Spectrum Chemical Mfg., a supplier of bulk fine chemicals, excipients, active pharmaceutical ingredients (APIs), intermediates, analytical reagents, biochemicals, laboratory products, and equipment is in an expansion mode. The company opened a new facility in China earlier this year and is enhancing its custom-synthesis business to complement its primary bulk-chemical business.

A core competency of Spectrum is its role as a supplier to the pharmaceutical industry. The company’s chemical portfolio contains more than 15,000 laboratory research and bulk production chemicals, including more than 1200 

United States Pharmacopeia–National Formulary

) monograph products, making it one of the largest suppliers of 

 products, says Paul Burg, founder and chairman of Spectrum. Burg founded Spectrum in 1971 in Southern California, which is also the location of the company’s current headquarters in Gardena, California. In addition to manufacturing, warehousing, and distribution facilities in California, the company has similar operations in New Brunswick, New Jersey. Its facilities are ISO 9001 certified, which is the standard for quality management systems issued by the International Organization for Standardization (ISO) and are approved under current good manufacturing practices (cGMP). In 2007, the company expanded its warehouse and cGMP packaging facilities in New Jersey. 

Earlier this year, Spectrum opened new facilities in China. Spectrum started sales and marketing operations in China in 2003 and later opened analytical testing and laboratory facilities in Shanghai. In 2007, Spectrum China Analytical Services, the company’s contract analytical business in China, received ISO 17025 certification as a testing and calibration reference laboratory. With the ISO certification, Spectrum also functions as a third-party analytical services provider in China and provides expertise for companies interested in sourcing and purchasing fine chemicals from China. Other services provided include third-party analytical support, onsite audit and validation services, manufacturing evaluation, documentation, and logistical support.

In February 2011, Spectrum opened a new 30,000-ft

 facility in the Songjiang Industry Zone in Shanghai, which provides expanded analytical testing, manufacturing, warehousing, and distribution capabilities for its global customers.  In addition to offering contract analytical services, the company’s facilities in China serve two primary functions: supplying domestic and foreign manufacturers with bulk fine chemicals and providing a base for the company’s sourcing activities in China, which include related analytical testing. “Spectrum’s uniqueness and expertise lie in our understanding of the global supply chain, chemical technologies, and quality standards,” says Craig Recatto, president of Spectrum’s custom-synthesis business. In addition to its range of 

 products, Spectrum supplies bulk chemicals in accordance with European, Japanese, and British pharmacopeial standards as well as American Chemical Society (ACS)-grade reagents and chemicals. 

A growing part of Spectrum's business is centered around its custom-synthesis capabilities as a chemistry outsourcing partner to the pharmaceutical and biotechnology industries. The company employs over 40 chemists to develop, test, and manufacture pharmaceutical intermediates and APIs ranging from multigram quantities for drug discovery through multiton cGMP commercial manufacture. The company also manufactures DEA (Drug Enforcement Agency) controlled substances (Schedules II-V) and provides full regulatory support to customers for these items. Overall, it has more than 1200 gallons of total reactor capacity and also has glassware research and development and kilo laboratory synthesis suites available for development work. The custom-synthesis business also offers related chemistry services, such as GMP analytical method development and validation, ICH (International Conference on Harmonization) stability studies, and chemistry, manufacturing, and controls (CMC) support. 

Recatto sees the company’s custom-synthesis business as synergistic to the company’s bulk-chemical activities. “It builds on our expertise in chemical development and manufacturing,” he says. Also, with increased emphasis on supply-chain integrity, the company’s ability to source raw materials and chemical intermediates from audited manufacturers adds further expertise beyond a strictly contract-manufacturing function. “In an increasingly global and complex pharmaceutical supply chain, the know-how in regulatory and quality systems is crucial,” says Recatto, concluding that such expertise it is an integral part of the company’s business model and growth strategies. 

Articles

Pharma Partner Focus

Spectrum Chemical Mfg., a supplier of bulk fine chemicals and pharmaceutical ingredients, opens new facilities in China and augments its custom-synthesis business.

Spectrum Chemical Expands in China

The US is the largest single national market for prescription drugs, and spending levels on drugs and consumption levels are important barometers for the financial health of the pharmaceutical market. A recent report, 

The Use of Medicines in the United States: Review of 2010

, by the IMS Institute for Healthcare Informatics shows slowing spending and consumption patterns for prescription drugs in the US caused by increased generic-drug incursion, lower spending based on overall macroeconomic conditions, and reduced spending on new drugs.

US spending on prescription medicines increased 2.3% in 2010 to reach $307.4 billion, markedly lower than the 5.1% growth rate in 2009, according to data from the IMS Institute for Healthcare Informatics. The lower spending levels in 2010 continued a trend of approximately 5% or lower growth per year that has occurred since 2007. Spending on branded prescription drugs totaled $229 billion in 2010, a 0.7% decrease compared with 2009, but spending on generic drugs, both unbranded and branded, increased. Spending on unbranded generic drugs increased 21.7% and branded generic drugs by 4.5%. Reflecting trends to higher use of specialty drugs, spending on drugs mainly dispensed by primary-care physicians increased by only 0.5%, but spending on drugs primarily dispensed by specialists grew by 4.8%, according to IMS. 

The largest segments of the US prescription drug market, including branded drugs, oral formulations, and small molecules, each declined or grew more slowly than the total market, while spending on generics, injectables, and biologics increased at a higher rate. Small-molecule spending totaled $240 billion, an increase of only 0.5% as biologics grew by 6.6%, amounting to $67 billion. Spending on oral forms of medicines declined by 0.1%, but spending on injectables increased 5.7%, according to IMS. 

