From The Editor | May 5, 2016

Amgen's Contagious Relationships Spread Industrywide

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By Louis Garguilo, Chief Editor, Outsourced Pharma

Amgen’s Contagious Relationships Spread Industrywide

“This is where it gets contagious,” says Rodney A. MacLea, Amgen’s supply chain director.

But MacLea isn’t alarmed; this contagion is nourishing. Actually, it’s a follow-on effect from Amgen’s open communication in supplier relationships – and the company’s willingness to share the spoils born from that openness.

“It started when one of our suppliers took this concept to heart, and applied it to their network,” explains MacLea. “They were having yield issues, and of their own accord identified two parameters in a process they needed to control with their materials suppliers. When they proactively did that, problems started to go away and our supply stabilized.” Notably, both sides benefitted long-term from the efforts.

In an initial article with MacLea, I referred to Amgen’s supplier-relationship approach as a bilateral commitment to continuing operational excellence. Here’s how it works, and moreover, how the contagion needs to spread throughout the entire biopharma industry.

Spreads With Trust

It will require “getting over that first hurdle of trust” to arrive at MacLea’s envisioned biopharma-outsourcing environment. Initially, this is a localized trust, where a supplier can approach Amgen with challenges and issues, and in collaboration, take actions to solve them. It includes suppliers providing in-line, real-time data as processes are underway. In turn, Amgen openly communicates back to suppliers. For example, it correlates the data it’s received to better understand operational performance, and creates feedback loops for the continual sharing of information.

But even before that can play out, MacLea stresses it’s a requisite for sponsors to gain the correct perspective on what biopharma is actually paying suppliers for. “You’re paying for consistency,” he says with conviction. “That’s the foundation for ensuring a continuous supply of quality materials and products. You want the same, optimized product delivered reliably every time, by whomever is producing it for you. Understand that eliminating variation may require investment in the form of capital, resources, and or materials. That keeps this spreading.”

But the contagion doesn’t stop there. It jumps across the supply-chain network – including between what would otherwise be competing CMOs – and ultimately out to the entire industry. Here’s how I see MacLea’s stages to get there:

  • Mutually Identify Risks & Mitigation Alternatives (local)
  • Share & Monitor Performance Parameters (local, and supply chain)
  • Transparency Across The Entire Supply Chain (supply chain, industrywide)
  • Knowledge Transfer Across the Industry (industrywide)

We’ll cover the final step in a moment, but first let’s revisit our supplier example above (of self-imposed, stricter process control for its partners) to understand the initial steps.

“There was some additional expense on their side,” says MacLea about that supplier’s proactivity. “If they didn’t trust us – or weren’t willing to make the adjustment – Amgen would have consistently incurred waste through inefficiencies resulting from material variation. But we had built that trust, and we naturally started sharing the gains from improved yields, and higher levels of consistency in the materials provided.”

Once improvements such as these are made, and performance is measured and confirmed, Amgen wants this knowledge spread as needed throughout the supply chain. All involved members of the network should obtain and benefit from gains in productivity and consistency.

Having worked at a CMO, I can certainly see where this step requires another large dose of trust, and sponsor leadership. As mentioned above, competition has been the norm between CMOs and suppliers, not necessarily camaraderie or companionship. But MacLea says transparency, and a more connected supply chain, has been and can be attained, led by sponsor example (and at times, sponsor demands, we can be certain). In fact – and again using our example above – CMOs and suppliers are more reliant on each other than ever before. Amgen is elevating that reliance to a full cooperation.

The final stage, then, is set. It moves us from positive amplification to exponential growth, and perhaps industry transformation.

Hope For An Epidemic

Amgen is working to spread this supply-chain concept and its precepts vertically through the biopharma industry. MacLea is one of those leading the charge. “This knowledge transfer is the big piece we are now focusing our efforts on,” he says. “How can we get our industry to look at these ideas and make them mainstream? For example, the more of our peers who ask their suppliers for real-time process data, the more normal it is for suppliers to provide that data. Amgen’s then not the only one looking to more deeply understand their suppliers manufacturing process. This should become the norm.”

MacLea is particularly interested in getting both suppliers and his peers to more broadly accept a deeper mapping of supply chains. “We made the decision to adopt the practice of thoroughly mapping our raw-material supply-chain, and monitoring it 24/7 for potential disruptions to supply.” He tells me the company keeps in mind that ultimately this is done in the name of ensuring a reliable supply of drugs to patients. He also mentions two practical benefits, among many:

  • Risk exposure:  Sponsors often believe they have dual sources for a critical material. Mapping the supply chain in detail can disclose that CMOs frequently source their key raw materials from the same sub-tier supplier. “This immediately changes your risk profile. It leads to the need for understanding the business-continuity plans for that sub-tier supplier.”
  • Resource utilization: Knowing whether an event, anywhere in the world, will actually impact your supply chain allows you to avoid wasting resources on chasing non-issues. “There were over 500 events in 2015 that potentially impacted the Pharma industry, but only a small percentage required attention by Amgen’s supply chain.”

MacLea says this mapping initiative and other related activities help Amgen “shift from multi-tier visibility to supply chain transparency, leading to a clear view all the way back to the earth for critical raw materials.”

“Today we are starting to see this become more common, even for smaller companies,” MacLea concludes. “We’re determined to spread these concepts, and share the knowledge obtained, as the entire industry takes on this way of thinking.”

Or in other words, catches the new contagion.

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This article is based on a presentation given by Rodney A. MacLea, Director, Supply Chain, Amgen, as a part of the DCAT Week ’16 event at Waldorf Astoria in New York City, on March 19th.