Operations Management in Pharmaceuticals01/19/2007 Operations Management in Pharmaceuticals

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AUTH: Sani, A. Jabbar
DATE: Fri, 16 May 2003

I am MBA student with an emphasis on Marketing Management. I have to write a paper for the Operations Management class. Since my career objective is a position in the pharmaceutical industry. So I want to write on some Operations Management issues in the Pharmaceutical industry. This is basically what I want to do. However I couldn’t find a specific issue to work on so far.

I was wondering if someone could advise me.


AUTH: Dave Cobb
Probably the best topic is Supply Management pharmaceutical. It allows you to explore the forecasting process from the marketing perspective and the operations integration. While it seems pretty straight forward, rarely is it completely correct. Cases that stand out: Cipro after the terrorist scare, the sudden need for smallpox vaccine, pneumococcal vaccine shortages. A key component would also include the FDA and impact timing the operations and anticipated supply with FDA approval process.

There are a couple of other topics that may help: Development of a manufacturing site based upon the development results.

Sources of information: IBF, PHARMA, and PMRG (see Pharmaceutical Marketing Resources)

AUTH: JMarcello Portela
Hi Sani,

You can try to analyze the value chain or outsourcing in pharmaceutical business.

AUTH: Mark McCarthy
Deploying an online marketing initiative such as multiple online Detailing programs. Operations (technology, vendors, hosting, deployment) and Marketing (target audience, content, ROI measurement).

AUTH: Mark Gleason

One suggestion is applying operations management to sales force coverage, an ongoing challenge for pharma because of size and cost of sales forces. A leader is that area is ZS Consultants based in Evanston, IL. Perhaps you should contact them and see if you could do a paper on the topic working with them – they have a lot of publications and are arguably the leader in modeling marketing and sales functions of pharma companies. Might be an interesting opportunity for an internship too. Great credential builder, not to far from Charleston, great experience to work with them. A suggestion.

AUTH: Jon Haggert
One issue that I can think of is assuring a new pharmaceutical product = is launched on time. Operations Management typically has to determine var= ious scenarios/capacity constraints to assure their current products are manufactured & distributed as well as any new products coming down the pipeline. Typically, they use the same people, equipment, plants, and other support area for the same purposes. The Marketing role is to ass= ure the new product is delivered as promised to the customer. Hopes this helps.

AUTH: Elvira Linazasoro
Hello there!

I think that one important issue to work on is the one regarding to forecasting in marketing and how it affects Operations Management. Often you can find as a marketing manager that what you are forecasting for both short and long term is kind of “unreal” for the people in the plant, due to several causes, ie, the pharmaceutical presentations you are expecting to launch, the real plant capacity, importing of raw materials or finished products that need to be re-aconditioned in the local facilities… you have tons of subjects to write papers on the close relationship that Marketing and Operations should have and that most of the times, its blurred because marketing just does marketing and the plant… well, just produces.

I hope my comment is useful for you. If I can be of any further assistance, feel free to contact me.

AUTH: Samuel Kelley
One might consider examining the role that cost control (re operations) plays in the strategic posture of firms during an era of cost containment.

For example, applying a framework such as Porter’s generic strategies may be helpful. Firms that have traditionally been broad differentiators are now finding it necessary to shift their orientation toward “low cost” or cost leadership as therapeutic innovation does not offer the pricing power that it once did. Consequently, the environment shifts profit drivers (increased margins) toward cost control, outsourcing, efficiency, salary containment, squeezing price reductions from suppliers, best practice implementation, time to market, etc.

Some of the interesting things to observe right now are the problems that some of the top pharma companies are having with getting bad audits from the FDA in their manufacturing processes. This represents a real long term problem with a number of firms and is representative of issues that firms face when available cash flows are not as plentiful as they once were.

An ATKearney survey/report (a few years back) concluded that the most inefficiently operated portion of big pharma was the marketing/sales area. It was suggested earlier that this might be a good place to look for some research. Another area to examine might be the efforts that big pharma undertakes in organizing its operations sp that medical liason officers, phone center employees, sales reps, internet promotions, pharmacoeconomic research and direct to consumer advertising is being integrated to present a coordinated battle plan to pull pharmaceuticals through the pipeline. The essence of much of this, in my view, is to generate better pricing capability, and revenue generation — Not just penetration. You would probably find this pretty embryonic and confused in most firms and might prove to be a good place for a young person to gain some understanding, begin a career, particularly in consulting.

