LLamasoft Supply Chain Blog

← Back to Blog

Winning the War on Cancer and Counterfeit Drugs and other Inspiring Stories from LogiPharma US 2019

By Dr. Madhav Durbha  September 18, 2019

Winning the War on Cancer and Counterfeit Drugs and other Inspiring Stories from LogiPharma US 2019

By Dr. Madhav Durbha  September 18, 2019

I just returned from the LogiPharma US 2019 held September 16-17 in Philadelphia. There were so many fascinating stories and inspiring themes that capturing all of them in a single blog post may be a challenge. Here are a few select stories:

  1. Integrated network strategy to support long term growth: Linzell Harris of AstraZeneca spoke about how having an integrated network strategy is pivotal to ensure long-term growth amid shifting product portfolio. The company lost sizeable revenue a few years ago due to loss of patents on a couple of blockbuster drugs. The company’s aggressive investments in innovation helped generate a strong pipeline of drugs that made up for the lost revenue. However, this resulted in rapid shifts in portfolio which meant a supply network that continued to evolve. This also resulted in more drugs turning from clinical trials to commercial, the supply chains for which are vastly different. The company’s tremendous growth in China wherein several products grew by over 100% year-over-year, is another factor making the supply networks and product flows increasingly dynamic. The Chinese market also brings in the additional complexity of catering to different channels across retail, hospital, government and provincial buyers resulting in government placing large tender orders which introduce more spikes in demand patterns. Linzell highlighted the need for building a robust network that accomplishes the dual objectives to support long-term growth while ensuring supply continuity and availability in the short-term.
  2. Sustainability is rising in prominence in the pharma industry: I attended several pharma industry events over the years. Sustainability was never discussed in a significant way in this space. However, DHL’s Larry Onge spoke of the top 10 hot topics driving forward-thinking, intelligent healthcare supply chains based on a recently conducted survey by his company. Sustainability made it into the list ranking at 6. Larry observed that cold chain logistics is certainly a contributor to this trend. He cited that temperature-controlled logistics leave 20% more carbon footprint, compared to ambient shipping. With 60% of the drugs by 2025 projected to be of biopharma, temperature-controlled logistics volumes will increase rising the prominence of sustainability. Incidentally, temperature-controlled logistics topped DHL’s top 10 hot topics. Rise of digital is something Larry talked about as well, citing an interesting fact that Apple now has a Chief Medical Officer. This comes as no surprise given the role like Apple watch are expected to play in patient health monitoring.
  3. Winning the war on cancer and the new supply chain challenge:In a highly provocative panel discussion, Laura Alquist of Kite Pharma and Carlo Guy of Novartis shared their experience of managing gene and cell therapy supply chains for CAR-T cell therapy wherein immunity cells from patients of certain types of cancers are extracted and are reengineered to recognize and fight the cancer cells then reinjected into the patient’s body. In this case, the supply chain begins and ends with the patient and is individually tailored for the patient, as the key inputs into the manufacturing process are the cells from the patient. This is a 100% made to order environment with on-hand inventory, as the cells need to be drawn from the patient. Traditional supply chain rules of protecting against volatility by stocking up on inventories do not work in this environment. Hence, responding to demand and order execution (there is a 0% margin of error) is essential to running this supply chain as compared to a traditional pharma supply chain. For now, CAR-T cell therapy is only approved as a third-line therapy after chemo and radiation for cancer patients. The panelists shared that with increasing interest in the field and as they get better at managing this supply chain and volumes grow, further efficiencies will be gained and the cost of therapy will decrease. They also shared that the planning and execution systems in place are geared more toward mass-produced drugs. However, personalized medicine supply chain has an altogether different nature. Technology solutions are emerging that are highly specific to personalized medicine that should make this supply chain more efficient.
  4. Emergence of direct distribution model: From a direct-to-patient distribution perspective, Amazon’s acquisition of Pillpack is forcing the likes of CVS, Walgreens and Walmart to try newer delivery models. However, at the event, rather than direct to consumer, most of the discussions in the direct distribution model were focused more on the distribution of drugs from pharma companies directly to the hospital systems bypassing the middlemen. It is a known fact that the drug distribution model in the US is highly inefficient. In fact, one of the presenters commented that while it costs his company a whopping US $260 to ship a pack of syringes to a hospital, the shipment when done through FedEx costs just US $40, highlighting the level of inefficiency and lack of transparency introduced by the middlemen. One of the attendees made an apt observation that the “middle model” in the Pharma industry was built from both ends (i.e., from hospitals as well as the pharma companies). Hospitals did not want to deal with each pharma company separately and hence gave life to the “middle” for consolidation and distribution efficiency, while pharma companies further fostered the model as they did not want to build warehouses and distribution capacities. However, much of the discussion at the event was focused on cutting out the middle layer and going directly from pharma to the provider. While this will be a welcome move, with it comes significant shifts in how the product flows through the network and changes to the networks themselves. Pharma companies and hospital systems alike should build competencies to reassess their networks and flow the product efficiently.
  5. Waging war on counterfeit drugs through customer partnering: In a highly informative fireside chat, Lynne Leckie and Chris Trent of Janssen Pharmaceuticals, a Johnson & Johnson (J&J) company, shared the problem of counterfeit drugs in pharma and how J&J is partnering with their customers in waging war on counterfeit drugs. They shared that about 10 to 15% of the world’s drug supply is counterfeit and the numbers are as high as 30% in developing countries. About $650 billion of total global economic value is lost per year in counterfeit drugs. They made an apt observation that supply chain is an amorphous entity with lots of entry and exit points. While sophisticated rogue players in certain countries are using industrial-scale production techniques to manufacture labels and packaging that looks very authentic, organized crime exists in certain pockets of the world such as in Latin American countries where dumpster diving practices exist. Disposed of vials and bottles of authentic drugs are picked up, cleaned and are reintroduced into pharma supply chains. Chris made an interesting observation that serialization, while a beneficial tool, is not a perfect solution to ensure authenticity of drugs. Success of serialization is impeded by the lack of a single governing entity, predication upon everyone in the chain of custody scanning the packaging, taking in product from another country and putting a serial number on it wherein the provenance of the drug cannot be fully traced, etc. He made a statement that at the end of the day, what one is authenticating with serialization is just the number on the packaging and not the contents themselves. The likes of J&J are now waging war on these counterfeit drugs by partnering with the providers and educating them on the means of counterfeiting. Providers have an interest in partnering with pharma companies as they are as much the victims as the patient population and the pharma companies themselves, of the counterfeit drugs. This is leading to doctors and nurses being able to identify counterfeit drugs, especially in developing countries. These providers are taking measures such as defacing the labeling before discarding medication or even smashing the bottles with sledgehammers so packaging cannot be misused by rogue actors! Overall provider education is a key aspect of fighting the war on counterfeit drugs.

There were a number of other compelling presentations on topics such as the role of supply chain segmentation, challenges of working with contract manufacturers, international logistics and Cold chain as a Service (ChaaS). However, as said in the beginning, it is simply not practical to cover all topics in a blog post.

All in all, the event clearly highlighted the massive shifts in the pharma industry as a whole and implications for the supply chains. Pharma companies are looking beyond the four walls of their companies in terms of expertise from broader ecosystem players such as technology providers, logistics providers, contract research and manufacturing organizations. Needless to say, pharma supply chain professionals have a tall task ahead of them in preparing for these massive shifts. But, gauging by the enthusiasm and the energy amongst the attendees, I will say they certainly have the right mindset to tackle these challenges.

Overall, LogiPharmaUS 2019 was a great event for learning, sharing and networking. I would love to hear your thoughts!