In the last five years we have seen a very rapid growth in recalls and drug shortages. The ramifications are not only a lack of life saving drugs for patients but also a rise in drug prices and counterfeiting. The recent issues with Avastin counterfeits and Doxil supply shortages clearly indicate the problem is growing and becoming more life-threatening. The situation keeps getting worse and the root causes need to be understood and addressed.

In parallel, we have seen the biopharmaceutical supply chain undergo massive changes based upon a fundamental change in the business model and organizational structure. Historically, biopharmaceutical companies were predominantly vertically integrated where they owned their own active pharmaceutical ingredient and bulk product manufacturing plants as well as their own packaging plants. In recent years, however, supply has become globalized and production virtualized. This has rapidly created a significant increase in the inherent risk in the supply chain. Products can now be manufactured in stages from all over the world and through a network of complex relationships. While the manufacturing network has grown in complexity the global distribution network has substantially grown in volume. China, India, Brazil and Turkey are all major growth markets, however their distribution networks are inherently vulnerable to diversion and counterfeiting. The US and EU markets are also threatened by the larger global distribution market with the diversion of counterfeits through importation or distributors engaged in illegal practices.

In order to address the growing risks in the supply chain, biopharmaceutical companies need to maintain the oversight of and collaboration with manufacturing partner companies as if they were their own plants. Many urge even greater visibility and tracking since partner companies have to manage the needs of multiple customers simultaneously. Coordination and visibility across the entire production lifecycle, including visibility into production status, quality reviews, material availability and current inventory levels, are essential to maintain the supply of quality products to the market. From a distribution perspective, China, India, Brazil and Turkey are now requiring both serialization and track and trace of products. The goal is to empower the pharmacist, the clinician and even the patient with the tools to verify the authenticity of the product before dispensation or administration. The US and EU are also moving towards comprehensive adoption of serialization, track and trace with authentication.

At TraceLink, we are working with major biopharmaceutical companies to address the need for superior collaboration, visibility, track and trace in order to achieve the supply quality, capacity and integrity required by the industry. Our approach is to create tight collaboration between supply planning, quality, logistics and manufacturing across companies in order to deliver quality products on-time and in-full. Our track and trace solutions use emerging GS1 standards being adopted by almost all countries for ePedigree and authentication delivered either through enterprise integration or mobile solutions available to patients via iPhone, Android or SMS phones.

With rapid adoption of the solutions that the industry has been developing, we can eliminate drug shortages and counterfeits from our global supply chain.

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In 2003, a few of us founded SupplyScape Corporation (the predecessor to TraceLink, Inc.) with a simple vision. We believed that the next wave of enterprise value generation was in integrating people, processes and information between companies. Our focus and core competency to the industry was to provide the integrative network for supporting the rapid selection and deployment of multi-enterprise applications. Today we express our mission as:

“TraceLink is Creating the Predictable Supply Network by Executing Any Business Process with Any Partner at Any Time.”

This month we announced our strategic partnership with Patheon, Inc. to promote supply optimization in Life Sciences. In our deep collaboration with the executive team at Patheon, we identified a number of immediate value propositions for Multi-Enterprise integration between contract partners and their customers. We have seen these core value propositions validated by every Pharmaceutical and Biotech company we are engaged with on building the Predictable Supply Network.

These value propositions can be classified into 5 areas:

1. Transactional Integration: This is the basic level of integration that allows for business documents representing inter-company transactions to be executed seamlessly. It is always surprising how hard it is to get large and small companies integrated into a common protocol and harmonized data sets to conduct business.
2. Data Synchronization: Beyond transactional documents there is a need to share information about process status, inventory disposition and goods flow between companies. Today teams on both sides are constantly generating reports from one system and sending it to the other company in order for it to be keyed into their system. Cost of labor and inaccuracies impacts execution and planning.
3. Synchronization Frequency: The use of manual processes limits the frequency at which information is exchanged. Monthly snapshots are the norm and weekly are the best one can envision. The ability to automate daily or event based synchronization of information provides both companies an advantage in managing demand and fulfillment. Predictability of supply has an immediate top line effect on revenue as well as a bottom-line effect on inventory costs.
4. Shared Visibility: Too often planners and production managers are looking at separate systems with different versions of the truth. With the TraceLink solution the network synchronizes the harmonized information into shared visibility that is available to teams from both companies. We are able to link and analyze the information and the application is shared between the companies.
5. Ad-hoc Collaboration: Teams need the ability to share documents and notes in order to efficiently execute in a dynamic marketplace. Each team we work with always has a need that cannot be adequately captured through a structured business process. Therefore they need to be able to exchange notes and documents representing instructions, documentation, artwork and many more pieces of information that cannot be categorized a priori.

In order to ease the adoption and maximize the value, we agreed to build an SAP Adapter to integrate SAP implementations with the TraceLink network. Patheon will work collaboratively with us to define and develop the SAP Adapter. This will be of significant value for the industry since SAP is the largest installed base of ERP implementations and the clear leader in the top 50 Pharmaceutical and Biotech companies.

The value propositions represented here are just the tip of the iceberg. In all our collaborations with the industry, we can easily identify more and more business process integrations that will drive higher and higher value. I compare where we are today with where SAP was 30 years ago. The initial value of SAP was to consolidate the information and reporting from a single general ledger. ERP was built from those roots.

The Predictable Supply Network is being built on these five foundational value propositions stemming from our Multi-Enterprise Application.

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Today, we announced our strategic partnership with Catalent. Over the last six months we have learned significantly from each other and developed a clear understanding of the functionality and information that needs to be shared between a global contract manufacturer and packager with their thousand customers. Instead of getting distracted by the complexity of each relationship, we focused on functional simplicity and broad utility.

Companies have complex business processes and inter-company process integration is often a tug of war between two companies trying to force-fit one company’s process with another company. The semantics surrounding these conversations is also confusing, since business process names and information fields are interpreted differently by both parties. Expand the conversation to all your supply partners and you soon have a massive challenge in basic communication. The standards approach with EDI and proprietary portals only makes matters worse, because it requires too much process and information integration to get even the basic level of visibility.

In reality, we just need to use a single business application for processes that cut across all the supply chain companies. By using the same application that has a common definition of data, business rules and collaboration tools, we can eliminate the many-to-many, multi-enterprise issues. The purpose of a common application is not to supplant current business applications at each company but instead to put into a common application framework the processes we already conduct via our informal activities using fax, phone and email.

In any large-scale network application, the value is based on commonality of capabilities. Inter-operability and uniformity, enabling collaboration with all partners, is far more important than special features for specific members. Large-scale network applications focus on core features that enable valuable capabilities across all users. At the core, Facebook and LinkedIn are very simple applications that enable its users to connect and share information across a set of relationships.

Our approach at TraceLink was to focus on the core functionality needed to facilitate communication, coordination and collaboration for well understood business processes. In order to keep it simple and valuable for our customers we established three guiding principles for designing functionality in our service:

1. We are the communication vehicle between contract suppliers and their customers for their shared business processes.
2. We facilitate the shared execution of those business processes by enabling each party to push and pull information in a format and manner best for themselves.
3. We link and instrument the related business processes to show mutual dependencies and overall analytics.

These principles enable us to fill the capability gaps between companies without imposing one partner’s IT requirements on another. We believe our approach and solution will deliver the true benefits the industry seeks from a Cloud Supply Chain. Our partnership with Catalent will enable us to lead the adoption of a solution that will create a more predictable supply chain.

No BullWhip!

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