Most seriously, all of these wise folks have given you some very good ideas, but I suggest you find something out of these that gets you excited and where you think you might enjoy becoming a world class expert on the topci and spending a career in that area. Even if you don’t the project should give you something good to talk about when it comes time to go job shopping.

Once you pick a topic you may wish to ask again on the list for suggestions of a dependent variable, or available sources of firm, division, or plant level data.

AUTH: Meghna Mehta
Hi Jabbar: I must say quite a off-beat but interesting issue. Well, there are a whole lot of issues that a pharmaceutical company faces that has association with marketing and operations. In fact, some of them could be like:

a) Pharmaceutical Sampling management – pharmaceutical industry in US spends more than half of its marketing budget on free physician sampling (approx. $15 billion annually) – operational issue could be EOQ in sampling, sampling product mix requirements (as some companies send samples as per the request of the physicians), cost of sampling inventory, sampling production schedules ( as samples are manufactured in the same production lines in the factory as regular medicine for sales) and also sampling allocation across the sales territories in US. The issues here create at times what we call bull-whip effect.

b) Pharmaceutical Sales call management: As in service operations – a la …sales force allocation, sales force time allocation for A,B, C category of customers, sales call scheduling, productivity analysis per call etc.

c) Pharmacetical new product launch planning: scheduling of pre-launch, post launch marketing, production, sales activities.

Also you could look at the issues like pharmaceutical marketing activities planning for the year…generally the companies chalk out their maketing activity plans for teh entire year…so you could use the knowledge of operations in planning the activities like doctor promotions, scientific seminars, conferences,group meetings etc etc…

There are plethora of things that can be looked at. But I guess u would find a hell lot of info. at some of the consulting firms’ sites …i guess accenture does a lot of operations mgmt jobs for pharmaceutical companies…Bye Bye

AUTH: Alain Rinaldi
Hello Sani,

Th topic of Drug Delivery improvement linked with use of generic formulations may be of interest, even if decent work has already been carried out on the subject, some niches may be untapped yet.

AUTH: Sani, A. Jabbar
I did not expect this great response, qualitative and quantitative as well, to my question. I want to say Thanks to Jon Haggert,Mark McCarthy,Mark Gleason,Dave Cobb,Marcello Portela,Elvira Linazasoro,Samuel Kelley,Meghna Mehta,Dr Alain Rinaldi and Firas Al Nufoury. I truly appreciate your wise feedbacks.

I am trying to gather material on the topics recommended so I can discuss them with my instructor soon. However I have some questions regarding some of your suggestions.

a.. Mr. Mark McCarthy : You mentioned about “Deploying an online marketing initiative” such as multiple online Detailing programs. Operations (technology, vendors, hosting, deployment) and Marketing (target audience, content, ROI measurement).” Could you explain it in a little more detail, what do you exactly mean by “marketing initiative” in this scenario (given that my main focus in this paper is Operations Management).

b.. Mr. Mark Gleason: with reference to “applying operations management to sales force coverage”; I am not quite sure if I understand what you mean. Moreover,Would it be possible for you to provide me with some contact information of ZS Consultants you recommended in your message.

c.. Mr. Dave Cobb: Speaking about your recommendation, “Development of a manufacturing site based upon the development results”, what would be the variables in deciding the site location. Are you referring to potential market, raw material, human resources etc?

Once again thanks a lot for your kindest advises.

AUTH: Dave Cobb
Yes, all those factors are critical, also being sure to capture the short and long term product forecast. The key marketing element is the accuracy of the 10 year forecast, capturing competitive launches, projecting trends of the market, trends of the sufferer group, and impact of managed care, policy, and treatment recommedations.

Then you have the global forecast that requires similar analysis on a country by country basis.

Full integration of marketing process and operations to manage the supply chain and ensure sufficient supply

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