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SAP for Life Sciences

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Written by: Ruud Nieuweboer, SAP Life Science Consultant

With the coming ISO IDMP (2016) and Serialization (> 2017) legislation, many pharmaceutical companies are struggling to comply. Some follow an ostrich tactic and some are facing the complexity head on. The latter discover that hidden in this complexity, there are  opportunities in streamlining internal processes (ISO IDMP) and increasing revenues (Serialization).

How, you might ask?

In short, what is ISO IDMP? It stands for Identification of Medicinal Products.  ISO(1) has created five new standards. With these standards it will be possible to better track patient safety issues across countries/ brands and analyze the data for root cause analysis. A key element is the unique identification of the product and all of its substances.

"ISO IDMP will break silos and is a catalyst for harmonizing data."

ISO IDMP is all about data, most of the data is scattered and stored in various systems and controlled documents. For globalized companies, updating their data to a global standard will be a huge task. But, experiences from current projects learn that ISO IDMP will break silos and is a catalyst for harmonizing data. In the end this will result in a streamlined static master data process, where the advantages are numerous. Like reducing costs in administrative processes, better insight in shared materials where for instance substantial supply savings can be achieved. In a harmonized environment, data is also better interpretable especially when static and dynamic data is combined. Here Serialization steps in, this covers the dynamic spectrum of the data.

“With a serialized infrastructure a pharmaceutical company will gain more supply chain insight and become more attractive as a CMO or distributor.”

Serialization is another burning topic within the industry. The key thing about serialization is adding a unique number to the unit of issue (one or more levels beyond the batch level) for prescription drugs. The individual ‘packed product’ needs to be tracked throughout the supply chain to ensure at the point of dispense that the product is genuine and not counterfeit. The legislation will result in many changes  to be made to artwork, controlled documents, it-systems and packaging lines, against high costs without apparent savings or benefits. Is that really true?

 

The big pharma companies are already in third gear and have the funding and power to make these complex projects work. Most big pharma companies are even participating in the fora that discuss the future operating models for serialization. The mid-size market however is looking for ways to manage these projects at low cost, for example by sharing a platform, or taking a close look at the physical supply chain to see where changes can be made to minimize impact. Although the mid-market is feeling the pressure a business case can be made. Due to a serialized infrastructure a pharmaceutical company will gain more supply chain insight and become more attractive as a CMO or distributor. Investing in a serialized infrastructure is a strategic choice to effectively stay ahead of your competition.

 

ISO IDMP and Serialization are two main drivers for increasing patient safety, but both also have a big impact on the pharmaceutical companies process and IT infrastructure. The deadlines are deceiving, as they appear to be in the far future. The reality however is that the lead time of these types of projects is long. If the legislative pressure isn’t enough to start now, why not focus more on the possible benefits and create a business case?

1)www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=55034

By Steven de Bruijn


Private and business users benefit from cloud technology everyday, however it is not used to its full potential by the average regulated company yet. We need to understand what the cloud means for these companies, what the perceived obstacles are, and how to overcome these obstacles while fulfilling the regulator’s expectations.

“The Cloud”

Before we start, let’s define what the cloud is, and explore what flavors the market has to offer. Cloud computing is a very generic term, and suggests the idea of a “black box”. And in fact, this is quite accurate as the cloud is an abstract mixture of IT infrastructural components. Furthermore various sorts of applications can be deployed in the cloud, such as collaborative tools, ERP systems, procurement platforms, document management systems, and so on.

 

Typically, three models of services are distinguished for cloud computing:

 

  1. Software as a Service (Saas) - Configured applications, containing all infrastructure and platform components including hosting facilities, are delivered to the regulated company.
  2. Platform as a Service (PaaS) - Middleware, including all infrastructure and hosting facilities, is delivered to the regulated company. Middleware configuration, application installation and configuration are done by the regulated company.
  3. Infrastructure as a Service (IaaS) - Computational and storage resources, including all network components and hosting facilities, are delivered to the regulated company. Depending on contract conditions, the regulated company can install, configure and maintain the OS, middleware and software applications.

 

Another classification is found in the type of cloud, namely Public, Private, Hybrid, or Community. Simply put, in a public cloud the end users do not know who else has jobs running on the same external server, network or disks. While in a private cloud the infrastructure is designed and delivered for the exclusive use by the regulated company and may be located in-house or externally. For the specifics of each type, visit the National Institute of Standards and Technology (NIST) website at www.nist.gov.

 

Cloud providers offer several clear benefits such as extremely fast and flexible solution delivery, on-demand scalability, business continuity solutions, relatively easy solutions for backup and archiving, and reduced TCO on infrastructure components. This is a strong proposition at considerably lower cost than traditional in-house computing. So why not start immediately?

Obstacles

So aren’t there any drawbacks to cloud computing and its providers at all? Experience shows that many suppliers offer cloud services but lack understanding of the needs of a regulated company. They fail to recognize the most significant GxP risks. Chances are that dropping the term “Annex 11” will not ring too many bells. However, if regulated content is managed in the cloud, the solution should go beyond what is required of most non-regulated business applications. Most importantly, the cloud solution should be validated and auditable.