The volume of prescription medicines consumed in the US rose at historically low levels in 2010. The number of retail prescriptions dispensed in the US totaled 3.9 billion, an increase of only 1.2% compared with 2009 levels. The total volume of drugs consumed increased at historically low rates for oral and nasal forms and declined on a per-capita basis for injectable and infusible forms. The total volume of medicines consumed in oral or nasal form, which account for approximately 60% of the total spending on medicines, increased only 0.5% in 2010, representing a decline of 0.3% on a per-capita basis, due to lower or declining demand in nearly every major therapy area, according to IMS. The volume on drugs administered by injection or infusion increased only 0.2% in 2010, or a per-capita decline of 0.6%, primarily the result of reduced utilization in hospital settings. 

 “Last year, we saw the convergence of key dynamics leading to diminished growth in drug spending, which included the greater use of generics, loss of patent protection for major branded products, slower demand, and less spending on new therapies,” said Michael Kleinrock, director of research development at the IMS Institute for Healthcare Informatics, in a Apr. 19, 2011, press release. “Moreover, fewer patients visited physician offices and initiated new chronic therapy treatments last year, likely the result of the slower economy.” 

Historically, protected brands have caused volume-based increases in spending, but that situation was not the case in 2010. For example, in 2006, protected brands contributed $7.9 billion in volume-based spending, but in 2010, protected brands experienced a volume-based decline in spending of $8.3 billion. Increased spending due to price levels of protected brands was $16.6 billion in 2010, but these levels were offset by an estimated $4.5 billion in higher rebates. Total spending on new brands has declined in the last five years, according to IMS. For example, brands with total sales of $32.1 billion were exposed to generic-drug competition in 2009 and 2010, the highest two-year total ever. In 2010, $12.6 billion in branded products faced patent loss and $19.5 billion of products did so in 2009. Branded and unbranded generic drugs now account for 78% of all US prescriptions dispensed, according to IMS. Brands losing patent protection or exclusivity in 2010 resulted in a reduction of spending of $12.6 billion compared with only a $4.0-billion increase in spending in 2010 for new brands or therapies. Spending on generics, including both volume and price effects, increased by $7.6 billion in 2010 compared with 2009, according to IMS. 

Other statistics show greater generic-drug incursion and resulting shifting spending levels as well as reduced demand for new products. Increased spending cause by higher volume of brands was $2.6 billion in 2010 compared to $4.2 billion in 2009, according to IMS. Declining spending due to lower volume was $4.3 billion in 2010 versus $400 million in 2009. The largest volume spending increases in 2010 were for Crestor (rosuvastatin), Lucentis (ranibizumab), and Lantus SoloStar (insulin glargine). The products with the largest volume declines, each more than $500 million, were due to a combination of upcoming patent expiries and patients transitioning to newer therapies and included Lipitor (atorvastatin), Seroquel (quetiapine), and Provigil (modafinil). Other major products that had patents expiring in 2010 included Aricept (donepezil), Lovenox (enoxaparin), and Flomax (tamsulosin), which each had annual spending above $1 billion during the 12 months prior to patent expiration. The patent expiries in 2010 brought the total share of the market facing generic-drug competition for the first time to 25.7% during the past five years, up from 22.9% in the prior five years.

As the industry faces these dynamics, new product growth is slowing. For example, total drug spending on products that have been available to patients for less than 24 months has dropped from $4.0 billion in 2010 from $6.7 billion in 2009 and from $11.0 billion in 2006. Spending on new medicines is now 2.8% of total brand spending, down from 5.0% in 2006. The number of new brands (products newly available in the recent 24-month period) totaled 69 in 2010, down from 96 in 2006, which reflected the declines in products emerging from research and development and receiving regulatory approval, according to IMS. Moreover, spending per new branded product was $62 million in 2010, down from $114 million in 2006, which reflected a shift in the mix of new products toward orphan drugs and products with the same mechanism of action as existing products.

“It became apparent in 2010 that the healthcare landscape is shifting in significant ways,” said Kleinrock in the IMS release. “Physicians and patients have more therapy options than ever, and yet spending on medicines is rising at historic lows with the impact of patent expiries and reduced patient activity. The long-term effect on patient health of fewer doctor office visits and new therapy starts is unclear ad requires closer attention.” 

APIs

Volume growth in the US prescription drug market was at historically low levels in 2010, and revenue growth was anemic.

Growth in the US Prescription Drug Market Slows

Biopharmaceutical companies seeking to meet the public-health needs of emerging markets must ensure their products are distributed to intended patient populations effectively and reliably. Whether companies typically focus on low-margin, high-volume or high-margin, low-volume products in these markets, it is critically important to reach patients in geographies that present difficult logistics challenges. 

 Challenges in the biopharmaceutical distribution chain for developing and emerging markets 

Pharmaceutical distribution in emerging and developing markets is no easy task. Biopharmaceutical distribution chains in emerging markets are notoriously complex, often involving private-sector partners (e.g., importers, distributors, and pharmacies) as well as public-sector organizations (e.g., procurement agents, public hospitals, and health centers).  Figure 1 provides a simplified illustration of the links connecting manufacturers to patients. 


 Figure 1: Emerging market challenges for the biopharmaceutical distribution chain.

Distribution in emerging markets presents three particular challenges: 

• Improving forecast accuracy and data reliability for estimating vaccine or drug demand 

• Maintaining product stability throughout the distribution chain, including requirements for cold-chain continuity

• Managing the dispensing of medical products to patients in the “last mile” of the distribution chain (i.e., the stage where products are delivered from the wholesaler or pharmacy to the consumer). 

These issues, however, are not insurmountable. Inspired by unmet medical need, several organizations have developed innovative strategies that can greatly facilitate emerging-market distribution. 

 Improving demand planning and forecast accuracy. 

