Supply Chain Strategies: Building Successful Pharmaceutical Partnerships
Pharmaceutical partnerships translate to shared knowledge, shared financial strength, reduced weaknesses, shared risks, network expansion, access to new technology and shared responsibilities.
Pharmaceutical companies pointed out that it takes over $2B and a decade to produce a new treatment. Developing new drugs alone as well as distribution and sales into new geographical areas are some of the biggest challenges in the Pharmaceutical industry.
Pharmaceutical companies that partner for localization deals gain speed to market and fast-track authorisation to access local markets in different countries. Looking at potential sales, overseas pharmaceuticals can explore collaboration with local companies.
From a global perspective you are only as strong as the weakest link in your partnership network. With the wrong partner for distribution and transportation, you’ll potentially end up with issues like delayed shipments, unnecessary costs, and non-compliance with local regulations.
Chapter 1: In the Wake of a New Era in Pharmaceuticals Supply Chain Collaboration
Today over 50% of late-stage pharmaceutical projects are a result of collaborating for in-licencing, co-developments and acquisitions. More partnerships are happening from research, commercialization and development to marketing and distribution.
Within the life sciences industry, the APAC region accounts for 30% of the global expenditure on pharmaceuticals, a percentage that is expected to grow threefold by 2030. The region has some of the most popular science hubs such as Singapore, South Korea and Taiwan, providing robust R&D partnership opportunities.By 2014, about 65 companies were already conducting biomedical research and development in Singapore. Johnson & Johnson has about six innovation centers that focus on bringing scientists together for business development and accelerating early-stage innovation.
Consequently, global pharma companies are forming partnerships to access the Asia market. For example, the partnership between Alvotech and DKSH to commercialize six new products in South-east Asia.
Case study: Overcoming challenges with clinical trials in Africa
Africa is made up of 54 countries, making it considerably more complex when it comes to rules, regulations, customs and clinical trials. Typically, it’s widely understood that managing trials from outside the continent is extremely challenging, there are differences in language and cultural appropriation as well as complexities in regulations and customs.
Historically, these obstacles have discouraged companies from conducting wider clinical trials in Africa, resulting in only one or two African countries being used in trials.
Through their partner network, Oximio formed strategic relationships to understand regulatory matters specific to each region, import license quirks and expedite approvals through customs and border control much faster than with their own resources alone.
Oximio illustrates the importance of partnership and the right partners through the collaborations they have made over the years and the successful business model they’ve developed through these ties. Partnerships have provided them with market intelligence, cultural appropriation and access to regions otherwise inaccessible, demonstrating how pharma companies can leverage collaboration for the expansion of access to local markets and to ignite innovation in explored territories.
Chapter 2: Pharmaceutical Companies Move toward Strategic Partnership
Partnerships are becoming more crucial as the pharmaceutical industry continues to transition from business models centered around large volume marketing to personalized medicine where volume produced per drug is smaller.
“Supply chain makes valued addition, reduce costing, and increase product impact in the market. How to utilize the same partners: reduce the costs and distribute the product around?” Shahid Ansari, Director, BASEA Supply Chain Manager, Finance & Operations (Head of Supply Chain BASEA), Novo Nordisk
Pharma startup companies can partner with incumbents to lower technological risk and have more access to funds. Similarly, large and incumbent pharma companies can lower commercial risk while launching drug candidates for commercialization. Over the years the licensing model increased in Pharma Incumbents relationship with startups, thereby promoting growth of R&D collaboration model.
Pharmaceutical companies approach partnership in line with the wide range of opportunities that support their external portfolio especially to access expertise and innovation. In an attempt to show the diverse opportunities, we propose the following list of some of the opportunities:
Patient-centric supply chain
New science technologies such as AI and Bioprinting, drive 81% of the pharma industry growth. However, it demands complex changes that result in greater pressure on the supply chain. Creating a truly patient-centric supply (PCSC) may not be easy to achieve alone.
Oncology and rare diseases are some of the therapeutic areas with unmet needs, especially in the Japan market. By 2025, oncology is expected to take a fifth of the Japan market that’s currently valued at USD 100B. Rare diseases and Oncology has complexity and the challenge of the small patient population. However, Biotech has been dealing with research and drug development for rare diseases in small populations for years.
Often, to solve their limited expertise in the regulatory environment and commercialization, Biotechs collaborate with pharmaceutical companies to produce personalized medicine cost-effectively. The pharmaceuticals get help with research into markets that would otherwise take a lot of time to get into. They also access relevant technology and expertise for a common gain. For example, Singapore-based Hummingbird BIoscience’s collaboration with Amgen brings in R&D expertise, manufacturing and commercialization.
Source: https://www.jumpstartmag.com/wp-content/uploads/2020/05/Hummingbird.jpg
With the growing demand for personalized medicine and patient-centric supply chain especially in the APAC region, precision medicine will have increased significance.