 

Some companies in the regulated industry seem to have a lack of understanding of what cloud computing is and, equally important, what the cloud is not. There still is a lot of ground to cover when it comes to agreeing on consistent terms that apply to the whole company, to understand the enabling technologies, and to recognize the interactions between the cloud and other applications. Such insights will convince your Quality department and prevent your quality controllers from misunderstanding the concept of a private or public cloud and overestimate the regulatory needs causing them not to allow for any cloud functionality at all. Last but not least, many regulated companies struggle to define their methods for validating cloud solutions. How to break down this struggle into manageable pieces focusing on regulator’s areas of interest?

Cloud Compliance

For computer system validation, the regulated companies traditionally rely on their IT department which owns and manages the corporate IT infrastructure. This way the regulated company would set up and qualify their own machines, platforms, and environments for development, acceptance testing and live use. The software supplier would be audited, and ultimately the implemented system would be validated.

 

In case of cloud computing, an entirely different approach is required depending on the cloud model used. In any case, the regulated company is accountable to the regulatory authorities for the compliance of the IT infrastructure (IaaS and PaaS) and (GxP-)applications (SaaS) that are used. This accountability cannot be transferred to cloud providers. The central goal of validation for the regulated company is to verify that the cloud provider conducts appropriate control over the cloud solution. This all starts with auditing the supplier to clarify what services will be provided and how they will be implemented, managed and controlled, and maintained.

 

In models 2 & 3 (PaaS and IaaS), the supplier qualifies and controls the infrastructure. It is the responsibility of the regulated company to verify that appropriate control is in place. Applications are owned and controlled by the regulated company in this scenario. Therefore, the validation of the applications will be similar to validating applications the traditional way, apart from some cloud-specific risks or issues.

 

Validation becomes more complex in a model 1 (SaaS) scenario, because the regulated company is not the owner and controller of the application, yet still responsible for validating the GxP SaaS application. The application is already installed and configured by the supplier and can’t always be reconfigured or customized to meet the regulated company’s requirements. The approach we propose is to assure that the application meets the requirements by verification through formal testing. Furthermore, verify that the split of responsibilities and tasks between the cloud provider and regulated company are documented in e.g. a formal SLA, as this is an Annex 11 (§3.1) requirement. Also ensure that appropriate control is conducted by the cloud provider, and establish procedures for use of the application.

Why go through all this qualification and validation effort?

Besides obvious reasons such as mitigation of your GxP and business risks, another driver should be the fact that the regulators are increasingly sticking their heads in the cloud as well. An auditor will be interested in what risks have been defined and how these are mitigated. Attention will be paid to how the integrity of your regulated data is assured, and what data backup and recovery measures have been taken. Compared to a traditional hosting model, more emphasis will be placed on cyber security for the networked cloud systems and to what extent privacy is safeguarded. Because a system in the cloud is as secure as its host, regulators will examine your supplier audits, assess SLAs and contracts you agreed on with your supplier, and inspect the supplier’s quality system.

 

New approaches for auditing are crucial, requiring cloud-specific IT technology knowledge, awareness of current IT certifications, understanding of legal aspects, and GxP & CSV knowledge. Goldfish ICT is developing compliant strategies and validation best practices on utilization of the cloud in a regulated environment. We enable our relations to adopt this technology, while maintaining control of their IT landscape in a consistent manner. We would be very interested to share our findings and current state of knowledge with you. If you have any questions or remarks, please contact Steven de Bruijn, who is more than willing to get in touch on cloud computing in a GxP context.

Wearable health-related devices offer great opportunities. As cardiac electrophysiologist Kevin R. Campbell states in one of his blogs, more data is better. He finds that it enables better decisions based on facts, and it can provide least a bit more control for patients to control their illness, which he claims to be especially true for people with chronic diseases. I would agree. I also see opportunities for innovating drugs and devices, as the data can be analyzed according to different patient populations for the development of better and more tailored treatments. If only the devices and apps were already broadly accepted! There are many privacy concerns out there, one writer even calls wearables a “privacy nightmare”.


I think building trust is possible, but some effort is necessary. Some first evident points, most of them inspired by Alison Diana’s commentary in InformationWeek:

  1. All involved parties, e.g. physicians, patients and researchers, set up and confirm by signature their buy-in into common guidelines which data is generated and how the data is used
  2. This should be followed by detailed instructions and education what this concretely means during daily life and execution for everybody who deals with the data
  3. Track, trace and control data from its generation, to its distribution when, where, from who to whom until who accesses the raw or aggregated anonymized data and when, which allows for higher control if everybody follows the rules
  4. The patient needs to get full transparency on all above mentioned points, get access to every detail that concern him or her to be able to wipe out concerns, and the patient needs to be authorized to intervene when necessary
  5. The solution has to be validated and trustworthy

 

There may be more points to consider. It definitely needs some work and investments to achieve broad acceptance, but I think it will be worthwhile!


Want to read more about medical wearables? Here are some more blogs:

  1. Wearable Medical Devices: Always On for Better Health
  2. Making Medical Wearables Work: Top 3 Traits to Keep in Mind

What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAP_Healthcare!

As pointed out in my previous blog "Wearable Medical Devices: Always On for Better Health", medical wearables may be the next big thing. Like probably any new trend, there may be some show stoppers out there. Mainly, who will accept a wearable medical device if it’s not trustworthy? It’s all about effectiveness, quality and safety.