 Many vaccines and therapeutics required for promoting health in developing countries often have limited markets in the developed world. Even with recent increases in donor support for research and development as well as for procurement, both suppliers and customers are unable to accurately predict demand (1, 2). 

This inability introduces risk across the biopharmaceutical value chain. Biopharmaceutical manufacturers have tended to under-forecast demand to hedge against excess inventory of both finished product and raw material. At the same time, customer populations have tended to over-forecast because ofthe high social consequences of product shortages (2). The result is inaccuracy in characterizing market demand, and for an industry that traditionally uses a make-to-forecast operating model, this problem contributes to lost sales or product waste. 

 Innovative approaches developed over the past few years have helped reduce risks, lower costs, avoid supply shortages, and encourage future investments. In 2009, the Bill & Melinda Gates Foundation, along with the governments of Canada, Italy, Norway, Russia, and the United Kingdom, pledged $1.5 billion, and the Global Alliance for Vaccines and Immunization (GAVI) promised to allocate $1.3 billion to ensure a minimal market price for pneumococcal vaccines for low-income countries through an advanced market commitment (AMC) agreement (3). Several other procurement models also are being implemented, including minimum purchase commitments, flexible-quantity contracts, buy-back contracts, revenue sharing, and real-option contracts. Mechanisms such as these help to drive interest and participation from industry by providing clarity to procurement timelines, quantities, and pricing of products (2). 

 To better plan and control manufacturing operations, biopharmaceutical companies regularly employ information-technology tools that enable simultaneous material and capacity planning. For example, AstraZeneca has been able to make quantitative improvements in on-time delivery and inventory turnover by using a dynamic, demand-based operating model to integrate information flows between buyers and suppliers (4). Following industry practices, the nonprofit global health organization PATH developed a software tool called Cold Chain Equipment Manager, which features data management, analysis, and reporting functions, in addition to logistical capabilities (5). 

Synchronizing customer requirements with production for public health products, such as artemisinin-based combination therapies (ACTs) that have long production lead times and short shelf lives, can improve use of limited resources and reduce waste. Such synchronization, however, is often difficult to manage. Novartis scaled up production of its malaria combination therapy Coartem (artemether and lumefantrin) to meet the demand forecasted by the World Health Organization (WHO).  However, changing grants policies ultimately resulted in inadequate donor funding, which in turn led to large surpluses and huge losses for the manufacturer (2). 

 Organizations also are establishing new types of networks that allow global health stakeholders to share up-to-date, credible, and comprehensive information.  A good example is the “infomediary” championed by the Center for Global Development (2). High-quality data shared by competent individuals provide the necessary input to systematically build individual demand forecasts from common baseline forecasts. The third-party infomediary facilitates sharing of blinded data sets, which maintain the integrity of any competitive advantages while generating baseline demand forecasts. By aggregating forecast data, buyers and suppliers are more likely to align their individual strategies and more effectively leverage resources in the near and long term. 

Mutually reinforcing, these various improvements in forecasting and planning help strengthen the front end of the distribution chain. Structured information sharing between clusters of stakeholders will lead to more accurate demand predictions of what products will be procured, in what quantities, and during what timeframe. Better upfront market forecasts will allow suppliers and buyers to pick the best contracting and financing mechanisms for procurements. The combination of a better business case and public- health results will attract interest, involvement, and investments, which, in turn, will result in increased purchasing power, expanded product availability, and improved health security. 

Cold-chain distribution networks have never been more critical to fulfilling global market needs for vaccines and biologics.The infrastructure needed to support temperature-controlled distribution, however, is lacking in many emerging market regions. Because of gaps in regional cold-chain infrastructure, countries in regions, such as Sub-Saharan Africa, often struggle to complete distribution of medical products to combat infectious diseases. Economic growth in countries, such as India, has driven increased demand for vaccines and biologics when existing cold-chain capacity is already needed by other industries that transport temperature-sensitive products, including food and other consumable goods. Innovations for overcoming cold-chain constraints fall into two major categories: near- and mid-term improvements to maximize use of existing cold-chain infrastructure and longer-term technology development to alleviate future dependency on temperature control. 

 Simply reducing the amount of time a product spends in the distribution chain can help maintain stability, but improved refrigeration techniques for storage and transport are still necessary to meet cold-chain requirements. Technology developments include low-cost solar refrigerators that operate without batteries, as well as “smart” refrigerators with remote temperature monitoring and systems that protect vaccines from freezing (6). 

In an effort to ensure reliable vaccine delivery, PATH has worked with other international collaborators to produce prototype vaccine vial monitors (VVMs) to monitor vaccines exposed to high temperatures. The VVM consists of a small sticker that is affixed to the vaccine vial. As temperatures rise, the VVM changes color. As a result, healthcare workers can quickly determine whether the vaccine has been exposed to heat. As a result, WHO has amended its policies regarding the duration of use for open vials, thereby leading to a significant decrease in vaccine waste and vaccine-related costs. UNICEF now requires vaccines to incorporate VVMs. Today, the monitors are widely used in developing countries (6). 

Other innovations have focused on low-cost solutions to maximize the throughput of existing distribution chains. For instance, airports throughout India have expanded cold-storage capacity to facilitate transfer of medicines to remote villages. Out-of-cold-chain (OCC) studies funded by WHO and PATH in Vietnam have identified licensed medical products, such as HPV vaccine and other high-heat stability biologics, which may not require a cold chain, thus freeing up resources for other cold-chain transport needs. In Senegal and Tunisia, efforts are underway to integrate supply chains of biopharmaceuticals and other temperature-controlled products during transport (7). 

Alleviating dependency on temperature control. 

