Imagine a company that has a fantastic new drug or medical device in the pipeline. Successful market launch around the world becomes life critical for this company. Based on our experience BCI Global has defined four building blocks that help companies in these situations to “guarantee” a flying start.
The life sciences industry is facing many challenges. Examples are the high complexity in the markets (financing, market access, pricing, regulatory), the competitive landscape (generics, scattered landscape of smaller start-up companies) as well as the ever increasing pressure on costs. Successful launch planning and execution therefore have become life critical for start-up and fast-growing life sciences companies.
Martin Gouda, Partner Healthcare Supply Chain Solutions at BCI Global: “The importance of successful launch planning does not only account for the initial market launch of these companies, but also for the longer term future of a company. These small but very promising companies have a once in a lifetime chance to build an optimal organization from scratch. Good decisions in this phase will have a longstanding positive impact on the company’s success”.
Next to working for the industry leaders, over the last 10 years BCI Global has developed a strong practice in supporting start-up companies, especially in high value and biopharma (including orphan drugs) in building a strong operational foundation for the initial launch and the longer-term future.
Johan Beukema, Partner Manufacturing Footprint and Location Strategies at BCI Global: “In the projects we do in this segment, our clients learn that future success requires a strong end to end supply chain, a clear distribution strategy as well as well thought-through location strategies for the international offices. Typically the management focus is still fully on product development, clinical trials, market access, pricing strategy, early access programs. But this is only half of the story.”
Based on our experience BCI has defined 4 key messages that we recommend life sciences start-ups to take into account early enough in their launch preparation process:
The only way to develop an optimal supply chain for new life sciences companies is to take an end-to-end approach: from sourcing, through manufacturing, packaging & labelling, distribution, all the way down to the patient.
Typically companies first take decisions on the upstream supply chain (also driven by its clinical production strategy) and start to think about the downstream supply chain only much later. In the clinical phases the focus is on producing the product in small quantities. The manufacturing is not so important at that moment as long as the product is available and can be distributed to the markets where the trails are run. In the commercial phase volumes typically are substantially higher and therefore the configuration of the supply chain becomes much more important from a cost, business disruption risk as well as customer service perspective.
Martin Gouda: “In a recent project we were confronted with a situation where the upstream supply chain was planned to be implemented at CMOs in the US. When starting the analyses we found out quickly that this was far from optimal: the major market volumes were projected to be in Europe and there were even more feasible CMOs available in the European market. Although it was getting close to launch date, we helped the company to redesign the strategy and worked with CMOs to reposition activities to their European sites in order to have a much more optimal supply chain from the beginning”.
Outsourcing is naturally the name of the game in this industry. Individual fast growing life science companies are too small for own operations. Often companies start selecting the right partner for every individual step in the chain: API production, drug substance, drug product, pack/label, warehousing and distribution, order to cash, etc.
Given that many of the service providers, both on the upstream and the downstream side, have expanded their capabilities, it is essential to take an integrated approach when selecting the right partners. There may be opportunities to combine for example API and drug substance production at one partner and one location. On the downstream side there are nowadays providers in the market who can provide secondary packaging and labelling, warehousing & distribution as well as order to cash services.
By taking the integrated approach companies can have a much more lean partner portfolio, leading to lower costs, lower risks and higher quality standards.
Besides decisions on the supply chain, also the offices footprint is an important theme: How to organize the company? Where to position the HQ? Is IP taken into account? Which functions can be consolidated in a global HQ? Which functions need to be located in the global regions or even individual countries? What impact does tax have on the decision where to locate US, European or APAC headquarters?
The executives in these companies typically all have their own past experience with different locations around the world. Personal preferences and perceptions are prominent, however often based on outdated and biased information.
Johan Beukema: “Even if the regional offices initially are only small, still a fact-based location decision is key. Often the organization starts to grow very fast after commercial go-live and if the offices are not at the right location, companies are suddenly confronted with for example very high labor costs, low labor availability, unfavorable labor regulations or tax and regulatory disadvantages”. In Europe, companies often automatically place Switzerland at the top of the rank. However based on a thorough cost/quality/risk analyses in many cases it turns out that The Netherlands, Belgium, Germany or Ireland are great locations as well. In Asia-Pacific Singapore is still the lead location for regional headquarters for start-up life science companies, although several alternatives are also coming up.
Finally, also from an organization perspective start-up companies have the once in a lifetime opportunity to build an organization that is effective and efficient and will prevent the mistakes that others have made: too many hierarchical layers, too many silos, too many people.
Martin Gouda: “On the operations side of the company we recommend to build an organization that spans the end to end operations and that oversees the globe instead of building upfront a thick wall between manufacturing and distribution as well as between global HQ and the regions. Taking decisions in the light of the end to end supply chain is key”.
BCI Global’s services for start-up and fast-growing life science companies include:
For more information please contact Johan Beukema or Martin Gouda.