The Patient-Driven Value Chain: Charting the Course to Excellence

Transcription

1 The Patient-Driven Value Chain: Charting the Course to Excellence Wayne McDonnell October 26, 2010 Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with written approval from Gartner. Such approvals must be requested via Gartner is a registered trademark of Gartner, Inc. or its affiliates.

2 Healthcare & Life Sciences Value Chain Coverage Spectrum Life Sciences Healthcare Suppliers and CMOs MFGs Wholesalers/ Distributors Pharmacies Payers/PBMs/ GPOs Providers Product Design & PLM Clinical Trial Supply Chain New Product Launch Global S&OP Global Distribution Sustainable HC Supply Chains Revenue Management in the Supply Chain Cold Chain Logistics 3PL/4PL Strategies Global Healthcare Reform Changing Role of the Patient Provider Supply Chain Metrics Value Analysis Programs Patient Contract Manufacturing Strategies Product Supply Architectures Quality Compliance Hubs Emerging Market Strategies Supply Chain Security SC Collaboration with Commercial Org Pharmacy Supply Chain Private Label Strategies Value Added Supply Chain Services Transformation of the Healthcare Value Chain Comparative Effectiveness and the Supply Chain Physician Preference Initiatives Enabling HC Technologies Consolidated Service Centers Value Chain Transformation Healthcare Value Chain Top 25 Joint Value Creation Demand Management Effective Sourcing and Procurement Cost to Serve Supply Chain Segmentation Supply Chain Talent Organizational Change Management Risk and Supply Chain Complexity Supply Chain Metrics

3 Time To Think Differently CIO Pharmaceuticals Understand patient needs and identify IT innovations that drive better outcomes CIO Medical Understand business process excellence in other industries

4 Evidence of Outside-In Value Focus How is GE Disrupting Itself? (HBR, Oct-2009) GE Healthcare reverse innovates conventional ultrasound to a portable ultrasound for Chinese market, based on Chinese clinicians input Impact = price of ultrasound unit drops from $100K s to $15K in 2007; global market grows from $4M in 2002 to $278M in 2008 ViiV (Nov-2009) GSK and Pfizer launch new HIV company to deliver advances in HIV treatment and care Our ambition is to leverage the best science, from multiple external partners, to create better treatment. Asian Cancer Research Group (Feb-2010) Lilly, Merck and Pfizer establish ACRG to accelerate drug discovery accelerate research and ultimately improve treatment for [Asian] patients affected with the most commonly-diagnosed cancers in Asia Large Pharmaceutical Company (Oct-2009) New Ops Strategy = Patient-Driven Supply Network

5 Two Races Ahead A Race Against Time Can we transform? A Race Against Competition Opportunities for Leaders

6 Fundamental Business Challenges: A Race Against Time Compliance & Cost Can we transform? Will we be ready? - Return 50% working capital to business - Cut Cycle Times 50% - Cut Costs 50% - Position products to compete in emerging markets

7 The Competitive Landscape: A Race Against Competition Is our strategy unique? If Not, CEO s are looking for excellence in leadership and execution to - Enable enterprise level, profitable trade-off decisions - Enable collaboration with our trading partners - Connect with patients for better outcomes

8 Disconnected Supply Chain Demand Supply Insights Become Market Driven Orchestrate the Demand-Driven Response Build Value into Supply Networks Risk Product Drive Innovation into Products and Services Opportunities

9 Demand-Driven Value Network (DDVN) Insights Demand Become Market Driven Orchestrate the Demand-Driven Response Supply Build Value into Supply Networks Risk Product Drive Innovation into Products and Services Opportunities

10 Operations and Innovation Excellence Leader Higher cash flow, profits, p/e Winners Operational Excellence (Perfect Order, Total Supply Chain Cost) Demand Supply Losers Product Laggard Innovation Excellence (Time to Value, Return on R&D) Leader

11 Lessons from Leaders Downstream data Logistics excellence Customer teams Performance with Purpose Become Market Driven Demand Orchestrate the Demand-Driven Response Supply Build Value into Supply Networks Global S&OP Downstream Data Joint Value Creation Customer value teams Demand visibility S&OP Lean pull model Global design and PLM Center-led COE s Global sourcing SC segmentation Drive Innovation into Products and Services Product Design for supply Scenario analysis on risk Early supply impact analysis Segmentation Commodity/Category Mgmt Innovation Funnel Lean programs Network Design Sustainability S&OP