1. Effectiveness:

What comes into mind first, is especially related to devices that monitor health indicators and life style. Will higher transparency really change behavior in a positive way? Do patients really want this kind of being watched – I mean do they truly want it. Everybody who has broken up a diet at least once in a life knows the difference between initial motivation and long-lasting will. Of course when medical wearables relieve from severe suffering, patients won’t go without them anymore. Secondly, do physicians have the capacity and tools to handle the additional information intelligently?


2. Safety:

Any kind of side-effect should be avoided. Side effects can be related to the body, e.g. google glass is suspected to have some health risk. Side effects may also relate to external actors trying to access your private data and misuse them. This is such a big concern that I will add a separate blog about privacy.


3. Quality:

This seems to be a no-brainer – when it’s about health, any measurements have to be precise, and all functions have to work perfectly. Otherwise the medical wearable would just contribute to confusion, false alarms, wrong actions or even worse consequences. And there are concerns that some medical apps don’t meet the high quality standards as they should. Depending on the feature of the wearable, quality also comprises sophisticated technical service for the customers and maintenance. As one of the main features is to be “always on” for improved health, manufacturers need to make sure to prevent a device gets broken, so they need excellent predictive analytics capabilities and the ability to deal with a huge amount of customer data rapidly in order to respond timely.

 

From companies that are not experienced with authority approvals for life sciences products, efforts do be done in order to get approved are sometimes under-estimated. However, it makes sense to double check if a wearable is classified as medical device. For example, the U.S. Food and Drug Administration (FDA) has just recently published their guidelines for Mobile Medical Applications, which points out a risk-based approach. If a mobile app poses minimal risk to patients, premarket review applications, registrations or listings are not necessary, e.g. apps providing regular educational information

 

So, when a manufacturer can tick all boxes mentioned above, technically the medical wearable is ready to take off. There is one more question remaining: What is about data privacy regarding wearables used to improve health? As this topic is hot, please find more about it in the next blog “Will Wearable Medical Devices Break Through? – Talking about Broad Acceptance and Privacy”.


What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAP_Healthcare!

The wearable market takes on pace – especially in the healthcare and medical devices space. Opportunities to improve health through “always on” diagnosis, constant monitoring of health indicators for preventive or therapeutic reasons with possibilities of instant alarming the patient, doctors or family and friends, and even direct therapeutic features are just too promising. Experts predict a multi-billion USD market to become reality in the upcoming years. Medical wearables can be basically grouped into two major categories: devices used in diagnostics and devices used in medical treatments.

 

1. Wearables supporting health monitoring and rehabilitation

 

Wearables supporting health monitoring and rehabilitation are already wide-spread: bio-sensors are able to track heart beats (ECG), stress through skin reactions (electrodermal activity), brain activities (EEG), respiration, sleep quality, body temperature, steps, calory burn, plunges – you name it. This can be done through wrist bands, watches, smart glasses, plasters, smart tattoos, or devices through devices you can wear around your waist or torso. Intelligent textiles like smart suits or even smart bras might also become serious business in the near future – who knows?


One big bet the big players are keen to win is around wearables that are able to facilitate glocuse monitoring through minimal or non-invasive wearables that leverage electricity or ultra-sounds. Some insiders say Google invests billion USD in research in glucose monitoring, and also Apple as well as the big medical device players are in the game as well. The market would be massive not only because of the growing number of diabetes patients, but also as this might lower the barrier to use these devices as soon as they might become affordable, so that the use case could broaden up for diets as well.

 

Bio-sensors a bit apart from what you would classically associated with wearables – but too fascinating not to mention here – are self-implantable devices that work under the skin and smart pills that contain technology to monitor glucose or heart rates at high precision.

 

Opportunities for Collaborative Care

 

All these diagnostics wearables can improve remote monitoring and home healthcare, but what is even more, they also enable to include friends and family to support therapies – when this is wished by the patient. For example, they can be alerted in real time on health risk before the patient status gets critical. Or, they can participate in a more healthy life style of the patient through gamification elements. As the data can be aggregated and anonymized with in-memory technology, there are new opportunities for collaborative research between life sciences companies, clinicians and other researchers enabling multi-disciplinary approaches for personalized as well as evidence-based medicine.

 

2. Wearables is supporting therapies and physicians

 

The second big part of medical wearables is around therapies and supporting physicians. This covers many traditional medical devices like pacemakers, voice modulators, and others. More recent example that are prominently present in the media are smart glasses supporting physicians during appointments with patients as well as during and after surgeries. Where will the future head to? I found one interesting blog that lists new ideas like wearables that are able to deliver acupressure to reduce pain, influence eye pressure, affect blood circulation micro and needle patches for acupuncture or drug delivery. There might be also opportunities to power up such new medical devices with solutions from SAP, e.g. mobile solutions in order to create tailored apps, or in-memory-technology in order to analyze data generated from the devices.

 

 

Which wearable medical device will be the next big breakthrough? This will heavily depend on their reliability, efficacy and acceptance by authorities, physicians and patients.

 

Would you like to read more about this? In this case, check out the following two blogs as well:

  1. Making Medical Wearables Work: Top 3 Traits to Keep in Mind
  2. Will Wearable Medical Devices Break Through? – Talking about Broad Acceptance and Privacy


What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAP_Healthcare!

This blog was written jointly by Chuck Pharris and me. I would like to express to Chuck my appreciation for his inputs, research, and contribution and thank him for his fantastic engagement!

