug goes generic and of course there is a steep drop in profit margins. As a result, pharmaceutical companies are always looking for ways to bring their drugs into the market sooner. Even though all the above listed phases benefit from business intelligence solutions, the maximum time reduction can be attained during the manufacturing phase of the drug and this is one area which is also prone to operational inefficiencies, so the target improvement areas for me and my team were in the manufacturing domain of this pharmaceutical company. The Pharma manufacturing process is batch driven, so the business needed to be able to easily monitor the batch yields, percentage of scrap batches, inventory levels, number of adverse events reported, etc. Like most pharmaceutical companies today, the manufacturing supply chain and inventory management of this company was also not completely aligned with their demand forecasting processes.
To provide improved monitoring into the manufacturing process, we implemented a data warehouse solution and delivered business intelligence reports which resulted in consolidation of data for their manufacturing plant, processes and equipment. This solution led to savings in time, effort and cost. For example, an Annual Product Review report which previously required a month of work from two full-time resources was just now a click away. The Quality team was pleased since they could quickly and efficiently analyze the events data reported and plan for corrective actions. Equipment maintenance could now be aligned with the production load to ensure that more money was going into preventive maintenance instead of corrective maintenance. The business could easily analyze the batch yields and users could easily monitor inventory levels across all plants and coordinate better bringing down the excess produce which could go waste. The stakeholders identified during this project included key business users, upper management executives who would be looking at our business intelligence reports, quality control and analysts, engineers working on the manufacturing plant floor, FDA, since the audit teams would also be looking at these reports, me and my project team and probably that was it.
The successful implementation of this project was a win for our consulting team and the client. But this optimization may have had a far reaching impact beyond just process optimization. Do we know how many of the NGOs / nonprofit organizations get their medical supplies which they use to serve the people in need in the developing countries and other disaster affected countries?
These nonprofit organizations approach the drug manufacturers and distributors to donate drugs which are used to serve the poor and the disaster-affected worldwide. An unopened drug is supposed to be good for a year after the printed expiration date. One of the goals achieved as part of this project was a reduction in excess production of drugs. So, this reduction actually may have impacted the operations or funding model of medical charity NGOs that depend on this excess capacity.
I am not sure whether this particular pharmaceutical client donated drugs to NGOs or just provided financial aid, but our team was not even aware that the charity groups collect these excess medicines and redistribute using their own supply chain. I am not sure how many Pharmaceutical companies try to find out (systematically) where their donated medicines go, unless they get some adverse events from the usage of the donated medicines. This IT enablement could actually be a matter of concern for NGOs that depend on excess supply.
I had never thought about this aspect of supply chain optimization until I happened to meet a friend of mine who attended the Global Pharma Manufacturing Summit in Chicago and shared some interesting insights from the seminars. The nonprofit organizations are also trying to analyze when this production optimization will occur for all the major pharmaceutical companies and what should be their plan of action. So what should be done? Should the manufacturing companies keep on producing excess supplies knowing the exact figures and cost incurred for the excess produce and keep those donations flowing (not sure how many would buy this idea..) or are there other ways? I have been trying to think of a WIN – WIN solution and thought it best to share this story here to have more minds doing the thinking.