YOUR PATIENTS DO IT FOR. Drive better patient outcomes at speed with intelligent life sciences supply chains. Accenture Life Sciences

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1 Accenture Life Sciences DO IT FOR YOUR PATIENTS Drive better patient outcomes at speed with intelligent life sciences supply chains. Patient Inspired. Outcomes Driven.

2 SHIFT FROM VOLUME TO PATIENT VALUE The rise of specialty medicines and the shift from a product to a patient outcome orientation create a burning platform for a new, more intelligent supply chain. The life sciences industry is being disrupted by a confluence of forces, including socioeconomic changes, scientific advancements and healthcare consumerization. As these forces come together and digital technologies advance at an unprecedented pace, life sciences organizations have an opportunity to fundamentally change the patient experience. Taking advantage of this opportunity requires a shift in focus from delivering volumes of products to delivering value for patients and healthcare systems. As an example, patients with B-cell acute lymphoblastic leukemia are benefitting from chimeric antigen receptor-t (CAR-T) cell therapy, a miraculous technology that rewires one s immune system to fight the cancer with the timely delivery of engineered T cells to the right place throughout the body. 1 But instead of taking a pill or injection, patients have their T cells shipped to a facility where they are genetically altered and then shipped back to be reinfused into the patient s bloodstream. That requires a very different supply chain than we see today. And like CAR-T therapy delivery, with the advances in specialty medicines, gene therapy and digital therapeutics, the life sciences supply chain must be reimagined. 2 DO IT FOR YOUR PATIENTS

3 Looking at the supply chain as an engine for growth and evolving into a customer service provider by getting closer to patients is key to future strength. While few supply chains are currently ready, Accenture research shows 97 percent of life sciences respondents believe digital technologies will enhance supply chain capabilities to get closer to patients. 2 According to Accenture research, life sciences supply chain execs believe: 97% 73% Digital will enhance supply chain capabilities to get closer to patients. Supply chain function role in 2020 will be a customer service provider. 3 Organizations must harness disruption by leveraging digital technologies to architect an intelligent supply chain that is smart, connected, learning and agile. And this is now possible with advances in machine learning, extended reality, the internet of things (IoT) and blockchain. By placing the patient at the center, an intelligent supply chain uses analytics to understand their needs, adapts to changes and connects across the ecosystem to deliver services and patient outcomes at speed. Those who stand still, rather than pivot to new technologies to enable breakthrough life sciences supply chain capabilities, put themselves at risk of being unable to do the one thing that matters most: better serve their patients. 3 DO IT FOR YOUR PATIENTS

4 SEE IT TO BELIEVE IT Digital technologies are enabling an intelligent life sciences supply chain that revolves around services with the potential to make a big impact. To gain more insight into the impact of digital technologies on the life sciences supply chain, Accenture conducted a survey among life sciences supply chain executives of global organizations in The research shows a wide range of digital technologies have been deployed across different supply chain functions, and life sciences organizations are seeing both strategic and operational gains. Executives, however, are limiting their value potential by applying a fragmented investment strategy as they dabble in digital technologies across the different supply chain functions with a very generalized focus on increasing efficiency. 4 DO IT FOR YOUR PATIENTS

5 A wide range of digital technologies, tools and platforms have been deployed across different supply chain functions in life sciences. Custom manufacturing 3D printing Augmented reality Virtual reality Robotics Big data analytics Blockchain Autonomous vehicles 16% 13% 31% 24% 28% 15% 23% 32% 24% 24% 31% 24% 17% 31% 15% 24% 17% 12% 33% 17% 31% 31% 15% 28% 16% 44% 16% 16% 17% Product design & development Planning Sourcing & procurement Order management Warehouse management Manufacturing Transportation Service management Machine learning/ deep learning Cloud Process automation Cognitive computing IoT & connected devices Cybersecurity Social media Industrial IoT platforms None of the above 31% 17% 32% 35% 31% 33% 23% 31% 28% 24% 23% 37% 24% 24% 32% 32% 35% 1% 1% 23% 23% 31% 17% 28% 36% 1% 1% 28% 32% 23% 23% 23% 1% 23% 35% 23% 24% 1% Product design & development Planning Sourcing & procurement Order management Warehouse management Manufacturing Transportation Service management 5 DO IT FOR YOUR PATIENTS