 

 

 

The life sciences industry has long been associated with innovation. This innovation is not only the perceived heart of success in this industry, it is the life-blood of a vibrant economy creating jobs, increasing productivity and resulting standards of living.


Organic growth through innovation has not been the only key for success of life sciences companies. The industry also went through a period of high profile M&A activity in the 90s already with a resurgence in the last year and an especially high degree of activity in Q1 this year with 49 deals vs 35 in the same period of 2013. News catching headlines have included Pfizers record setting $119B bid for AstraZeneca, Valeants attempted hostile takeover of Botox maker Allergen, Novartis and GlaxoSmithKline asset swap, Mercks divestiture of its consumer care business to Bayer.

 

In spite of the skepticism of achieving success in these large megamergers given the challenges of large scale integration, McKinsey and Company report analyzed the success of the top 20 pharmaceutical companies by revenue in 1995 andtheir subsequently M&A history showing they created shareholder value, generated greater economic profit, and even changed long term performance expectations.

 

The challenges these former mega-mergers faced and the recent M&A activity all face success challenges more core to traditional business operations than new single drugs or technologies. In particular, some drivers of mergers this year have centered around:

  • Margin Improvement: Novartis established an internal business services unit targeting $6 billion worth of expenses it oversees. Teva is seeking to reduce half of its 75 manufacturing facilities it acquired through acquisitions.
  • Business Focus: Novartis is swapping assets with Glaxo Smith Kline in a series of transactions worth $25 billion to better focus their mutual core competencies. Novartis expects this to improve its core operating profit by 2.5%. The Harvard Business Review highlights a variant of this M&A frenzy in life sciences “David-Goliath partnerships” described as an alternative to the all or nothing disrupt or acquire view of startup competitors. Abbott spun off Abbvie and with it all of its big name drugs, including Tricor, Niaspan, and Humira, the blockbuster anti-inflammatory with greater than $10 billion in sales. Baxter plans to spin-off its biotech business in 2015 enabling it to focus on its core medical technology business.
  • Tax and Cash Incentives: Another growing trend is the pursuit of US companies of reverse acquisitions where a larger company buys a smaller foreign player and relinquishes the headquarters to this smaller company location seeking more favorable tax treatment or enabling them to utilize foreign cash reserves without repatriating the cash into the US tax structure.  Medtronics recent $42 billion takeover of Covidien, which is operated from Massachusetts but is incorporated in Ireland, is reported by Bloomberg as the “biggest yet to renounce its US tax citizenship”. Covidien gets the majority of its sales from the US where 19 of its 41 factories are located.  Its headquarters location originally shifted with its parent Tyco to Bermuda in 1997 and then spun off as a Bermuda company before switching to Ireland. This will also give Medtronic access to its $20.5 billion in cash held overseas without the 35% US corporate income tax it would have to pay if brought into the US.


The performance bar is growing given the maturity and market consolidation. The financial and operational challenges of these increasingly complex global enterprises grows on all aspects of finance, accounting, trade, R&D coordination, manufacturing and supply chain management, and overall ovation oriented collaboration. 

 

How can SAP help bring margin improvement, better research and collaboration to achieve greater business focus, and manage the complex financial and operational requirements of these global enterprises? Just a few illustrative examples:

  • Faster analytics for better strategic decision-making: Our solutions help getting the insights companies need to understand their performance as well as the root causes for it. The ability to run future scenarios quickly enables companies to make fact-based decisions ranging from decisions on M&A, product portfolios, global manufacturing plants, HR, customer-related questions, finance and tax – there are no limits.
  • Improved R&D processes: SAP HANA helps analyze genomic and proteomic data, and with solutions for R&D from SAP and our partners, companies can increase efficiency of Clinical Trial Supply Management and streamline project management.
  • Margin improvement through increased operational efficiencies: With an integrated solution that SAP offers, companies can standardize and consolidate operational processes globally across plants, such as Manufacturing, Supply Chain Management and Serialization, as well as Procurement and Management of CxOs. All this can be especially beneficial for achieving quick RoI after M&A.
  • Flawless post merger integration processes: Flexible and robust HR solutions by SAP allow companies to manage change, maximize employee loyalty, to identify and retain best talents, and to boost productivity.

 

To learn more about we can help you with your business challenges please have a look at the Life Sciences web pages on sap.com!


What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter at SAP Health Sciences!

No matter if it’s about strategy, innovation, regulatory compliance, quality standards, or responding to requests from physicians and other customers – all the different parts within a life sciences company have one thing in common: the race for the highest precision.

 

Speed and precision may not always go hand in hand, but enterprises who champion in both disciplines will lead the game. It’s the deep insight on small pieces and single processes as well as the ability to extract the essence of the big picture in real time that makes the difference.

 

It’s the ability to find out specific scientific breakthroughs and on market trends earlier than competitors as well as to simulate the future to be able to identify the right decisions resulting in competitive differentiators. It’s the power to analyze terabytes of data on genomes and proteomes quicker and to launch new drugs and medical devices faster that turns companies into first movers. It is the capacity to analyze each plant and each batch in real time to be able to detect risk of non-compliance and to define the right preventive actions early on that delivers the highest quality and cost advantages. It is the competency to respond to requests of thousands of patients quickly but forward-looking that eventually builds trust and customer loyalty.