The global health community also is exploring new approaches to reducing or eliminating reliance on cold-chain transport through the development of novel formulations and stabilization technologies for vaccines and therapeutics. In addition to lyophilization, a form of freeze-drying for biopharmaceuticals, companies and organizations are experimenting with spray-drying of vaccines to produce formulations with high stability and heat tolerance. For example, the nonprofit research organization Medicines in Need in South Africa is developing a spray-dried formulation of a tuberculosis vaccine for pulmonary administration (8). Organizations also are providing prefilled reconstitution devices to avoid common pitfalls in reconstituting vaccines with heat-stable formulations, such as inaccurate mixing or a lack of access to clean water (9). 

Shortening the last mile of distribution 

In a biopharmaceutical supply chain, the “last mile” may actually be thousands of miles or just a few feet to the point of delivery (10). While considered the most important link in the chain, it is also often the most expensive—and the least efficient. Contributing factors include improper handling, delivery delays, theft, and other forms of lost or wasted products (11). 

 Several operational innovations, now in pilot stage, will help to shorten the last mile. WHO, PATH, and the Bill & Melinda Gates Foundation launched Project Optimize to create a supply chain for the distribution of drugs and vaccines (12). The mission of Project Optimize is to use an integrated supply-chain system that incorporates a modern management-information system for delivering drugs, vaccines, and other products.  In one of the pilots launched in Senegal, Project Optimize set up a “moving warehouse” that reduced costs of delivery by distributing medicines and vaccines from a central location to district pharmacies and health posts. A logistics management-information system also was implemented to manage the moving warehouse (13). 

 In addition, innovations in dosage-form technologies are enabling safer and more efficient administration of vaccines and therapeutics. Overcoming the need for needles and syringes may allow faster administration and higher patient compliance in completing vaccination courses while requiring fewer healthcare workers. Furthermore, new technologies, such as needle-free dosage forms that eliminate transmission of blood-borne pathogens, may help address recent calls to avoid unsafe injections (14). Table I provides several examples of these innovations (15–18). 

Table I: Examples of  innovations in dosage forms for alternative delivery mechanisms (15–18).

Intercell’s vaccine patch    technology received interest from organizations such as the Bill & Melinda    Gates Foundation.

Researchers at Tufts    University are developing nasal-drop dosage forms for delivering rotavirus    vaccine.

BioProgress and other    companies offer thin-film dosage forms for oral delivery of pharmaceuticals    and vaccines.

Researchers at the    Netherlands Vaccine Institute are exploring the use of bioneedles,    biodegradable implants for vaccination without syringes or needles, for slow    release into the skin or deep tissue.

.One of the most critical contributors to resilience in the last mile is the strength of local health systems. Healthcare workers require adequate training to ensure they can consistently handle and administer products. They should also, in turn, provide written handling and storage instructions to patients and caregivers on how to store products, including how to perform temperature monitoring on their refrigerated products (10). 

For example, PATH and WHO have developed training materials to guide healthcare workers on the proper use and disposal of vaccines in developing countries. In 2006, an earthquake in Yogyakarta, Indonesia, resulted in the loss of electricity for multiple days.  Properly trained local healthcare workers were able to save approximately 50,000 vaccine doses because they knew how to interpret the colors of the VVMs on the vials (19). 

Significant operational constraints will continue to pose a challenge for the distribution and administration of vaccines and therapeutics in developing countries. The increasing pace of innovation, however, can help overcome these barriers in the distribution chain. New ideas already are being implemented for improving forecast accuracy, product stability in storage and transit, and local administration of medical products to patients. 

The opportunities are vast for biopharmaceutical companies and their global health partners that are able to apply these innovations to developed markets. Any country faced with naturally occurring infectious diseases, intentional acts of bioterrorism, or other threats to health security, or the health-related effects of natural disasters or industrial accidents may face similar distribution-chain issues. These innovations may provide the solutions countries need. 

Chan Harjivan (charjivan@prtm.com) is a partner and James Guyton (jguyton@prtm.com) is a principal, both in the global public health practice at the global management consulting firm PRTM. 

This article is Part III of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets. 

, which focused on drug development, appeared in the March 2011 issue of 

1. Global R&D funding for malaria has increased 119% since 2003: PRTM analysis based on the 

2. S. Neelam et al., “A Risky Business: Saving Money and Improving Global Health Through Better Demand Forecasts,” Center for Global Development Global Health Forecast Working Group (Washington, DC, 2007).

3. GAVI, “GAVI Partners Fulfill Promise to Fight Pneumococcal Disease” press release (Geneva, June 12, 2009).

4. SAP, “MySAP Supply Chain Management at AstraZeneca” case study (Walldorf, Germany, 2005). 

5. S. Kibet et al., “Using Software to Achieve Continuous Quality Improvement in Supply Chain,” 

6. PATH, “Vaccine Technologies at PATH” (Seattle, WA),

www.path.org/projects/vaccine-technologies-overview.php

7. PATH, “Rethinking the Vaccine Supply Chain” (Seattle, WA),

www.path.org/projects/project-optimize.php

8. Medicines in Need, “BCG (Vaccine) Inhalation Powder (BCGIP)” (Cambridge, MA), 

www.medicineinneed.org/our-approach-ourpipeline-bcg-inhalation-powder.html

9. PATH and WHO, “Trends in Vaccine Availability and Novel Vaccine Delivery Technologies: 2008–2025” (PATH, Seattle WA and WHO, Geneva, July 2008). 

Technical Report No. 46: Last Mile-Guidance for Good Distribution Practices for Pharmaceutical Products to the End-User 

11. R. Gevaers, E. Van De Voorde, and T. Vanelslander, "Characteristics and Typology of Last-mile Logistics from an Innovation Perspective in an Urban Context" presented at the Transportation Research Board Annual Meeting, Washington, DC, Jan. 25, 2011.

