Zero to Hero Helping a pharma company start up global operations to deliver a potentially life-saving antiviral DOWNLOAD

Abstract

A pharmaceutical startup company received U.S. Food and Drug Administration approval for a promising antiviral. But before it could get a signed contract, it needed to guarantee quick delivery of large quantities of the drug. Deloitte helped the company in its efforts to ramp up global manufacturing and distribution from scratch in record time, with minimal investment. They were able to get the drug to market five times faster than usual – in five rather than 25 months – to help save lives of patients with severe symptoms.

The Challenge

This bio tech startup company with fewer than 100 employees had a promising new drug that showed signs of being effective. But it had no existing manufacturing or supply chain capabilities. One of the key challenges was to secure global production and supply chain capacity without a clear idea of the total market size or even which markets would place orders. This uncertainty made it hard to know how much to invest and complicated the process of vendor selection and negotiation. The model needed to work for both near-term orders and the full-scale commercial launch.

How We Helped

Deloitte helped the company in its efforts to draw up a plan including production schedules and vendor solicitation. The plan considered everything from technical specifications to due diligence on technical capabilities for all dimensions – raw materials, active pharmaceutical ingredient (API), synthesis, formulation, fill and finish and packaging. It also covered a variety of distribution scenarios.

Our team then helped the company design and implement a global manufacturing and distribution network to get the product to patients and health organizations as quickly as possible. Specific activities we supported were to:

• Identify vendors to provide raw materials, create the API and manufacture the final product
• Develop a range of demand scenarios and conduct executive workshops to design a flexible manufacturing strategy
• Conduct a rigorous RFP process and negotiate vendor contracts that included fast-track production schedules and flexible manufacturing options
• Develop a comprehensive distribution strategy that included guidelines and allocation criteria for prioritizing orders from different customers

Once production started, we helped them in their efforts to actively manage the production process and timelines to minimize the problems that might delay delivery of this potentially life-saving drug. Specific activities we supported were to:

• Create a master supply chain schedule and track critical path components, raw materials sourcing and manufacturing lead times
• Provide on-site monitoring of contract manufacturing activities
• Track and analyze regulatory developments for potential road blocks

Moving forward, Deloitte continues to provide project management related services as the company ramps up to full-scale commercialization. We are also helping the company in its efforts to develop alternate strategies for global manufacturing, distribution and risk mitigation.

Solution

Designing and implementing a global strategy for manufacturing and distribution is particularly challenging in the pharmaceutical business. Every step of the process is strictly regulated and controlled.

In this case, the challenges were even greater because of the short lead times and uncertainty in demand. The company needed to achieve high volume production very quickly. Yet, at the time vendor agreements were being negotiated, there was no way to know exactly what the actual volume would be. In fact, company leaders could not even be sure whether they would get any orders at all. This uncertainty left the business in a very difficult position. If it did not commit to sufficient volume, it would be unable to secure the deals necessary to produce and distribute the drug. But if it failed to achieve the expected volume, it might go bankrupt.

Through a combination of deep experience and industry relationships, they were able to negotiate flexible vendor contracts that reduced the standard production lead time by 80 percent – from 25 months to only five. They also negotiated capital expenditure reductions of $24 million, which represented a savings of more than 10 percent on sales of $240 million.

The company successfully delivered its initial orders to customers in major regions around the world. This not only allowed the company to help save lives; it enabled the business to generate revenue 18 months ahead of schedule, providing funds to develop other innovative products and treatments.

“Unclear demand for our anti-viral meant that we didn’t know how much capacity we needed from our manufacturing partners. Deloitte Consulting supported our operations arm throughout the entire start-up process – from obtaining initial orders to achieving full commercial production. They helped us be responsive and flexible as we rushed this potentially life-saving drug to market. And we’ve now reached cash flow 18 months earlier than usual.”
- CEO, Pharmaceutical R&D start-up