 

Many life sciences companies ask us how SAP can support both, achieving precision in detail and utilizing exactly these little details as a sound basis for a clear view on the complete Life Sciences universe without losing time just crunching data. SAPPHIRE NOW offers the opportunity to get the answers through discussions, live demos, and best practices.

 

Are there other aspects you would like to discuss with us to win the race for the highest precision? We very much look forward to welcoming you at our Life Sciences Expert Table IN 113!

Yes, quality has its price, and yes, the global demand for drugs and medical devices is high. For these reasons, Life Sciences is an attractive area for some market participants to play a different and dangerous game offering falsified products.


The drivers for this behavior are sometimes lower price; sometimes higher margin. Either way, for patients and the concerned companies, this is more than just unpleasant. The recent scandal of PIP breast implants in Europe and an open letter of John J. Castellani, President and CEO of the Pharmaceutical Research and Manufacturers of America illustrate how severely counterfeit drugs and medical devices can impact health – and unfortunately, there are many more cases out there.

 

In order to combat counterfeiting of drugs and medical devices and to increase security, new serialization regulations in life sciences around the world are being established. The unique device identifier and the Drug Safety Quality Act are prominent examples, but they are not the only ones. Complying with all existing and upcoming local regulations in the rapidly changing world of serialization is complex.

 

Preparing for the new set of regulations in a timely manner for each region is challenging. Should life sciences companies start now and try to interpret the rough guidelines that are already available? Or should they wait until more details are clear and implement very fast at a later point of time? This won’t be easy, as they need to integrate with suppliers, contract manufacturing organizations, warehouses, plant shop floors, wholesale distributors and other third parties. How will life sciences companies validate and monitor all serialization activities? And how can they efficiently manage the massive data volumes associated to all this?

 

We would like to discuss with you different approaches on how to secure patient safety and how to put serialization into practice. Meet us at SAPPHIRE NOW at the open microforum discussion “Maximize the Quality of Drugs and Medical Devices Efficiently in Real Time”, June 4, 2014 at 3 p.m. at IN137 and at our Life Sciences Expert Table IN 113! We look forward to seeing you.

Life sciences companies need to be wide-awake to keep up with the fast pace of market changes. Scientific and technology progresses, healthcare reforms in mature markets, and globalization are just a few factors that drive competition on the one hand, but that also offer new opportunities for innovation in areas like  personalized medicine. M&A keep on growing, new strategic directions and collaboration models in the health sciences sector are on the horizon, and at the same time the focus on operational excellence to ensure efficiency, compliance, and quality is here to stay.

 

Art or science?

 

Where should pharmaceuticals, biotech and medical devices companies start to stay ahead of the curve? Some part of the answer may sound like pure science: control and optimize your processes continuously, hire and develop the best talents, and analyze market trends to underline your strategic decisions. Practitioners know that this not only requires analysis, focus and discipline, but also whole lot creativity. They may say that mastering all this is even an art – especially because rivals never rest.

 

Get inspired and check facts with other front-runners!

 

Sharing best practices has been a proven recipe for reality checks and for inspirations for brand new ideas. SAPPHIRE NOW and ASUG offer you the opportunity to do right that.

 

Start with a deeper look into strategies in the life sciences industry and on innovating drugs and medical devices. Learn how CareFusion simulates strategic planning with greater speed and precision, how Endo’s approach on analytics looks like and how Medtronic is using data-driven innovation to create a holistic view of care. Discuss about the opportunities of data modeling in life sciences, and learn why Varian moved to SAP HANA, how Animal Health explains the RoI of SAP HANA, and don’t miss how SAP HANA enables new discoveries in genetic research. Talk with peers and SAP experts about improving clinical productivity and patient outcomes while respecting patient privacy, overcoming complexities in clinical supply chain management, and see how life sciences companies can benefit from in-memory technology in R&D.

 

Customer-centricity in sales, marketing and services is key to stand out. See how patients, care providers and the life sciences industry can collaborate to improve treatments, learn how Medtronic gets deep customer insights and optimizes the patient experience, how Animal Health improves pricing performance and how Novartis Animal Health generates metrics on customer-360, segmentation, market-opportunity, and brand-effectiveness. Round up this chapter with a discussion about how to offer outstanding services for medical device customers.

 

Cost-efficiency, compliance and quality build the core of your operations – so find out how you can get even better. Join the session with Medtronic on how to benefit from real-time analysis in quality management and IT, hear what Varian Medical, Larsen & Toubro and GE have to say on responsive manufacturing, how Varian Medical optimized Manufacturing Execution and share best practices on serialization and innovations in manufacturing drugs and medical devices including predictive analytics. Get to know how you can improve supply chain management in Life Sciences, how you can calibrate and maintain assets on the go, and how to best perform signal detection and maximize quality in life sciences.


In the end, it’s your people who make all this happen. Explore how to encourage learning in regulated industries, how Eli Lilly effectively runs Employee Self Services, how Johnson and Johnson boosts payroll processes with SAP HANA and how Hospira changes the face of SAP with their new UI strategy.

 

Are you missing anything that should be covered at SAPPHIRE NOW and ASUG? The programs are packed – so I’d love to help you find the right sessions! Share your feedback and thoughts in the chat box below, on contact us on twitter @saplifesciences, or meet us at the life sciences expert table.