12. WHO, “Immunization Service Delivery and Accelerated Disease Control” (Geneva),

www.who.int/immunization_delivery/systems_policy/optimize/en/index.html

13. WHO, “Senegal: Demonstrating the Benefits of an Integrated Supply Chain” (Geneva), 

www.who.int/immunization_delivery/systems_policy/optimize_senegal/en/index.html

15. Intercell, “Bill Gates Visited Intercell to Discuss Vaccine Approaches for Developing Countries” press release (Vienna, July 20, 2010).

16. Tufts University School of Medicine, “New Low-Cost Method to Deliver Vaccine Shows Promise” press release (Boston, Nov. 16, 2010).

17. BioProgress, “SoluLeaves” company information (Cambridgeshire, UK),

www.bioprogress.com/pages/content/index.asp?PageID=50

19. PATH, “Vaccine Vial Monitors” (Seattle, WA),

www.path.org/projects/vaccine_vial_monitor.php

CSR and Sustainability Forum

This article, which focuses on distribution and administration, is Part III of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets.

Distribution and Administration in Public Health, Government, and Developing World Markets

As pharmaceutical companies deal with a slowly recovering macroeconomic environment and changing industry fundamentals, the role of sourcing and procurement to help meet cost objectives and create value for an organization is exceedingly important. To address these issues, the Drug, Chemical and Associated Technologies Association (DCAT), along with its partner, the Pharma Forum and Chemical Group of the Institute of Supply Management (ISM), will offer perspectives from the pharmaceutical majors, their suppliers, and other leading experts on ways to use innovation in sourcing, procurement, and related activities as a driver for value creation. The educational program, the 

DCAT/ISM Sourcing Summit’ 11: Innovative Sourcing

, will he held July 13 and 14 at the Sheraton Newark Airport Hotel in New Jersey. 

The program will feature insight from Pfizer, DSM, and other innovation experts, to explain how different types of innovation are developed and implemented to deliver overall value to an organization, including sourcing and business-development relationships. The program also will feature interactive panel discussions of sourcing and supply-chain professionals to explain how they are using innovation to improve the pharmaceutical value chain.

An innovation panel discussion, which will be held Wed. July 13, will be moderated by Ron Perry, senior director and global leader of worldwide procurement at Pfizer, and Tyson Popp, vice-president of research and development (R&D) at West Pharmaceutical Services. Panel members include: Donna J. Gruol, associate director of business development and alliance management with Teva Parenetal Medicines; Rhonda Griscti, director of R&D procurement at GlaxoSmithKline; and Oscar-Werner Reif, executive vice-president of R&D and managing director at Sartorius Stedim Biotech. 

The panel discussion will be followed by an interactive session led by representatives from the management-consulting firm Accenture that will focus on three specific dimensions of innovation—products/services, process, and operating/business models—as tools to advance sourcing and procurement activities. Session leaders from Accenture include Shubber Ali, senior manager of the process innovation performance service line; Christopher McKenna, partner; Mitch Sava, senior manager of innovation performance; and Mitali Sharma, senior executive of the process and innovation performance service line.

Also, Puneet Sapra, director of worldwide business development and innovation at Pfizer will offer a keynote address on approaches in innovation taken by Pfizer. And Robert Fry, senior economist at DuPont, will provide a macroeconomic outlook and its implications for the chemical industry. 

Panel discussions on Thursday July 18 will focus on implementation strategies for innovation, including cultural changes, building knowledge bases and skill sets, and approaches for engaging staff, stakeholders, and suppliers. Ron Perry, senior director and global leader of worldwide procurement at Pfizer and Tyson Popp, vice-president of R&D at West Pharmaceutical Services will again moderate the panel. Panel members include: Albert Gallo, sourcing director of clinical technologies and supply management at Johnson & Johnson; Ansa Yiadom, director of global packaging material procurement at Pfizer; and Andreas Stolle, head of the pharma business line at Saltigo. 

Additionally, Paul Sidhu, vice-president of marketing and strategy at DSM Pharmaceutical Products, will share four case studies from DSM to offer a perspective on adoption of innovation from a contract manufacturing organization’s perspective. And the representatives from Accenture will further discuss the results from the interactive innovation sessions. 

Sourcing

An upcoming conference by the Drug, Chemical and Associated Technologies Association (DCAT) will focus on innovative practices and strategies for optimizing sourcing, procurement, and the management of the pharmaceutical supply chain.

Innovation in the Pharma Supply Chain

 a subsidiary of Waste Management, are jointly launching the BD ecoFinity Life Cycle Solution, a service that will recycle medical sharps waste and use the material to manufacture new products. The BD ecoFinity program will enable hospitals to reduce their environmental footprint by recycling single–use medical devices, such as needles and syringes. Based on results of a pilot program at Rady Children’s Hospital–San Diego, BD believes that more than 70% of its overall sharps waste may ultimately be recovered and recycled rather than be permanently disposed of in landfills. 

 has been awarded two Superior Energy Performance certifications for achievements in energy efficiency at its Texas City, Texas, operations, by the US Department of Energy (DOE). The facility is one of the first four in the US to test the DOE Superior Energy Performance program. The site’s isopropanol unit received Platinum Partner Certification with a 17.1% improvement over a three–year trial period and its energy–systems plant received Silver Partner Certification with an 8.1% improvement over the same timeframe.The Superior Energy Performance program is a new American National Standards Institute (ANSI)-accredited energy-management certification program designed to help industrial facilities drive continual energy efficiency achievements while maintaining competitiveness. The DOE developed the project with support from the US Council for Energy-Efficient Manufacturing (US CEEM). 

