Page 23 - Linkline Yearbook 2018

manage medicinal requirements. Similarly, Apprecia Pharmaceutical’s 3D Printing solution for the manufacture of its Zip Dose epilepsy drug shows how the patient is now at the heart of industry innovation.
Online pharmacies have also emerged in the market. Alibaba and JD.com have developed an online market in China valued at $1.1bn. Medtronic’s End of Life pacemakers and defibrillators are sold online through their spin-off company Nayamed. This online market which reduces cost to the ‘value-oriented’ end customer bypasses the wholesale channel, a process known as “Disintermediation” and is considered to have the potential to grow to $250bn - but it needs serialisation solutions and regulations to manage the threat of counterfeiting and self-harm. Home deliveries of vaccine drugs by Uber in North America is another innovative example of direct to patient services.
Hospitals are also looking to practice “Disintermediation” through Just-In-Time Delivery (JIT), delivery of medical devices and surgical equipment. 3PLs with global networks and warehouse management systems that can kit out devices at hubs local to the hospitals can be major players in this localisation and postponement activity. Similarly, the adoption of home delivery Business-to-Consumer (B2C) network solutions to Good Distribution Practice (GDP) standards and the application of supporting IT systems to provide transparency and traceability, accurate information throughout the distribution process is an ongoing area of development in the 3PL world.
GMP & Advanced Continuous Manufacturing
Pharma manufacturing is presently completed under Good Manufacturing Practice (GMP) requirements and through large batch production techniques. Individual sites contribute to each section of the supply chain and the manufacturing process. Granules are manufactured in one site, crystallisation is completed in the next site, blending and compression in the next site and tableting and packaging in the final site before shipping finished product through the GDP channel distribution process.
This process is changing due to cost pressures and supply chains driven by value-oriented customers. Continuous manufacturing and the ‘Smart’ factory is now a reality. Drones, automatic unmanned vehicles (AUVs), robotics, artificial intelligence (AI) and augmented reality (AR) are actively employed throughout global sites. Processes heretofore managed manually on the production floor will now be automated. “Internet of Things” (IOT) is impacting and shaping the future of pharma manufacturing and ‘push-driven’ large batch manufacturing is being replaced by multi SKU smaller lot manufacturing processes and techniques to meet specific client demand. Johnson &
Johnson employ IOT sensor technology in the manufacture of their HIV blockbuster medication Prezista – sensors monitor and test production flow outputs at each stage without stopping the process. Similarly, in shipping and distribution new IOT and GPS enabled technologies allow shipments to be managed in real time, with management being alerted to temperature reports and any deviations, a welcome development to GDP for the management of temperature sensitive and cold chain products.
Contract Design Manufacturing Organisations
Aligned to the development of the “Smart Factory” and continuous manufacturing has been the emergence and development of outsourced manufacturing. Contract Design Manufacturing Organisations (CDMOs) are now valued at about $60bn and are growing annually at a rate of 8.5%. This growth is due to demand driven by increased usage of drugs in the emerging markets, increased number of start-ups with insufficient capacity and knowledge to bring new drugs to market and finally the growing number of Biologic drugs in development with many traditional pharma companies lacking the biotechnological expertise.
Counterfeiting & Serialisation
Despite quality being at the forefront of all manufacturing, the issue of counterfeiting, which costs the industry over $100bn and 70,000 deaths annually, is according to the WHO a catastrophic problem. Pfizer use Radio-Frequency Identification (RFID) tagging to address counterfeiting issues with its blockbuster drug Viagra. Each tag has a microchip which stores the electronic product code (EPC) that can be scanned and verified by distributors and pharmacies. The WHO advocates and promotes such initiatives but in general technology has not kept up with crime. For this reason - Serialisation - whereby product can be tracked ‘end-to-end’ in the supply chain has been evoked industry wide. Blockchain, the practice whereby all transactions are decentralised is a potential solution. Every transaction will be cryptographically digitised so that the full history of the product can be traced. Through blockchain, every over the counter product will potentially be scanned by a smart phone and the full history of the product confirming its legal status will be accessible and on hand. Augmented Reality can also appropriately address counterfeiting by reading encrypted codes on the packaging.
Price Erosion and the Patent Cliff- drivers of Industry Consolidation and M&A
All the world’s top pharma corporations have experienced revenue decline. Generic manufacturers, unburdened by R&D costs or bringing new drugs to market, simply file for the right to manufacture more cost effectively when a drug comes off patent. Teva, Mylan and Sandoz are the largest
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