QAD West Coast User Group November 2014
Life Sciences Industry Trends and Update
Bart Reitter, Director of Marketing – Life Sciences
Life Sciences
QAD West Coast User Group November 2014
Save the Date for QAD Explore 2015
www.qad.com/explore
Life Sciences
QAD West Coast User Group November 2014
Agenda
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Industry Challenges & Drivers
Industry Present State
The Voice of QAD Customers
Industry Future State
QAD Solutions for Life Sciences
Life Sciences
QAD West Coast User Group November 2014
Drivers
Challenges
Industry Challenges and Drivers
Tightening
Global
Regulatory
Environment
Quality
Management
Initiatives
Changing
Business
Models
Supply Chain
Visibility &
Governance
Reimbursement
and Price
Pressures
Patient safety
driving tighter
regulations
FDA Case for
Quality
Growth of global
partnerships and
alliances
Visibility of global
supply chain
partners
Focus on core
life sciences
business
processes
Governance of
global supply
chain partners
Reduced prices
in global
markets driving
down margins
Global
regulators
looking for
consistent,
cGMP
compliant
process
Consistent
Quality System
management
processes and
metrics
Risk-based
quality
management
process
Rapid growth
and M&A
Accurate
management of
Group
Purchasing
Organizations
(GPOs)
Life Sciences
The Present
Bart Reitter, Director of Marketing – Life Sciences
Life Sciences
QAD West Coast User Group November 2014
Regulatory Action
• Drug Quality and Security Act (DQSA) – 2013
- Compounding Quality Act creates a voluntary compliance
regime for compounding pharmacies
- Drug Supply Chain Security Act requires the FDA to create
and implement a national track-and-trace system (2015
deadline)
• Falsified Medicines Directive - 2013
- Introduces measures to prevent the entry of falsified
medicines into the legal supply chain
- Substantially changes the European framework around the
supply of medicines and covers businesses that have
traditionally not been directly regulated through medicines
regulation
• FDA Safety and Innovation Act (FDASIA) - 2012
- Directs FDA to promulgate regulations establishing a unique
device identification system for medical devices
Life Sciences
QAD West Coast User Group November 2014
Customer Regulatory Challenges
• “We received a DQSA ultimatum from a
customer for year end 2014”
• “We’re focused on DQSA and the Falsified
Medicines Directive”
• How do we link operational data with
serialized data? (i.e. PO#, Transaction # and
Date)
• “The UDI problem is that all of the information
is not in one place”
• “We want our UDI solution to come from our
ERP vendor”
Life Sciences
QAD West Coast User Group November 2014
FDA’s Case for Quality Initiative
• Launched in 2011, this initiative aims to bring
stakeholders together to drive higher medical device
quality.
• To achieve this mission, FDA identified 3 core
components:
- Focus on Quality
• Compliance is still a baseline, but the FDA wants to identify
and promote practices that result in high-quality devices
- Enhance Data Transparency
• Provide stakeholders with understandable and objective
information about medical device quality
- Stakeholder Engagement
• Foster strategies that focus stakeholder interactions on
device quality
Life Sciences
QAD West Coast User Group November 2014
FDA’s Case For Quality Initiative
• Our analysis flagged manufacturing quality risks and
showed that firms that managed those risks by driving
quality organization-wide tend to be more
productive, with fewer complaints and investigations
per batch, and often have smaller quality units with
lower quality-related costs than their competitors.
• …while the sophistication and complexity of medical
devices has grown rapidly in recent years, the
sophistication of device manufacturers’ quality
systems have not necessarily kept pace.
Steve Silverman,
Director, Office of Compliance
FDA CDRH
Source: http://axendia.com/blog/2014/01/14/fdas-steve-silverman-on-the-case-for-quality-initiative-part-i
Life Sciences
QAD West Coast User Group November 2014
Quality Challenges
• Global Medical Device Manufacturer
- Class III implantable
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CAPA point solution
Complaint handling point solution
Paper-based supplier management “system”
Lack of integration
Looking for a complete QMS solution
-
Manage incoming inspections
NCRs integrated with inventory
Complaints turn into a CAPA
Management of Field Action Notifications
Life Sciences
QAD West Coast User Group November 2014
Quality Challenges
• Virtual Pharma company with outdated
QMS
• Outsourced manufacturing
• CMOs have their own systems
• Sponsor drives change to the CMOs via email
- Updated test methods
- Changes in specifications
- Changes in packaging
• Duplicated data and error prone
Life Sciences
QAD West Coast User Group November 2014
Quality Challenges
• Medical Device Component Manufacturer
• Utilizing Excel for Quality Management
• Areas for Improvement:
- Receiving Inspection:
• Recording inspection results
• Tracking/pulling of lot numbers associated with received materials in
inventory.
• In-Process Inspection Data – recording results and tracking/pulling
associated component/material lot numbers.
• Pick Lists Integration
- Non-Conforming Material
• Integrated with CAPA and Customer Complaints
• CAPA - integrated with NC Material
Life Sciences
QAD West Coast User Group November 2014
Device Manufacturing Current State
Shopfloor
Receiving
Compliance Risk –
manual data transcription
Compliance Risk –
manual data transcription
PLM/Document Mgmt.
