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SELLING A LIFE SCIENCES BUSINESS finance SUPPLY CHAIN biopharma LIFESCIENCELEADER.COM 44 By L. Garguilo MARCH 2015 BIOPHARMA LOOKS INTO THE SUPPLY CHAIN MIRROR: WE'RE THE PROBLEM It's like a scene from a Brothers Grimm folk tale. One late afternoon at an industry conference, a cross section of biopharmaceutical leaders gather in a room to take a hard look into a large mirror. It reflects that they — not their suppliers or service providers, as was assumed — are culpable for, and thus can control, many of the product reliability problems in their supply chains. ccording to Marla Phillips, co-chair of PharmaLink Conference and director at Xavier Health, "It was a sudden and profound paradigm shift." The gathering is a culmination of months of investigation into these questions: Why isn't the drug product supply more reliable, and why can't we assure greater consistency in product quality for patients? Attendees from companies such as Boston Scientific, Cook, Eli Lilly, General Mills, J&J;, Kroger, Merck, Meridian Bioscience, P&G;, and Shire know the data is conclusive; in fact, the data is culled directly from the manufacturers themselves. "I remember the meeting clearly," says Phillips. "The silence when we said, 'Your own data is showing you are causing the lack of reliability in your products.' Then you heard comments like, 'Oh my gosh, it really is.'" Perhaps some comments said under breath were a bit more colorful. David Lowndes, senior vice president of supply chain management for Shire, was there. For him, what we'll document in this article boils down to this: "The industry should achieve the same results in safety, quality, and availability from a fully outsourced supply chain as from a vertically integrated one. Patients, prac- titioners, and regulators expect nothing less." INTEGRITY OF SUPPLY INITIATIVE AND GOOD SUPPLY PRACTICES (GSPs) "Fixing the supply chain" is a topic where seemingly the amount written about it is inversely proportional to the amount actually done to improve it. However, what is coming out of the FDA/ Xavier PharmaLink Conference, specifi- cally the discussion about a set of GSPs regarding the Integrity of Supply Initiative, is substantial and important. The data mentioned above was derived via rigor- ous research and methodology, including detailed cause-and-effect matrixes, Pareto analysis, failure-mode models, and scien- tific surveying techniques. The GSPs, being drafted as this article is written, could become recognized by the FDA and regulatory bodies as defin- ing practices for biopharma, food, and medical device companies. For suppliers and outsourcing service providers, this process should usher in improved client relationships and performance. For patients, it means a safer and more reliable drug supply. The GSPs address three categories determined by the data as the driv- ers for change. First is Supply Chain Development and Management . There is a need for more rigorous supplier selec- tion processes. Currently, even when implemented, they don't get followed. Manufacturers then spend years manag- ing unqualified suppliers that shouldn't be in the supply chain to begin with. The second is Product and Process Knowledge and Development . The assump- tion at the outset of the Integrity of Supply Initiative was that suppliers lack reliabil- ity and quality. Instead, it was discovered manufacturers don't understand their own specifications or processes well enough to predict the impact of material variances on final products. As the title suggests for the third catego- ry, Driving Ideal Behavior , manufacturers exhibit negative traits vis-à-vis their supplier networks. One-sided supplier- manufacturer relationships need to change to the "partnerships" often talked about but not practiced. The Initiative recognizes suppliers play an integral role in the success of the final product and bring applied expertise throughout the supply chain. It also stresses manufac- turers need strong internal alignment of L O U I S G A R G U I L O Executive Editor @Louis_Garguilo Biopharma Looks Into The Supply Chain Mirror: We're The Problem A