 American College of Endocrinology (ACE) 

 created the "Power of Prevention: Diabetes Disaster Plan," a checklist of items for people with diabetes to use in disaster preparedness. After the destruction caused by Hurricane Katrina in 2005, ACE and Lilly Diabetes joined forces to provide guidance to people with diabetes on assembling a kit for emergency situations. Copies of the plans are available for free download at the program’s website. Items on the list can ensure that a person with diabetes has a list identifying his medical conditions, a supply of medications, and contact information for healthcare providers. Other safety items suggested for the kit ensure the safety of others by containing empty water bottles and sharps containers to hold syringes, needles, or lancets. 

to reward people for taking everyday conservation actions. The partnership follows collaboration between Future Friendly and Recyclebank in Cincinnati to enhance that city's recycling efforts. Recyclebank encourages residents to live more sustainable lifestyles, including increasing household recycling and reducing home-energy usage, with Recyclebank Points that are redeemable for discounts and deals. In addition to sponsoring this national rewards platform, Future Friendly also will provide members with opportunities to earn points through online educational content using the Recyclebank Learn & Earn platform that highlights methods to save energy, save water and, reduce waste. 

 have launched a national cervical cancer prevention program in Kigali, Rwanda. The program includes vaccination with Merck’s Gardasil [human papillomavirus (HPV) (Types 6, 11, 16 and 18) vaccine, recombinant] for girls between the ages of 12 and 15 and molecular diagnostic screening for women between the ages of 35 and 45. Cervical cancer ranks as the most frequent cancer in women of all ages in Rwanda. Rwanda is the first nation in Africa to offer a prevention program that incorporates both HPV vaccination and HPV testing, according to a Merck & Co. press release. During the first three years of the national prevention program, the Rwandan Ministry of Health will offer Gardasil to girls between the ages of 12 to 15. Merck will provide more than two million doses of Gardasil to the Rwandan government at no cost. Qiagen will provide 250,000 HPV screening tests at no cost along with all necessary equipment and training to perform the tests. The Rwandan government will continue routine vaccination of 12-year-old girls. Merck will offer its services at discounted prices, and Qiagen will make its tests available under a tiered-market pricing structure to enable developing countries to establish and maintain the use of HPV testing within national cervical cancer screening and treatment programs. The two companies also have committed to providing five million doses of Gardasil and 500,000 HPV tests to developing countries at no charge. 

 International Atomic Energy Agency (IAEA)

 have developed EDUCARE (EDUcation for Cancer in African Regions), a partnership that addresses the shortage of trained healthcare professionals in oncology in Africa. The program is governed and managed by a committee of representatives from Roche, IAEA, and the World Health Organization (WHO).  The committee’s main priority includes establishing a Regional African Cancer Training (RACT) network by linking cancer centers within sub-Saharan Africa through regional networks to strengthen the transfer of knowledge to a broader group of healthcare workers. The project also will implement Virtual University for Cancer Control (VUCC), which will serve as a virtual university to provide cancer training across Africa. Roche and the IAEA have committed to a five-year pilot of VUCC in Ghana, Tanzania, Uganda, and Zambia. 

 has announced that its matching gift program is raising money for the nonprofit organization (NPO) “Japan Platform,” which focuses on international emergency humanitarian aid. Takeda has made a cash donation to the Japanese Red Cross Society as well as to the Japan NPO Center that is supporting a variety of NPOs and nongovernmental organizations that are conducting relief efforts in the area. Takeda also is contributing ethical and over-the-counter drugs under initiatives supported by Japan’s Ministry of Health, Labor and Welfare.  The company is also encouraging its employees to engage in volunteer programs. 

An open-ended working-group meeting of member states, coordinated by the 

 and under the authority of World Health Assembly, agreed on a framework to ensure that in a pandemic, influenza virus samples will be shared with partners who need the information to take steps to protect public health. The framework has certain binding legal regimes for WHO, national influenza laboratories, and industry partners in developed and developing countries. The framework is intended to increase and expedite access to essential vaccines, antivirals and diagnostic kits, especially in outbreak areas by making sure obligations are set up more effectively than in previous pandemics. It also will ensure equal access to affordable vaccines and guarantee the flow of virus samples into the WHO system, so that necessary analysis needed to determine public health risks and develop vaccines is available. 

A roundup of developments in corporate social responsibility and sustainability from the bio/pharmaceutical industry, its suppliers, and other public and private organizations.

CSR and Sustainability in the News

Green manufacturing is an important component for any company’s sustainability objectives. The sector-specific nature of manufacturing, however, means that developing environmentally favored manufacturing also requires an understanding of the processes, production methods, and related issues unique for a given industry. To facilitate that process, GlaxoSmithKline (GSK) and the Singapore Economic Development Board (EDB) formed a 10-year, S$33-million ($28-million) partnership in July 2010 for green and sustainable manufacturing. Singapore is a hub for pharmaceutical manufacturing with many multinational pharmaceutical companies having operations in that country, and the partnership seeks to advance green manufacturing in the pharmaceutical and related industries, such as fine chemicals. Patricia Van Arnum, senior editor of 

Pharmaceutical Technology’s Sourcing and Management

, spoke with Beh Kian Teik, director of biomedical sciences at Singapore’s EDB to discuss the strategy and implementation of the partnership.

 What was the rationale for the GSK–Singapore Partnership for Green and Sustainable Manufacturing? Why did the parties have a specific interest in developing projects for green pharmaceutical manufacturing? Had GSK and the Singapore EDB worked on similar projects previously? 

 GSK has had a presence in Singapore since 1959 when Glaxo first set up a small sales office in Singapore. In the ensuing five decades, the partnership has grown into a hub for research and development (R&D), manufacturing, and commercial operations, representing an estimated S$1.5 billion ($1.2 billion) in investments and over 1000 employees. The collaboration on green and sustainable manufacturing began in June 2009 with the announcement of the GSK–Singapore 10-year Strategic Roadmap, which charts GSK’s growth strategy in Singapore and in Asia. Nested within the Strategic Roadmap was a joint gift of S$50 million ($41 million) from GSK and Singapore, forming the GSK–EDB Trust Fund, which is dedicated to capability-building in the frontier areas of green manufacturing and healthcare policy in Asia. 