Share Drive, PTC, Dassault,
Siemens, Documentum
Paper DHR
Compliance Risk – Error in
DHR
Warehouse
Overall Risk –
Traceability & Genealogy
that is paper-based
Other Systems
QMS, Training Management,
Maintenance
Life Sciences
QAD West Coast User Group November 2014
Pharma Manufacturing Current State
Real Factory
Making the product
Documenting the product
Hidden Factory
Life Sciences
QAD West Coast User Group November 2014
Changing Business Models
• Consort Medical Completion Of Acquisition of
Aesica – November 2014
• Medtronic, Inc. Offers EU Concessions In $43 Billion
Covidien Deal – November 2014
• Leica Biosystems Buys Devicor Medical Products For
Undisclosed Amount – October 2014
• Stryker Corporation Completes Acquisition Of Small
Bone Innovations, Inc. – October 2014
• Lubrizol has acquired QAD customer Vesta, Inc. –
August 2014
Life Sciences
QAD West Coast User Group November 2014
Changing Business Models
• “We are pursuing an aggressive acquisition
strategy.”
• “We are expanding our business to enter the
large molecule space as well.”
• “We are acquiring to be able to develop
combination products.”
• “Pursuing API manufacturing so we can
deliver entire value chain.”
• “We are seeing a need to develop
innovative forms of packaging.”
Life Sciences
QAD West Coast User Group November 2014
Changing Business Models
• FDA Public Meeting on Development and
Regulation of Abuse-Deterrent Opioids
- On October 30 and 31, 2014
• Opportunity for development of novel
medications
- If injected (parenteral), opioid-tolerant patients will experience
withdrawal signs and symptoms
- Crush, tamper and extraction resistant technology
- Push-Pull osmotic delivery system releases hydromorphone at a
controlled rate over an extended period of time.
- AVERSION technology: if dissolved for injection, a viscous gelatinous
mixture will form trapping oxycodone inside
- If crushed and snorted, inactive ingredients will cause nasal
discomfort
Life Sciences
QAD West Coast User Group November 2014
Supply Chain Visibility & Governance
• Integrate ERP and serial line level data
- “We want to mingle ERP and serial data”
- Operational and line level
• Opportunity to trigger the ASN on operational data
- Material produced
- Inventory updates
- Order status update
• “Integrating quality data like a CAPA event to
serialized data is a big deal.”
- Level 5 of the QAD Quality Maturity Model
Life Sciences
QAD West Coast User Group November 2014
Reimbursements & Cost Pressures
• “We are having major reimbursement pressures. This
business is not as profitable as it once was.”
• “We currently need to issue electronic invoices to an
authorized provider by the government.”
• “We estimate a loss of 3-4% of revenue due to
chargeback mismanagement”
Life Sciences
The Future
Bart Reitter, Director of Marketing – Life Sciences
Life Sciences
QAD West Coast User Group November 2014
Drivers
Challenges
Industry Challenges and Drivers
Tightening
Global
Regulatory
Environment
Quality
Management
Initiatives
Changing
Business
Models
Supply Chain
Visibility &
Governance
Reimbursement
and Price
Pressures
Patient safety
driving tighter
regulations
FDA Case for
Quality
Growth of global
partnerships and
alliances
Visibility of global
supply chain
partners
Focus on core
life sciences
business
processes
Governance of
global supply
chain partners
Reduced prices
in global
markets driving
down margins
Global
regulators
looking for
consistent,
cGMP
compliant
process
Consistent
Quality System
management
processes and
metrics
Risk-based
quality
management
process
Rapid growth
and M&A
Accurate
management of
Group
Purchasing
Organizations
(GPOs)
Life Sciences
QAD West Coast User Group November 2014
Every business process working at peak efficiency
and perfectly aligned with your strategic goals
An Effective Enterprise in the
Life Sciences is:
Patient Focused
Manufactures safe and effective
products for patient care
Compliant
Complies with applicable global
regulations and requirements
Innovative
Innovates to improve all aspects of
their operations
Life Sciences
QAD West Coast User Group November 2014
QAD in the Life Sciences Industry
QAD Cloud ERP for Life Sciences
Quality and Business Process Integration
Supply Chain Planning and Integration
Support for Life Sciences Business Models
Support for Needs of Life Sciences ERP Clients
Life Sciences
QAD West Coast User Group November 2014
QAD and the Life Sciences
Industry
Challenges
Changing
business models
Supply chain
visibility and
governance
Price / cost
pressures
QAD Cloud ERP for Life Sciences
• Full-featured, cloud-based ERP
• FDA “Qualified” IT environment
• Single, dedicated instance for
control and regulatory compliance
• Regulatory compliant SOPs
• Life cycle validation support
• On-premise or blended
deployment
Life Sciences
QAD West Coast User Group November 2014
Cloud Adoption
19%
The cloud software model
will account for $1 of every
$5 spent on software by
2016
14.3%
15%
Compound Annual Growth Rate
1/5
109%
11%
7.9%
Spend on Cloud ERP will more
than double (increase by 109%)
2012-2017
8%
~50%
4%
0%
Total ERP
Cloud ERP
23% to 50% increasing
willingness to consider SaaS
ERP 2009 - 2012
Life Sciences
QAD West Coast User Group November 2014
Why Cloud?
