The change being experienced on the drugs market is a bitter pill for the pharmaceutical industry to swallow. Gone are the times when manufacturers invested highly in research and developed ever more drugs, securing high yields thanks to comprehensive patents. A different set of conditions, for example reforms in international health care and the competition from generic drugs pose previously unknown challenges for the industry. Previously, for example, all marketing efforts were directed at the physician, while today the interests of the patient and health insurance companies also need to be considered. And in addition to therapeutic effectiveness, financial aspects are also coming more to the fore in an attempt to ward off the competition from generic drugs.
In view of this situation, it is more important than ever for enterprises to optimize the profitability of their products across the complete life cycle, and reduce the complexity of the product range. Key factors here are effective product lifecycle management (PLM) and portfolio management. A typical midsize pharmaceutical company for example offers around 4,200 finished products – a huge number, resulting from the combination of a variety of active ingredients, the number of countries supplied, the different forms of administration, and packaging and container sizes. As analyses have shown, however, it is often not clear which products contribute to a company’s success, or to what extent.
According to a study by the business consulting firm Capgemini, entitled “Unlocking the Value of Pharmaceutical Products: A New Perspective on Product Lifecycle Management,” most of the managers in the pharmaceutical industry are not satisfied with the performance of their product lifecycle and portfolio management. Because of the high yields involved, PLM did not used to be a central theme, but is now becoming increasingly important, as research is no longer providing sufficient new “blockbuster” drugs. In addition, measures that extend the life cycle of a product are started too late and are often only triggered as a result of an expiring patent. As a result, the procedure is not methodical enough, key performance indicators (KPIs) are lacking, and responsibilities are not clearly defined.
Collaboration rather than silo mentality
One factor determining the success of PLM is the intensive and cross-enterprise collaboration between the areas of research and development (R&D), logistics, production, marketing, and sales. Here, it is necessary to define processes that establish PLM in the company – such as portfolio and profit analyses or cross-functional innovation cycles – which combat the silo mentality often seen in the pharmaceutical industry, because in the usually traditional organizational structures, responsibilities along the value chain are often strictly split between the individual areas. Each department works in isolation and only ensures the success of the product in its particular section of the value chain.
Comprehensive PLM requires cooperation between three different teams: the development team, the product supply team, and the product launch team. Each of these teams is cross-functional, containing members of the different areas affected, such as R&D, production, supply chain, or marketing. Together, they draw up a plan for how a product or product group is to be positioned on the market in the various phases of the life cycle, and implement the required measures. Responsibility for controlling the PLM process and for staffing the teams should lie with the body that also approves the product and portfolio strategy, which in most cases is the executive board.
Coordinated planning of long-term activities
SAP offers a series of solutions and components that support enterprises in setting up PLM. The components for portfolio planning and management of the combined application package SAP xApp Resource and Portfolio Management (SAP xRPM) help product managers to plan coordinated long-term activities in a targeted way. Support starts with clinical trials and extends from market introduction through to measures for product maintenance, for example new forms of administration or a wider indication range.
A number of analysis options, such as the display of the net product value (NPV) or return on investment (ROI), provide different views of the product portfolio and thus support strategic decision-making processes. The skill and resource management tools from SAP xRPM make it easier to staff project teams with suitable employees across functional boundaries. The cProjects and cFolders applications from mySAP Product Lifecycle Management (mySAP PLM) promote cross-enterprise communication, which is of the utmost importance, particularly in the early, creative stages of innovation projects.
One key factor for the effective streamlining of the product range is end-to-end data that can be used to evaluate all of an enterprise’s product-relevant activities. SAP Business Information Warehouse (SAP BW) and SAP Strategic Enterprise Management (SAP SEM) provide this data in integrated form together with the necessary analysis tools.
With “Product and Portfolio Lifecycle Value Management” Capgemini has developed a method that helps enterprises to evaluate and improve their options with regard to PLM. The transparent representation of the portfolio value, accurate to the day, is fundamental for success-driving decisions in the PLM environment, for example whether a new packaging variant should be introduced. Scenario planning is used to evaluate the effects of optional product maintenance or marketing measures on the basis of future market developments. For the development of the sales of a drug, it is extremely important to know how health legislation or reimbursement guidelines are set to change, for example.
Different starting points for PLM
In the life cycle of a drug, there are a number of different starting points for PLM initiatives. In the clinical development phase, these include partnerships and joint product developments, the acquisition of products, or external clinical research organizations.
In these fields of activity, significant benefits can be leveraged through the targeted use of IT solutions. Thus the solutions in the cProjects suite support partnership-based product developments, for example, and mySAP PLM as a laboratory information management system provides the right information at the right time, and controls the necessary processes, such as test planning, analysis, and documentation. SAP also offers a pharmaceuticals-specific enhancement for mySAP PLM, which can be used to manage in full all the information and documentation required according to the guidelines of the Food and Drug Administration (FDA) Part 11.
In the development or product launch phase, mySAP PLM supports all trial activities, from the laboratory trial through to ready-for-series pilot production and the manufacturing test run. All phases are covered here: test planning, determination of material requirements based on the formulas, procurement and capacity control, and the documentation of results. With the help of the Project System SAP R/3 functionality, trial hierarchies can also be defined to ensure that all the required test cycles have been covered.
The market launch of new drugs is another area that harbors the potential for optimization. Capgemini’s experience of projects has shown that a rapid launch carried out in parallel with the launch of other drugs enables an enterprise to secure peak sales that are 5 to 10 percent higher, and come three to nine months sooner. As a result, multi-millions can be made even with drugs that are not typical blockbusters. PLM activities in the product commercialization phase also offers great opportunities. One example relates to the optimized field sales concepts that provide physicians with the information they need, for example about risks and side effects, via the Internet or call centers. Portal solutions, which can provide the care staff with additional information in indication databases, have proven effective here. In addition, specific patient programs serve to improve patient compliance and thus increase the chances of a therapy’s success.
The introduction of packaging standards and systematic master data management are further starting points for PLM. In this respect, SAP Master Data Management (SAP MDM) guarantees uniform product, customer, and market data across national boundaries and makes this data available to the various processes.
In most companies, PLM strategies are developed on a global basis and implemented regionally, as the preferences regarding forms of administration or therapies differ from country to country. For this reason, the monitoring of PLM activities takes on a key role, as the success or failure of individual measures is a determining factor for the development and implementation of subsequent steps.
One prerequisite for regular monitoring is an IT infrastructure that supports distributed, cross-regional procedures across system boundaries and offers a user-friendly interface. SAP Netweaver is a good basis for this. The new “Guided Procedures” functionality combined with Adobe-based interactive forms enables processes to be flexibly structured using user-oriented input forms (“digital paper”). The Adapter technology facilitates cross-enterprise processes, as external systems can be easily integrated.
The study “Unlocking the Value of Pharmaceutical Products: A New Perspective for Product Lifecycle Management” is available free of charge from Monika Hespe at Capgemini, tel. +49 (0)30 8 87 03-1 75.