6 Our research indicates that there are opportunities for bigger value potential when investing in digital technologies across the supply chain. We are seeing the art of the possible through early digital adopters in life sciences supply chains: PLAN Machine learning can be used to enable leading-edge supply/demand planning capabilities. Accenture helped a global pharmaceutical company establish a supply chain planning capability with enhanced business processes and advanced systems. Accenture led the overall program management and solution implementation testing through production, which included developing the hyper-care approach and longterm support model. The initiative targeted a reduction of inventory working capital by approximately $350 million and a high return on investment with inventory reductions achieved through SKU-level market segmentation and finished goods inventory modeling. Process automation reduced manual effort and management by exception through the use of interactive visual dashboards for more efficiency. MAKE/BUILD In its digital biologics plant in Geel, Belgium, Sanofi installed sensors that measure more than 5,000 parameters along the production process and generate over one billion data points in every single manufacturing cycle for analysis in helping to monitor and maintain high production yield levels and enable predictive maintenance. Each of Sanofi s supermodern plants also leverage augmented reality (AR) and virtual reality (VR), giving them real-time views and information to make data-driven production decisions and adjustments as needed. 5 The realm of possibilities for life sciences organizations may extend even further with innovations like Microsoft s HoloLens and digital twins a virtual representation of a machine or the entire plant that informs workers on a machine s status and enables remote interaction. Imagine the plants of the future with plant managers as connected colleagues managing entire networks of plants remotely all the while enabling their physical presence remotely through the capabilities of AR and VR. This future has already arrived. FULFILL/DELIVER Drones can be used for cycle counting in enabling warehouse automation. Accenture delivered an autonomous, indoor camera processing system proof of concept for stock inventory management in distribution warehouses, which successfully tested the ability for drones to co-inhabit distribution space with staff operators and integrate with the camera system. Other examples of using new technologies to fulfill/deliver in the supply chain include IIoT for temperature tracking during delivery and blockchain for serialization. Digitalization is enabling these capabilities with blockchain at the forefront. Accenture Research shows that 64 percent of life sciences organizations are currently deploying blockchain, with another 30 percent planning to deploy it in the next 3 years. 6 A strong and timely use case for the application of blockchain is for serialization and track and trace, which presents a significant opportunity in effectively and securely sharing data across the supply chain and, eventually, with the end patient. 6 DO IT FOR YOUR PATIENTS

7 UNDERSTAND THE CHALLENGES IN CREATING VALUE WITH DIGITAL TECHNOLOGIES By anticipating them, you can determine a course to conquer them. Approximately half of life sciences executives report three top challenges in creating value with digital technologies inadequate technology skills among employees, and absence of a business case or clear strategy. 7 % Ranking within top 3 Inadequate skills within workforce to drive value with digital technologies Absence of a business case to integrate digital technologies Absence of a clear business strategy to deploy and drive value with digital technologies Reluctance of workforce to embrace digital technologies Lack of compatability with legacy systems Lack of senior sponsorship Poor digital maturity of business partners 48% 51% 42% 45% 43% 44% 41% 43% 44% 40% 36% 37% 34% 32% Overall Life Sciences 7 DO IT FOR YOUR PATIENTS

8 In addressing labor as the top challenge life sciences organizations are facing while creating value with digital technologies across the supply chain, industry supply chain executives are focusing on skilling existing talent (80 percent) or hiring new talent (56 percent), according to Accenture research. 8 The reality, however, is that there is a lack of digital training in the industry. There can be effective alignment between business and technology leadership for investing in digital across the supply chain to create new capabilities and competitive differentiation. In life sciences, CTOs (52 percent) and COOs (33 percent) are the top two among primary stakeholders for implementing digital technologies, versus the overall findings of the CTO and CIO as the top two stakeholders across other industries from our research. 9 There is still opportunity in life sciences, however, to elevate the supply chain to a key element of the business strategy by aligning with the CEO and CFO for supply chain technology investments. Currently, only 20 percent of respondents see them as the primary stakeholders. 10 So, how can life sciences organizations begin to turn today s business challenges into supply chain opportunities? 8 DO IT FOR YOUR PATIENTS

