Imperatives

The challenge in pharmaceuticals is to deliver safe, high-quality medical products and devices with revenues that compensate for years of R&D expenditure and compliancy efforts. This challenge also comes in an economic environment where growth in established markets is slowing. The long time-to-market, expiring patents, decline in R&D productivity, emergence of ‘me too’ products and imitation drugs, and the development of manufacturing capabilities in countries such as India and Brazil, all mean the pipeline is under continuously high pressure to safeguard future revenues. Major restructuring initiatives have been undertaken in both the manufacturing and commercial environments, and branding is becoming more important.

It is recognized that there will be fewer blockbuster drugs coming out of the pipeline. Only seven drugs could hypothetically reach blockbuster status in 2009. Pharmaceutical companies are waiting to put generic drugs on the market after expiration. Under certain conditions, these low-cost products often get fast-track approval by EMEA / FDA, leading to more pressure on the pipeline. A significant number of medicines are going off-patent between now and 2012, and generic drugs are causing price cuts of up to 80%.

As pharmaceutical companies stand to lose many billions of Euros of yearly revenues over the next few years from patent expiry, there is a strong focus on new product development. This has resulted in an increase in licensing deals and acquisitions, particularly biotechnology companies. Big pharmaceuticals choose to partner with biotechs and license their in-development drugs or simply buy the entire company. A small, flexible biotech can innovate easily and sometimes be an ideal partner for the cumbersome big pharmaceutical. There are many examples of these kinds of partnerships.

All medical products, devices, and diagnostics are exposed to a highly regulated environment. The large registration dossiers require a structured content for evaluation by EMEA / FDA. Indeed, the regulatory authorities, especially the FDA, are becoming increasingly cautious. As such, they are forcing the manufacturers to place a higher emphasis on control and validation of their drug development and production processes as well as their storage and information systems. Pharmaceutical companies must keep their commercial organizations up-to-date on state laws, as well as customer-specific regulations that govern interactions with providers. Building an effective compliance capability is considered a source of competitive differentiation.

Business trends

The growing demand for healthcare—particularly from an aging population perspective—is putting significant pressure on healthcare spending. This is resulting in healthcare reforms and an emphasis on controlling drug bills. On the other hand, lifestyle drugs are very attractive to companies due to this aging population trend. Consumers in Western and emerging countries are becoming more demanding and are willing to pay for lifestyle drugs.

With declining revenues, there is a need to improve efficiency and reduce costs. The outsourcing, or Business Process Outsourcing (BPO), of drug discovery, clinical trials, clinical data management, and R&D activities is set to grow, and India will be a big beneficiary.

The outsourcing of manufacturing to low-cost sources, whether it be the Eastern European countries or Asia, is becoming more common place, and this is putting an increasing pressure on supply chain efficiency to move the products swiftly around the globe. Optimising the supply chain is increasingly important to incumbent pharmaceutical companies and drives the emergence of multi-market sourcing, resulting in new infrastructure needs, processes, pack management and distribution systems. All the major organizations have Lean Manufacturing and Six Sigma programmes through which they aim to generate the benefits, notably in terms of reducing the cost of quality and supply chain lead-times, reaped in other industries. This is in spite of the constraints imposed by the regulated nature of the industry.

Identifying winners and losers from the pipeline earlier, whilst reducing the overall number of failures, would increase profitability.

Traditionally, private equity firms have side-stepped the pharmaceutical sector deterred by the major R&D commitment required. Biotech is now becoming increasingly productive in terms of new product development, with some promising products being produced in clinical trials. Further biotech / pharmaceutical alliances and consolidation as well as big company acquisitions are to be expected.

The refocus in the health sector, broadening of the customer base, customers’ changing needs, reduced field-force access to doctors, and cost pressures are driving greater integration of sales and marketing. Marketing is being pushed down into the field and is also much more consumer-driven.

Links to electronic patient records and clinical databases are starting to build a foundation through which patients can be targeted, analytics can be run, and R&D informed.

Patient and product safety is driving an ever-heavier regulatory burden on development, manufacture and supply of drugs. Standardization in value chain processes is required to meet the increased pressure on legislation and thus compliancy. Tighter drug-pricing regimes across the EU and US also compound this.