12 Supply Chain Value Chain Whatever! The Supply Chain Traditional View: manufacturer pushes product toward the customer Definition: inside-out planning, sourcing, making, and delivery of products to customers The Value Chain Present View: collaborative relationships between trading partners seeking value for the end customer Definition: translation of outside-in demand from the customer into profitable perfect orders for trading partners The Path to Enlightenment How can we get better visibility? We need truly collaborative relationships! Ah, one size does not fit all! Do we have the right metrics in place? Are we aligned internally? Do we really understand cost-to-serve? Do we have the right talent?

13 Healthcare Value Chain Capabilities Model Patient Focus Outcome Focused Comparative Effectiveness Value Chain Goal: High Quality Patient Care at Optimal Economic Cost Collaboration Shared Vision and Goals Sustainable Collaborative Relationships Joint Value Creation Network Visibility Demand Inventory Compliance Foundational Capabilities Operations & Innovation Excellence Business Process Optimization Enabling Technologies Governance Dynamic Supply Segmented Supply Chains Value Added Services Change Management Vision Leadership Guiding Metrics Innovation Culture

14 Healthcare Supply Chain Top 25 Composite Score The Universe: 128 Manufacturers, Distributors, Retailers and US Providers 20% ROA 30% AMR Research vote 40% Financials 60% Opinion 20% Inventory turns 30% Peer vote

15 2009 Healthcare Supply Chain Top Johnson & Johnson 2. Sisters of Mercy 3. Cardinal Health 4. Owens & Minor 5. McKesson 6. CVS Caremark 7. Abbott 8. Novartis 9. Becton Dickinson 10. Wyeth 11. GSK 12. Astra Zeneca 13. Amerisource Bergen 14. Walgreens 15. Covidien 16. Cleveland Clinic 17. Merck & Co. 18. Genentech 19. Alcon Laboratories 20. Medtronic 21. Boston Scientific 22. BJC Healthcare 23. Roche 24. Amgen 25. Mayo Clinic

16 Lessons from Leaders Patient Focus McKesson Genentech Amgen Value Chain Goal: High Quality Patient Care at Optimal Economic Cost Collaboration Sisters of Mercy Boston Scientific BJC Healthcare Network Visibility CVS/Caremark Walgreens Dynamic Supply Owens & Minor Amerisource Bergen Alcon Labs Change Management Novartis Johnson & Johnson Foundational Capabilities Cardinal Health GSK Covidien Roche Medtronic

17 Who is the customer versus who should be? n=all industries, n=240 Source: AMR Research 2009 Healthcare Exchange Study

18 Challenges at the Provider s End of the Chain Q. What are the challenges to your existing healthcare supply chain model? Of the challenges you just selected, which one is the most significant? If costs are the top concern, what can we learn from other industries? Value of collaboration and role of information in dealing with costs? N = [121, Total sample]

19 Who can help address these challenges? Especially amongst larger systems, the manufacturers were deemed to have the greatest potential to solve these challenges. AMR sees this as a great opportunity to create differentiation via supply chain services. Quote from $500M+ Hospitals: We re looking to the manufacturer to drive efficiency in our SC. They have the knowledge, money and resources to drive visibility solutions. We're working closely with a manufacturer to drive down costs in our supply chain. This has definitely translated into more market share for them. Manufacturer X sales reps can speak the operational game/supply chain game vs. other manufacturers reps. N = [65 hospital systems]

20 So how will your company respond? Balanced service, cost and inventory = excellence! Customer service = perfect order from the customer s perspective Value chain, speed, segmentation, collaboration tell me more! Unit cost of manufacturing and capacity utilization is all that matters! Customer service = warehouse efficiency We re unique! Lessons don t apply Inventory is free! Slow but compliant is OK

21 Our Value Chain Strategies Must Look Ahead Understand customer's new intent Segmentation of needs at the patient and provider level Predict the impact of business conditions Leverage existing BI investments to enable data visibility and analytics Connect strategy to outcomes Focus on outcomes at the patient level and translate that focus into profitable execution of your end-to-end response to patient needs

22 Open Discussion / Questions