9 ARCHITECT YOUR INTELLIGENT SUPPLY CHAIN By transforming your supply chain with leading-edge digital capabilities, you can deliver patient value. Life sciences organizations should align supply chain technology investments to their overarching business strategy and determine where they will have the greatest impact. Start by focusing on identifying what new capabilities are needed to enable competitive advantage and drive growth. Then, look at a collection of digital technologies that address specific supply chain challenges or needs, like providing visibility, increasing speed or enabling customization. Developing a comprehensive digital roadmap is key to driving tangible benefits. Otherwise, looking at technology investments and supply chain functions just one by one can substantially limit their impact potential. There is a balance to be found between a longer-term digital roadmap and initiatives that will yield benefits in the short term. Because most digital capabilities are low in effort and cost of entry to pilot, they offer the advantage to prove out the viability of long-term initiatives. Digital capabilities can be stood up in weeks, not months and exploiting this advantage is key to a successful digital strategy. Our research reveals that life sciences supply chain leaders are already utilizing and plan to continue utilizing a wide range of digital technologies to drive better patient experiences especially custom manufacturing, IoT and connected devices, Industrial IoT and cyber security. 9 DO IT FOR YOUR PATIENTS

10 Life sciences organizations are already utilizing and plan to continue utilizing a range of digital tools, technologies and platforms. Which digital tools, technologies and platforms is your business utilizing or planning to use toward driving better patient experiences or journeys? Custom manufacturing 3D printing Augmented reality Virtual reality Robotics Big data analytics Blockchain Autonomous vehicles Machine learning/ deep learning Cloud Process automation Cognitive computing IoT & connected devices Cybersecurity Social media Industrial IoT platforms 2% 10% 10% 10% 5% 5% 5% 15% 4% 4% 4% 4% 3% 3% 5% 4% 45% 53% 41% 49% 40% 51% 44% 47% 33% 62% 38% 56% 30% 64% 45% 40% 48% 48% 32% 64% 44% 52% 45% 51% 32% 66% 38% 59% 45% 49% 37% 59% No plans to deploy Next 3 years Being currently deployed 10 DO IT FOR YOUR PATIENTS

11 Digitalization can enable the transformation to an intelligent supply chain by connecting, providing insight and transparency, adapting and innovating. The intelligent supply chain has a control tower at its core, providing real-time visibility across planning through fulfillment with insights on: Why is this happening? What could happen next? How to improve? Life sciences intelligent supply chain architecture. STRATEGIC SUPPLY CHAIN & OPERATIONS DESIGN STRATEGIC SOURCING PRODUCT LIFECYCLE STRATEGY MANUFACTURING & NETWORK STRATEGY SUPPLY CHAIN SEGMENTATION EXCEPTION MANAGEMENT ANALYTICAL System of Cognition & Engagement GUIDANCE Intelligent Supply Chain Control Tower Platform Visualization & Modeling Predictive & Prescriptive Analytics Automated Supply Chain Optimization & Exception Identification Design Service/ Maintain Source Make/ Build Plan Deliver ART SM Cloud-Based Platform Internet of Things Cognitive Engine AGILE LEARNING CONNECTED INSTRUCTIONS CONNECTED EXECUTION System of Execution & Record Intelligent Enterprise Life Sciences Supply Chain Platforms FINANCE MANUFACTURING FULFILLMENT PROCUREMENT QUALITY SALES PLANNING LAB OPS SERIALIZATION ORDER MGMT CUSTOMER SERVICE Life sciences organizations need to leverage digital throughout their supply chains to get products and services to the patients that need them at speed and with the greatest efficacy. Root-cause analysis will facilitate faster, more strategic decision making to act on opportunities, remedy issues and continuously improve processes. An intelligent supply chain will enable stronger differentiation in the marketplace and faster growth through the delivery of value-added services that get closer to patients. All of this can result in a boost to the organization s brand image. 11 DO IT FOR YOUR PATIENTS

12 As life sciences leaders look to architect their organization s intelligent supply chains, it is important to remember that there is no one-size-fits-all approach the course you take will depend on your specific market position, goals and strategy. Evolving your operations with intelligent supply chain capabilities will require breaking down functional silos, redefining priorities, and building synchronized planning and fulfillment capabilities. No matter your course, these eight building blocks help architect an intelligent supply chain and accelerate the time to value. 1. Living Segmentation 2. Asset-Light Solutions 3. Partnerships & Collaborative Platforms 4. Real-Time, End-to-End Visibility 5. Service- Oriented Operating Model 6. Data-Led Workforce 7. Applied Intelligence & Performance Management 8. Continuous Innovation Using these building blocks to architect your intelligent supply chain, start with one or multiple functions. Incremental value is realized by expanding capabilities across the supply chain over time to drive transformational change and growth. 12 DO IT FOR YOUR PATIENTS