We very much look forward to welcoming you there, very soon!

Life Sciences companies have reached a tipping point with a recent sequence of external events forcing the industry to re-evaluate their strategies and rethink their goals. On one hand the drug patents for some of the most blockbuster drugs started to end from 2011. This phenomenon referred to as ‘patent cliff’ is expected to continue for the next five years.  It means that medicines that currently generate $133 billion in U.S. sales alone will face generic competition, according to Evaluate Pharma.  On the other hand there is a growing decline in US prescription sales to the lowest in decades. The projection from data firm IMS Health shows the global prescription drug market growing by 3 to 6 percent over the next four years to $1.2 trillion by 2017 compared to a growth rate of 5.4 percent in the last four-year period. These coupled with the ever-increasing R&D costs have mandated the companies to find new ways to save costs to counter diluting revenues and redirect money back into R&D.


The Outsourcing Conundrum for pharmaceuticals

 

Outsourcing is one of the major trends in pharmaceutical business, motivated in part by efforts to reduce costs and increase ready access to specialized capabilities and services. This is a natural evolution beyond back office outsourcing like finance and accounting and information technology, of which pharmaceutical firms have been strong adopters. Companies are increasingly outsourcing activities previously considered core internal processes ranging from formulation, lab services (assay testing, toxicity testing), validation processes, clinical trials, downstream production and regulatory advice.

 

Supplier Management: A strategic imperative

 

There are, however, challenges associated with outsourcing especially in an industry like life Sciences. Companies now have to manage a large number of fragmented outsourced processes, which in itself may result in unintentional inefficiencies. Thus, there is a need to consolidate, streamline and manage suppliers consistently and efficiently to mitigate related risks.  Supply risk is typically associated with single source suppliers – API, specialty components. Supplier risk management is needed to identify potential new suppliers, analyze these new suppliers, and score them on key performance indicators of price, quality, reputation and service.  Companies generally communicate the score back to suppliers and allow them to act on the feedback and continually measure the improvements. Once a supplier is finalized, they need a host of services to help simplify and streamline the commerce process for both buyers and suppliers – from automating key purchase, invoice, and payment transactions; to accessing community-based insights and services  like dynamic discounting, receivables financing, and community-based ratings and market data.

 

From supply chain to a supply network

 

The industry also needs to have a re-look at the supply chain. In fact, it needs to think not about supply chains — with their sequential orientation — and more about supplier networks with multiple points for obtaining information and taking action. Companies should have access to supply chain insights enabling faster and more informed decisions aligned with direct and indirect spend, supply, inventory, and fulfillment goals. They should support serialized item traceability to allow monitoring of condition of goods and provide authentication service/ pedigree information and enable faster recalls.

 

Outsourcing and offshoring of the pharma and life sciences industry in its many forms has resulted in significant benefits — revenue growth opportunities and lower costs for companies, lower costs for patients and greater access globally to life-saving and life-enhancing products. Yes, it is fraught with insidious challenges and invidious risks companies have not seen before. To counter them a well-orchestrated and thoughtful outsourcing strategy is needed to achieve multiple benefits that many are not currently achieving. The best practices are here and you don’t need a weather man to know which the way the wind blows!

 

You can read the full blogs along with the infographic at http://blogs.sap.com/innovation/industries/manage-strategic-sourcing-and-procurement-complexity-in-life-sciences-0125083…

As the Life Sciences industry finished the first decade of the 21st century, the focus was and has been on restructuring the portfolios to reduce costs, grow revenue and transform their business models to align with reduced margins given the end of the blockbuster drug model.  Examples of this trend included:

 

  • Pfizer divested their animal health and nutritional divisions as they focused their organization the pharmaceutical segment.

 

  • Abbott Labs spin off their branded pharmaceutical business, now known as Abbvie, that now focused them on the remaining consumer products, generic pharmaceutical and  medical device & equipment divisions.  

 

  • GlaxoSmithKline spun off a number of consumer divisions as they focused on their higher selling and higher margin brands.

Recently, it appears we are seeing the end of this phase and the start of a new period of mergers & acquisitions that has begun to accelerate at a very rapid pace.   Amgen’s acquisition of Onxy Pharmaceuticals highlighted the increasing value of drug pipelines powered by continued lost revenue from patent expiries and continued challenges of getting new drugs & devices to market but this was merely a signal of things to come.  

 

In my previous blog, Life Science Paradox: Creating Opportunities During Times of Tremendous Change,  I highlighted how companies needed to transform their organizations to enable globalization, profitable growth, operational excellence and increased employee engagement but the acquisition strategies that have emerged in the last few weeks will accelerate and complicate those efforts.   Pfizer’s $105B+ acquisition of Astrazeneca, GlaxoSmithKline and Novartis’ oncology and
vaccine exchanges combined with a consumer products joint venture  and Valeant’s acquisition of Allergan highlight how organizations are willing to go to any length to ensure the growth, margin and shareholder value of their portfolios and, ultimately, their companies.      

 

Finally, the coming weeks will continue to see additional activity as companies respond to the new market dynamics and competitive landscape.   An organizations ability to manage the increasingly vast holding companies on a global level will be essential to maintaining profitability and avoid the loss of scale across their global operations.    Driving top line revenue only, without a focus on globalization, profitable growth, operational excellence and employee engagement, will fail to achieve the competitive advantages intended by the global categories, segments and brands created through the acquisitions. 