Closed loop spend management
A strategic alliance between pharma companies for R&D, production and collaboration to access new markets can greatly reduce the pharmaceutical companies’ expenditure where both risks and benefits are shared.
Building collaborative networks in the pharmaceutical industry allows for sharing of processes linked to manufacturing, marketing and logistics. It’s a system through which the pharma companies can efficiently transfer data, new products and raw materials quicker. The possibility of shared contractors, resources and even clients, reduces cost.
Takeda, one of the largest pharmaceutical companies in Japan, partnered with Teva Pharmaceutical industries to develop a generic medicine business in Japan. Teva would provide the manufacturing facilities and Takeda would be the distributor having insight into the Japan market. This collaboration enabled Takeda to expand its product portfolio at a lower cost and expand into the Japan market.
In 2013, Amgen Inc, a US-based biopharma company, collaborated with Astellas Pharma, A japanese company, to gain a stronger presence in Asia in driving its sale of Amgen’s drugs. Astella provided a strong reputation and local market knowledge to accelerate commercialization of pharma medicines. Astellas CEO, Yoshihiko Hatanaka, said the partnership would strengthen their pipeline to addressing unmet medical needs and provide an opportunity for growth. The long term collaboration was to focus on co-development and co-commercialization of new drugs, which resulted in a joint venture in 2016 to provide innovative medicine to patients in Japan.
Digital Manufacturing
Pharmaceuticals have been forming partnerships and collaborating on drugs and devices manufacture to reduce cost and increase efficiency. A company with expertise in drug discovery can partner with a company that has drug manufacturing expertise to bring a new drug into the market or expand into a new market.
Johnson & Johnson partnered with HP to develop a 3D printing process and software for patient-centric medical getting easier access to technology and innovation. Both pulled together their technological expertise, clinical, scientific, material science, and insights for better patient outcomes on a global scale using the latest technologies. The reason behind this partnership was to create personalized healthcare solutions through 3D printing technology; reducing costs for patients while increasing satisfaction, improving outcomes for healthcare providers and consumers. Together, the two companies can create innovations and opportunities in healthcare that neither company would be able to develop alone.
Sustainability services
Sustainability is a part of optimizing the supply chain. Currently, there is a growing awareness of how much pharma companies contribute to the global carbon footprint. A study revealed that pharmaceutical companies emit 55% more carbon compared to car manufacturing companies. Its a concern because the pharma market is 28% smaller than the automotive market yet has 13% more carbon emission. Pharmaceutical production is very energy intensive, which explains the higher pollution it contributes.
ALT: chinese healthcare carbon footprint
Source: https://www.thelancet.com/cms/attachment/83e8e4eb-361c-4818-a8ff-7ed249b10654/gr2.jpg
Firms that have sustainable strategies and gain reputation as sustainable companies gain the trust of consumers, the government and all stakeholders. Sustainability is therefore an opportunity for pharmaceuticals to gain competitive advantage and experience growth.
“Sustainability - Construction of new infrastructure. New DCs. New warehouses. These are being built with sustainability and waste management in mind. Packaging continues to be a big thing – very difficult to sustainably replace.“ Brett Marshall, Corporate Head, Quality Assurance & HSSE, Zuellig Pharma
Recently, four Japanese companies namely Astellas Pharma, Eisai, Takeda and Daiichi Sankyo, entered into a collaboration to achieve sustainable packaging. The four companies will share expertise on packaging technologies that help reduce environmental burden. Examples include compact packaging, the use of biomass-based plastic in place of the usual petroleum-based plastic and use of recyclable packaging. All the four companies were previously working individually towards sustainability.
Conclusion: Paving the way for the future
In the past, pharma companies were more focused on scaling up quickly in response to demand while working in parallel with other companies in the pharmaceuticals industry. However, operational strategies such as building pharmaceutical partnership networks, have proved to be more successful.
Today, pharmaceuticals are joining partnership networks for a better supply chain with market expansion opportunities, better logistics and distribution, access to new technology and less costly research and development.
Partnerships are the solution for the challenges facing the pharma companies including technological advancement and capability requirements, higher capital requirements, operational complexities, increasing risks, variable-cost increases and the need for cost-saving opportunities.
However, for successful partnerships, we have to get it right from the start. Each company needs to analyze the potential profitability of the partnership and whether the partnering company aligns with your company vision. The agreement needs to specify the responsibilities and contributions expected from each partner. You should have a common and clear end-of-partnership strategy. Have a well-defined framework and indicators for measuring performance.
Finally, communication is a key factor in maintaining good partnership networks.
Building Successful Pharmaceutical Partnerships is a key focus topic for LogiPharma Asia Summit 2023.
Download the agenda to see the companies that will be leading the discussions on the Day Two Conference Track B labelled "Setting Yourself Apart With Partnership".