The GSK–Singapore partnership is one underpinned by the building of talent. In the same spirit as the most recent gift, Glaxo gifted a S$50-million ($41-million) human resource fund in 1990 that has sponsored the training of more than 300 EDB scholars and several Glaxo employees through an EDB–Glaxo scholarship. The Green and Sustainable Manufacturing Partnership with GSK reinforces Singapore’s commitment to build future-ready technical capabilities and a research talent base in sustainable manufacturing processes in both the pharmaceuticals and specialty-chemicals sectors. 

Sustainability is an important component of GSK’s activities and is widely supported by GSK senior management. In 2009, GSK CEO Andrew Witty said that GSK would increase its 2015 global mass-efficiency target from 2.0% to 2.5% (compared with an industry average of 0.5 to 1%). [Mass efficiency is a green-chemistry performance metric to aid in process design and development by measuring the efficiency of converting raw materials to product.] This goal joins an already extensive list of ongoing 2010 targets, originally set in 2006 by GSK, to reduce emissions, cut energy and water use, and improve research and development’s (R&D) material efficiency. For Singapore, Witty announced that GSK’s manufacturing flagship site in Asia (i.e., GSK Jurong) would achieve two ambitious goals in sustainability: it would be the Sustainable Factory of the Future and it would partner with Singapore to build the pool of local green and sustainable manufacturing talent. 

GSK Jurong was awarded the 2008 MAXA Excellence in Environmental Management award, Singapore’s top accolade for manufacturing excellence, for the company’s approach toward energy and waste management as well as its efforts in measuring its environmental activities. In 2010, GSK Jurong also was one of the 49 pioneering companies with the National Environment Agency’s new Energy-Efficiency National Partnership, which was established to drive Singapore’s climate-change and environmental targets set at the United Nations Climate Change Conference, which was held in Copenhagen in 2009. 

To achieve sustainability in its operations and processes, some programs that GSK is embarking on are solvent recovery and the conversion of certain waste streams into energy and byproducts that are inputs to other processes. Some of the solvents recovered also are used in other industries, such as the coatings and paint industries.

 Can you outline the funding for the partnership and the type of projects that the funding will target? 

 The GSK–Singapore Green and Sustainable Manufacturing Partnership is committed to an estimated S$33 ($28 million) million over 10 years. Funding is dedicated to annual calls for proposals in problem-statement areas drawn up by GSK around the 

, an industry standard framework that characterizes some of the most pressing problems the industry faces. This program has currently awarded eight principal investigators and is in the midst of evaluating responses from the second call for proposals. The second round of awardees is expected to be announced in July 2011 during a scientific symposium organized around the partnership. 

 The second call for proposals was open in the following problem-statement areas: 

• Unit-operation selection and optimization

• Facilities and supply-chain management

 The partnership has already awarded funding to eight principal investigators at the Institute of Chemical and Engineering Sciences, Nanyang Technology University, and National University of Singapore. Can you provide further details on these research projects?

 The following proposals have received funding from the GSK–Singapore Green and Sustainable Manufacturing Partnership:

• Two proposals for the development of green and efficient methods for amide synthesis to reduce production costs and waste generation

• Research to enable oxidation processes to potentially eliminate the use of heavy metals and other chemicals that require controlled waste-disposal conditions

• Development of new sustainable methods of producing chemical structures common in fine chemicals and pharmaceuticals to minimize or eliminate use of hazardous reagents and waste generation and to improve production efficiency

• Development of new technologies essential in improved bioreactor design and cell immobilization to enhance the rate of biotransformation and to ensure sustainability through minimal use of petrochemicals

• Development of green, selective, and efficient biotransformations for the production of pharmaceuticals and fine chemicals to improve production efficiency, avoid the use of hazardous reagents/catalysts, reduce the formation of byproducts, minimize waste generation, and save production energy

• Development of stable and more water-soluble forms for pharmaceutical products to potentially reduce the amount of drug needed for patients and therefore reduce the amount of materials and energy required in their production

• Development of single-step crystallization processes for fine chemicals, pharmaceuticals, food products, and cosmetics to reduce the need for postproduction refinement of product.

 Is the project work directed specifically at GSK facilities in Singapore or will the work apply to pharmaceutical manufacturing overall or in a specific area, such as active pharmaceutical ingredient (API) manufacturing or finished-product manufacturing? 

 Project work is directed not only at GSK facilities in Singapore. In fact, each awarded principal investigator will have an active GSK mentor to guide the industrial applicability of research outcomes. The GSK–Singapore Green and Sustainable Manufacturing Partnership also has convened an industrial advisory group that is comprised of representatives from companies in the fine-chemicals, consumer goods, and process-technologies sectors to provide additional input into the development of the problem statements to broaden the work’s applicability to other related industries.

 Does the Singapore EDB have other such green manufacturing partnerships with other pharmaceutical companies or fine-chemical companies? 

 No, the Singapore EDB does not currently have other such partnerships with other companies. 

 Are there overall green-manufacturing incentives or facilitation that the Singapore EDB or the Singapore government provides to encourage companies to invest in green manufacturing? Any specific programs for the pharmaceutical industry? 

: At the national level, Singapore has a number of programs focused on developing innovative solutions to support sustainable development. Areas under sustainable development include reducing carbon emissions, exploring biorenewables, and improving energy efficiency. For example, the S$1-billion ($810-million) National Innovation Challenge is aimed at developing cost-competitive energy solutions that can be deployed within 20 years. 