 

To learn more about we can help you with your business challenges please have a look at SAP's Solution Explorer for the Life Sciences Industry.

 

What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAPlifesciences

Track and trace (also referred to as serialization) is one of the most important topics for pharmaceutical manufacturers at the moment. How can businesses not only suffer but profit from these new regulations? SAP solution extensions by Vistex provide additional value for pharmaceutical manufacturers regarding serialization.

 

The track and trace regulation was introduced to combat drug frauds. The serialization is not only a matter of registering the serial numbers of medicaments, it also results in a complete transformation of the supply chain of pharmaceutical manufacturers. The reason for this is that it implies the way businesses manage their stock and register their goods. Furthermore, it also influences the reporting of authorities that sell the products. Some countries like China (with some limitations), Turkey, India (with some limitations on exported products) and Argentina (with some limitations) already require a serialization of medicaments. In some other countries the serialization will be mandatory soon like for example in Korea starting 2015, in Brazil starting 2016, in Saudi Arabia starting 2016 or in the EU starting 2017. As pharmaceutical manufacturers (also referred to as laboratories) are distributing globally, these worldwide legislations impact them highly.

 

Pharmaceutical manufacturers can use the requirement of serialization for improving their business processes. How that? As serialization will bring better quality of data, businesses can improve the controlling of their finances. Let´s take chargebacks as an example. The chargeback process can be very labor intensive especially in reconciliation and revenue losses. By incorporating the serialization into the chargeback process, businesses can get a better control of the process. This is where SAP solution extensions by Vistex can provide additional value. The SAP Paybacks and Chargebacks (PBCB) by Vistex solution incorporates the serial number in the chargeback process resulting in laboratories being able to extend the control of their paybacks and chargebacks processes.  Additionally they can ask their distributors to include the serial number in their claim which simplifies the whole process. This gives the manufacturers full control of their inventory benefitting them in getting accurate claim reconciliations.

 

Main benefits for pharmaceutical manufacturers using SAP solution extensions by Vistex are:

  • Reduction of chargeback discrepancies: As the price of a medicament is saved by the serial number as well, the distributor’s claim can be automated based on the serial number of the product. Additionally, manufacturers can control if distributors claim for serial numbers they have not received.
  • Avoidance of duplications: In case a product is returned to the manufacturer it is not possible to claim the product again as with the help of the serial number, the manufacturer can record the interactions and sees that the product has already been returned resulting in avoidance of duplication of claims.
  • Omitting reverse chargebacks: Reverse chargebacks occur when a product is sold or a chargeback failed. As a result the product is returned to the manufacturer which generates a refund of the chargeback from the distributor to the manufacturer.
  • Reporting to government: Reporting of every single serial number to the government due to claim serial numbers supplied and received via claim.

 

Pharmaceutical manufacturers can benefit and take advantage of the legislation requirement that at first glance looks like it only impacts the distribution of products. By using the SAP Paybacks and Chargebacks by Vistex solution, pharmaceutical manufacturers have a better control of their chargebacks and can be more accurate.

 

SAP Paybacks and Chargebacks by Vistex also has the functionality to incorporate the serial number in the commercial aspects giving the possibility to determine rebates and other sales incentives.

Fools ignore complexity. Pragmatists suffer it.  Geniuses remove it.”      Author unknown

 

The last five years have seen the evolution and, in some instances, revolution across the Life Sciences and Healthcare industries.    Increasing regulations, policy reform & patent expiries continue to transform the industry with one of the bi-products being a move from on-premise to cloud technologies.   Note the following:    

 

 

  • Europe, also a mature market, has been moving, albeit at a somewhat slower pace, to the cloud but concerns over patient & corporate privacy have them responding more cautiously given the investigations over widespread corporate spying like he NSA scandal in the US. 

 

  • In emerging markets, Life Science companies are leveraging cloud applications to quickly adopt the process standardization to support their processes which, in many cases, do not include “GXP” areas like manufacturing, sourcing or quality but, rather are primarily finance and sales focused facilities.    

 

Companies must embrace the need to move to the cloud for commodity areas like Procurement, Sales, HR and IT but must do so in a way that doesn’t increase complexity and cost, in the long run, as a result.   Without a solid cloud integration strategy, organizations will simply transfer the IT costs from one area to another but now with limited or no visibility due to the siloed nature of the cloud applications.

 

Further, cloud applications typically have a rapid enhancement & patch methodology that will create significant challenges for “GXP” areas regulated by agencies like FDA.   Without a thoughtful approach that addresses oversight, governance and documentation, organizations will be overwhelmed by complexity and frequency of the revalidation efforts and will, ultimately, fall out of compliance.   Companies need to have a “hybrid” cloud strategy that allows them to pick and choose where to leverage the cloud in order to reduce cost, improve adoption and minimize risk while still maintaining the visibility and compliance that are pervasive in their on-premise environments.

     

To learn more about we can help you with your business challenges please have a look at SAP's Solution Explorer for the Life Sciences Industry.

 

What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAPlifesciences

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Pharma has been a high value goods business in the last century. Most of the exports were by air. As pharmaceutical margins have decreased and low cost generic volume has increased, some companies have shifted their mode of exports to sea.  This shipping alternative to traditional air freight can save companies millions of dollars if planned and executed well.

