Pharma 2020: The role of the supply chain - video transcript
Jonathan Marshall: In our view, the supply chain of the future for pharmaceuticals needs to change. If you look at the supply chain today, it’s that necessary evil. It’s that cost burden that we have to bear in order to get product from point of manufacture through to the patient. In the future we see that shifting. The supply chain can really become a source of strategic advantage for the pharmaceutical company.
Some of the key changes we think are necessary within the supply chain. One is that if we look at the products that are coming through pre-clinical today, and we look at the capability we need to manage those through the supply chain, it’s very different to what we operate today. We’re going to start looking at more gene therapy, stem cell research is going to become more prevalent, the use of different devices, nano-particles to deliver product, these require different capability. It’s not about moving a small molecule, a tablet, from a point of manufacture into a country. It’s around localisation, it’s around personalisation, and you need to think about the capabilities necessary to manage that kind of environment.
The other change we see is that the supply chain has to help the pharma-product be differentiated within the marketplace, and this is really embedding themselves within the product and the healthcare package. It’s no longer just a tablet. It’s kind of: how can I bring both the diagnostic, a device, the healthcare physician, to the point of care, and do that seamlessly so there’s a benefit for the patient, there’s a benefit for the provider of healthcare, there’s also a benefit to the payer, in that you get a better outcome for the money you’re spending? It really means that the supply chain has to get to the centre of the provision of healthcare, requiring a completely different mindset in terms of how they interact with the patient as well as the other value chains within the healthcare arena.
We see kind of four models emerging within the supply chain of the future. One is around virtualisation, where we specialise very much on the ability to make a novel molecule, but we partner with those people who can bring best-in-class service, be that the mode of manufacturing or the method of distribution, but we partner with others. Our core skill is around the molecule. In other instances, we may want to focus on the service proposition. How do we as a pharmaceutical company, really understand the service need in the marketplace? That, again, is a different skill set. We also recognise that there will still be a requirement for the mass-produced pharmaceutical product, and in that context, we’ve got to really think about how we get the cost-base down to address some of the margin pressures we’re facing, and really get a cost culture into our organisation, which is very different from what we observe today and most pharmaceutical companies. Through to the extreme where we actually shift our supply chain into a source of profit, so we actually start to generate cash from that supply chain. We sell our services not only internally, but also to other pharmaceutical manufacturers. Inherently though, we’ll see a lot more tailoring of that supply chain to the product, and those are going to be some of the significant changes as we move forward.
In some ways, the supply chain of the future really has to address two key aspects. One is how it provides the right capability and the right competence to manage the new products in the portfolio and get those to market, in conjunction with really understanding existing products and allowing the organisation to really differentiate those in the marketplace to combat some of the generic pressures.
If I compare capability with other sectors - we look at industrial products, retail and consumer - we really need to look at those sectors for inspiration in terms of how we need to modify our supply chain for it to become that source of advantage in the future.