Using the wide variety of information on the Internet, patients are increasingly taking an active role in the choice of medicine prescribed; though, in many countries, direct to consumer promotion is restricted. Parallel trade drives single distributor strategies and increased pack security.

Impact technologies

Enterprise Resource Planning (ERP) vendors support standard platforms and deliver additional modules, with the trend moving towards single ERP as a means of managing and reducing legacy systems. All these technology and application integrations should be reviewed in conjunction with Business Process Platform (BPP) strategies. This will drive decisions about when, where, and whether application integrations via ERP harmonization or Service-Oriented Architecture (SOA) solutions add most value to the business.

SOA can have cross-functional impact—e-commerce and Customer Relationship Management (CRM) to ERP and Supply Chain Management—enabling true business agility.

Plant automation is being facilitated by common architectural approaches such as SOA, enabling the linking up between plant floor systems and ERP. Indeed, the emergence of Manufacturing Execution Systems (MES) integrating the plant floor systems and linked to the Quality Management System (QMS) is providing real-time data to support key manufacturing decisions and enhance regulatory compliance. One of the challenges now facing the pharmaceutical industry is to drive this real-time data availability back down the supply chain to the supplier base.

The maturing of RFID technology will play a key part in managing the supply chain and improving pack security. The adoption and common use of reliable track-and-trace technology would help secure the integrity of the drug supply chain by providing an accurate drug ‘pedigree’ that is a secure record confirming the drug was manufactured and distributed under safe and secure conditions.

The use of new Identity and Access Management (IAM) technologies is commonplace and is used to protect access to buildings as well as access to information and resources.

The CRM systems need to be readily updatable to address the increased focus on portfolio profitability from both commercial and supply chain / operational planning perspectives. Globalization and standardization continue to drive these implementations.

New mobile solutions will enable this by giving the workforce vital access to information from anywhere and on any device.

Managing the sharing of nuggets of information in R&D Centers of Excellence will be facilitated by Enterprise Content Management (ECM), providing real-time access to content information from any location. ECM will also facilitate online submission of data for regulatory approval.

With simulation tools, pharmaceuticals simulate diseases and clinical trials to identify and test new compounds (translational medicine).Using computational simulations cuts the high clinical trial cost, long cycle times and high failure rates of conventional lab research. Patient data collection, storage, and simulation analytics play a vital role in realising a bi-directional link between the drug discovery phase and clinical research.

Physician and patient Electronic Medical Records (EMR) is the next frontier. A further integration between physicians, hospitals and integrated delivery systems is foreseen. ‘Translational Medicine’ is the key term here.

There are also new developments around Process Analytical Technology (PAT):

• Building compliance and traceability into manufacturing processes using data gathered during the R&D processes, instead of simply validating processes and controlling the end product.
• Patient compliance, that is getting patients to take drugs on time, requires innovative approaches to administer drugs, for example intelligent packaging with roll-up screens.

Pharmaceutical companies are looking to improve collaboration internally and with external partners to improve time-to-market. Collaboration tools and virtualization technologies are crucial to this effort. Organizations can adopt best practices from other industries (like consumer electronics) to develop initial strategies to utilize Multi-Enterprise Business Process Platform (ME-BPP) solutions.

The business needs to be able to take an educated view on future requirements in a number of areas including budget planning, supply-anddemand balancing, and plant optimization. Business Intelligence will also be of value here, in the form of predictive analytics and dashboards.

A single view of information across all the business’s data sources, by way of Enterprise Information Integration, will give the business the on-demand intelligence that is required to help pick the winners and losers early on.

With patients wanting to take a greater role in their choice of medicine, and with physicians being more difficult to gain access to, Web 2.0 can take an active role in enabling collaboration and participation.

Brought together with Legacy Management, SOA can advance the wealth of diverse legacy systems to a more flexible, accessible solution. Compliance demands extensive IT assets. Leveraging existing (IT) assets is far more cost-effective than building parallel compliance capabilities. Data entry, interfaces, and reporting must re-use or be compatible with enterprise systems such that they help detect risk in highly visible areas, such as off-label promotion.