 

 

A recent customer interaction was with a multibillion dollar pharmaceutical company, under an operational cost reduction mandate. We were in discussion with the transportation function to understand the profile of operations. Then a certain number struck us – about four-fifths of the company’s export was by air. The mode optimization appeared as an unexplored goldmine as shipment by sea costs about five to seven times lesser than air. If you are a generics pharma manufacturer exporting a billion dollar worth a year, just consider the magnitude of savings - for every 3% points increase in proportion of exports by sea, you save a million dollars every year.

 

There are many reasons a company would transport certain products by air – for high value products, Make to Order products with stiff lead times, inventory shortage in destination markets for Make To Stock products, products in the beginning or the end of their lifecycle.  However most of the shipments for generic pharma companies do not have the above constraints. The temperature control is far superior in sea shipments with products in controlled temperature in containers. Also reduced emissions by sea will in turn help companies meet their sustainability targets.

 

The biggest challenge against sea is the smack from sales in case of any loss of sales opportunity. An agreed list of rules for exigencies based on wide parameters and alert system running on an integrated supply chain solution is a must.

 

With the present crop of integrated supply chain execution solutions with wide real-time visibility, transportation mode optimization has become easier. Sales order integration enables a longer planning horizon, hence enabling mode selection at an order level. An alert for expedition based on multiple parameters through the supply chain, changes the mode to air to avoid any sales loss.

 

Load forecasting and consolidation planning plays a pivotal role in enabling higher sea shipments. Planned container level load consolidation will enable timely dispatch of containers. Orders where shipments cannot be consolidated to a container level for certain markets due to lack of volume would be marked for air-shipment at planning stage.  As per out studies, only 23%* organizations have product forecast translated into transportation requirement forecast broken down by mode and lane.

 

Exception alerts would ensure timely corrective actions to avoid loss of sales opportunity. As per our studies, only 15%* organizations have alerts captured and routed along a pre-defined workflow and resolution options dynamically proposed to the decision-maker.

 

The pharma industry as a whole seems to be utilizing sea cargo to move more product.  As per IATA, the proportion of air cargo has fallen gradually from 17% in 2000 to 11% in 2013. We may see continuation of this trend with companies pressed for margins in these times of stagnant growth.

 

*Figures based on overall SAP Benchmarking database, 2013

 

If you liked this blog, please also read my previous blog “Electronic Tendering is the Future for Logistics Providers"

Albert Einstein once said, “We cannot solve our problems with the same thinking we used when we created them.   This is an interesting point of view given the magnitude of the changes that are underway across the health sciences industry in 2014.

 

In the “go, go” days of the ‘90s and early 2000s, life in the life sciences industry was great given the healthy pipelines and high margins that could obscure the need to improve efficiencies, reduce costs or focus on anything other than producing the next blockbuster drug or product.    

 

Of course, today’s reality is a very different place.   Life science manufacturers must not only focus on developing innovative drugs and devices but they do it with smaller R&D budgets with a focus on operational excellence that was never required in the past.    Organizations must reduce costs, improve productivity and increase revenues by getting products to market faster through new and more innovative ways.  

 

More specifically, the new paradox in the life science industry requires companies to transform their organizational operations & processes and ensure that they are, at a minimum, focusing on the following:  

 

  • Enabling Globalization:   life sciences companies must leverage their global buying power, standardize global processes, leverage common master data and think globally to avoid the redundancies & inefficiencies of the regional operating model.   This provides a huge competitive advantage from a profitability perspective and has become a must have strategy in 2014 and beyond.  

 

  • Creating Profitable Growth:  organizations must open new and innovative channels to get their products to market in the “digital age”.    This would include traditional channels such as wholesalers but also innovate with new channels such as direct to patient as organizations seek to drive top line revenue but though effective channels that can do so with low transaction costs.

 

  • Enable Operational Excellence:  as the generic and branded markets begin to converge, enabling operational excellence is becoming a baseline requirement whose goal is to increase productivity, reduce inefficiencies and eliminate costs wherever possible.   Further, as I highlighted in my previous
    blog “Leveraging Technology to Improve Therapeutic Outcomes & Reduce the Cost of Care”, organizations must adapt to leverage the breakthrough technologies that can transform processes and markets to create tremendous competitive advantages.   Without flawless operational execution,
    organizations will be unable to compete. 

 

  • Increasing Employee Engagement:   as process efficiencies continue to improve organizations must leverage their vast enterprise, operational and performance data to transform the employee experience by providing real time, predictive analytics that anticipate problems & identify opportunities before they are apparent to the “siloed” employee.   In my previous blog “Finding the Therapeutic Needle in the Healthcare Data Haystack”, organizations must utilize the operational data to create the analytics for the “millennial” employee of today who is more digitally astute than previous generations to empower them to make the real time decisions.

 

In short, organizations need to seize the moment to capitalize onthe opportunities that are presented during times of tremendous change.    Focusing on execution with an eye on innovation of business models that provide allow partners, physicians and patients to easily interact with your organization will, ultimately, win the day.

 

 

To learn more about we can help you with your business challenges please have a look at SAP's Solution Explorer for the Life Sciences Industry.

 

What do you think about the issues discussed here? Continue the conversation in the comments below and on Twitter @SAPlifesciences

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