 Will the research and advances from the GSK–Singapore partnership be available to GSK only or will it be shared or made available to other pharmaceutical companies that operate in the region? 

 Any intellectual property derived from the project will belong to the institution of the awarded principal investigator and not to GSK.

GlaxoSmithKline and the Singapore Economic Development Board team in advancing sustainable pharmaceutical manufacturing.

GlaxoSmithKline and Singapore Partner in Green Manufacturing

I had dinner recently with an old and very insightful Big Pharma colleague of mine and after speaking together, he revealed an important concern. "Gregg, I'm worried," he said. "I think the complexities of our current global supply chain outweigh our capability to control the network," he continued. He was talking about his company's third-party external supply network.  

It's a scary thought, the idea of being too big and complex to adequately control an organization's supply chain properly. But as my colleague and I discussed this in more detail, I definitely understood why he felt that way. For the past 20 years and especially the past decade, the industry has watched the evolution into "gigantic pharmaceutical drug-makers," such as Johnson & Johnson, Pfizer, Roche, Merck & Co, Novartis GlaxoSmithKline, and sanofi-aventis, all $40-billion-plus annual revenue behemoths. 

These global giants are the results of mergers, acquisitions, and myriad comarketing, in-licensing, and other growth strategies to make up for the disappointing failures of traditional research and development. The resulting manufacturing "mash-ups" have created third-party external supply networks that are difficult to manage because of the overall number of contract manufacturing organization (CMOs) involved, long-term contracts (some with substandard organizations), contracts with no provisions for ongoing cost reductions and a host of other nuances that result in the buying organization having a higher risk profile than desired.   

Now, there is no doubt that making changes to the network can be difficult and expensive due to product registrations and other regulatory hurdles on a country-by-country basis. But if a company is willing to play a longer game, with a forward vision, it is possible for it to optimize its third-party external network to reduce all types of supply risk and ensure the ability to manufacture products cost effectively. 

There is a new methodology, called collaborative optimization, which I've had the chance to become familiar with through my work as senior advisor for A.T. Kearney Procurement and Analytic Solutions. The methodology has its roots in optimizing transportation logistics. It's been successfully used in many direct and indirect categories of spend as diverse as packaging, chemicals and temporary labor and also to simultaneously optimize multiple categories of spend used in sequential manufacturing processes. It was designed for complex categories of spend when the complexity comes from many specifications, many potential suppliers with a multitude of capabilities, and regional or global manufacturing and distribution needs.  

Collaborative optimization has three important components. First, it is establishes deep analytics in the cost makeup of a product or service through the creation of an extremely detailed cost breakdown. Second, it gives all suppliers the ability to quote in multiple ways, including creatively (i.e., quote on parts of the business that plays to an individual suppliers strengths and/or provide new ways to meet the requirements that are more cost efficient). This function is called expressive bidding and makes ups the "guts" of a very new type of request for quotation that has an abundance of cost-rich information and cost-reduction ideas.  

The real differentiator with collaborative optimization is the ability to use combinatorial optimization through an embedded combinatorial analyzer that allows for scenario comparisons to be rapidly generated. These comparisons  determine the most desirable outcome based on what a corporation must have. This requirement might be the lowest total price or the best total cost when certain constraints are added. This method overcomes many of the limitations in today's procurement approaches by fostering creativity into the quotation process and handling large amounts of data in a fast and efficient way, thereby enabling the buying entity to determine the best solution for its specific needs. What I like the best about collaborative optimization is that it does not pit supplier against supplier the way traditional procurement practice often does. Instead, it identifies the best way forward that is beneficial to buyers and suppliers alike.    

So, how could this methodology be applied to a third-party external network? To start, a corporation would need to decide it wants to fix the "mess" (a word used by the late, great systems thinker, Russell L. Ackoff, PhD, to describe most current state situations). The company also would need to recognize that the fix might take 5 to 10 years to fully implement.  For a corporation that was willing to play the long game using collaborative optimization, the benefits would be substantial. One benefit is that it allows a company to identify where new contract-manufacturing opportunities should be sourced. It also allows a company to understand where existing contract manufacturing should be sourced and if there is a financial or risk-based business case to support working through regulatory and/or contractual barriers. This method also ensures that the best CMO network had been identified to  reduce all types of risk and provide real cost competitiveness.   

When a company thinks about its the third-party external supply network, a crucial question to consider is whether the company is using a CMO's total capabilities across its total product requirements on a global basis. From my experience, which includes more than 30 years in procurement, the supply chain, and related operations, including 10 years as vice-president of procurement of global systems and operations at GlaxoSmithKline, I'm fairly confident that the answer would be "no." And that reply is really no fault of an individual or an organization. It goes back to what my colleague and I were discussing: the complexities of what an organization is dealing with are greater than its ability to control unless there is a commitment to develop a long-term vision and a willingness to adapt and use different approaches in managing a third-party external supply network. Collaborative optimization offers the potential for annual incremental savings and potentially a lower overall risk profile. 

The key factor for effective supplier management is that once a company has established what its end-state third-party external network should look like and what suppliers should constitute that network, it is imperative that there is an ongoing collaborative environment and culture in place that ensures that future supply partners are always incented to improve and innovate. This evaluation may make an organization take a hard look at the skills or lack of skills that it has in place to support third-party external manufacturing relationships. My guess is that there are some gaps in relationship management. Identifying and filling those gaps is a first crucial step in improving supplier management. 

To gain additional insight from Gregg Brandyberry and other experts, view an educational webcast, "How to Optimize CMC Development and Manufacturing," at the multimedia section at 

is CEO of Wildfire Commerce, and senior advisor for A.T. Kearney Procurement and Analytic Solution

Outsourcing

The complexity of third-party external supply networks requires new ways to manage them.