Lack of IT
Resource
37%
Global
Flexibility/Cap
ability
40%
Corporate
Directive
16%
Regulatory
Compliance
7%
Life Sciences
QAD West Coast User Group November 2014
Other Reasons to use Cloud Computing
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Maintain Focus on The Business
Business Agility
Reduced Capital Expenditures
Staffing Efficiency
Speed & Simplicity
Version Control
Life Sciences
QAD West Coast User Group November 2014
QAD and Life Sciences
Industry
Challenges
Tightening
global
regulatory
environment
Quality
management
initiatives
Supply chain
visibility and
governance
Quality and business process
integration
• Integration of quality and
production processes
• Automated quality
management
• Item data attributes for QC
• QAD serialization for track and
trace
• Lot trace workbench for
effective recall management
Roadmap Subject to change without notice. The above is intended for information purposes and should not be incorporated into a contract
Life Sciences
QAD West Coast User Group November 2014
Quality and Business Process Integration
• QAD ERP/EQMS Integration Maturity Model
- Integrating quality and business processes
Level Five
Level Four
Level Three
Level Two
Level One
Non-existent
integration/
automation
Integration
of QC
QMS
support
Integrated
QC flows
ER/ES
EQMS
support
ERP process
integration
Shop floor
integration
Mfg. quality
metrics
Enterprise
and supply
chain
integration
Supply
chain
quality
metrics
Life Sciences
QAD West Coast User Group November 2014
Quality and Business Process Integration
211.100
211.101
211.103
211.105
211.110
211.111
cGMP Integration
Work Instructions
Life Sciences
QAD West Coast User Group November 2014
QAD and the Life Sciences
Industry
Challenges
Reduced
reimbursement
and price
pressures
Changing
business models
Supply Chain planning integration
• QAD Demand Planning 7.0
• QAD Cloud Supply Chain
Planning
• QAD Supplier portal
• Transportation management
Supply chain
visibility and
governance
Roadmap Subject to change without notice. The above is intended for information purposes and should not be incorporated into a contract
Life Sciences
QAD West Coast User Group November 2014
Supply Chain Planning Integration
Life sciences ERP integrates supply chain elements
Global
Distributors
Raw
Material
CMO
Payers / GPOs
The Life
Sciences
Enterprise
Healthcare
Providers
Domestic
Distributors
Life Sciences
QAD West Coast User Group November 2014
Supply Chain Serialization
• Multi Level Serialization
• DQSA Support
• Supply Chain Traceability
Life Sciences
QAD West Coast User Group November 2014
Recall Management
Lot Trace – Forward
Inventory
Manufacturer
Recall
Extension
Original
Recall
Lot Trace – Back
This information is confidential and provided for discussion purposes only; It does not form a commitment to deliver any functionality and is subject to change
without notice.
Life Sciences
QAD West Coast User Group November 2014
QAD and the Life Sciences
Industry
Challenges
Reduced
reimbursement
and price
pressures
Changing
business models
Support for evolving life sciences
business models
• GPO contract management
- Trade Activity Management (for
early adopter customers)
- Rebate / chargeback management
• QAD Cloud EDI
- Link to electronic healthcare
exchanges
Roadmap Subject to change without notice. The above is intended for information purposes and should not be incorporated into a contract
Life Sciences
QAD West Coast User Group November 2014
Trade Activity Management
$$ Chargeback (List – Contract Price)
Serialization
Integration
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Trade management
Product safety
Supply chain integrity
Recall
NCR / CAPA
CAPA /
NCR
Admin
Fee ($)
Distributor Orders
from Manufacturer
Manufacturer
Contract
Price
Definition
GPO or
Buying Group
Hospital/Provider
Distributor
Invoices at List
Price – Std disc
Manufacturer
markets directly
to Provider
Invoices at
Contract Price
Customers Order
from Distributor
This information is confidential and provided for discussion purposes only; It does not form a commitment to deliver any functionality and is subject to change
without notice.
Life Sciences
QAD West Coast User Group November 2014
Support for Evolving Business Models
• Secure, compliant connectivity for life sciences
manufacturers with the healthcare ecosystem
Providers
Life Sciences
Manufacturers
QAD Cloud EDI
Distributors
Life Sciences
QAD West Coast User Group November 2014
QAD and the Life Sciences
Industry
Challenges
Changing
business models
Supply chain
visibility and
governance
Quality
management
initiatives
Supporting the needs of life
sciences ERP clients
• QAD Customer Engagement
Process
- Annual assessments
- Led by business consultants
- Learn how software can better
support your business processes
- Improvement recommendations
Life Sciences
QAD West Coast User Group November 2014
Save the Date for Explore 2015
www.qad.com/explore
Life Sciences