13 The key for helping to optimize your impact potential and return on digital investments is to determine the right combination of different technologies to enable leading-edge supply chain capabilities. It s all in the combination: Pharma companies need to push through their hesitation to reach the pay off. Unlock significant financial gains with optimal technology combinations 6% Mobility 6% Machine Learning 26% Autonomous Vehicles 12% AI 8% Autonomous Robots 8% Digital Twin Big Data 22% AR/VR Big Data 28% AR/VR US$80k (or 42% reduction) By combining five digital technologies, companies could achieve additional average savings of US$80,000 per employee. US$6.5bn (or 12% increase) A slightly different mix could result in additional average market capitalization of just over US$6 billion for a company. Source: Accenture Research 13 DO IT FOR YOUR PATIENTS

14 Lead the market in delivering better outcomes through an intelligent supply chain. Life sciences organizations must address key challenges concerning labor, creating a business case for funding, and developing a clear strategy for enabling an intelligent supply chain. To help increase your overall impact and return on digital investment: Develop a patient-centric strategy Center your supply chain strategy around patients and service delivery, aligning it with your organization s overarching business strategy. Put process before technology Develop the vision for the supply chain capabilities to address your future business needs. Then, identify the technologies to enable those capabilities. Focus investments, trial but fail fast Leverage your ecosystem to help prove out hypotheses. Work with a commercial organization to measure patient/customer impact. Fail fast and try again. Make talent a forethought Put a plan in place for the skills required to deliver leading-edge capabilities and address future needs rather than leaving talent as an afterthought. Use proof-of-concept execution and hands-on experience as ways to get resources skilled up while also recognizing the pitfalls. Sixty-eight percent of life sciences respondents see the supply chain as a support function on the 2020 horizon. 11 But by expanding supply chain capabilities beyond business support and increased efficiency and making it a key element of your organization s overall business strategy, it can become leading-edge and drive profitable growth. Integrating additional services around your products that speed traceability or visibility of where they are in the supply chain and how quickly they re going to reach a destination can further provide competitive differentiation in the marketplace. 14 DO IT FOR YOUR PATIENTS

15 ABOUT THE RESEARCH The Accenture research referenced on reinventing life sciences supply chains with digital technologies was conducted in early The markets included Austria, Canada, Germany, Ireland, Switzerland, United Kingdom and United States. Input was obtained through 900 online interviews with C-level operating, supply chain and procurement officers in addition to senior/executive vice presidents of manufacturing and supply chain. References 1 Labiotech.eu, A Cure for Cancer? How CAR-T Therapy is Revolutionizing Oncology, Clara Rodríguez Fernández, January 16, 2018 (Accessed on April 25, 2018 and viewable at: 2 Accenture Research, Reinventing Supply Chains With New IT, Life Sciences, March Ibid. 4 Ibid. 5 Fierce Pharma, Sanofi pushes hard into robotics and analytics to get most out of manufacturing, Eric Palmer, October 25, 2017 (Accessed on April 17, 2018 and viewable at: 6 Accenture Research, Reinventing Supply Chains With New IT, Life Sciences, March Ibid. 8 Ibid. 9 Ibid. 10 Ibid. 11 Ibid. 15 DO IT FOR YOUR PATIENTS

16 For more information CARLY GUENTHER Managing Director Life Sciences Supply Chain BRAD PAWLOWSKI Managing Director Life Sciences Supply Chain MATTHEW PIERSON Management Consulting Manager Life Sciences Supply Chain Join the Follow us on LinkedIn linkedin.com/company/ accenture_life_sciences lifesciencesblog Visit us at service-life-sciences-supply-chain About Accenture Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 442,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at About Accenture Life Sciences Accenture s Life Sciences group is committed to helping our clients make a meaningful impact on patients lives by combining new science with leading-edge technology to revolutionize how medical treatments are discovered, developed and delivered to people around the world. We provide end-to-end business services as well as individual strategy, consulting, digital, technology and operations projects around the globe in all strategic and functional areas with a strong focus on R&D, Sales & Marketing, Patient Services and the Supply Chain. We have decades of experiences working with the world s most successful companies to innovate and improve their performance across the entire Life Sciences value chain. Accenture s Life Sciences group connects more than 15,000 skilled professionals in over 50 countries who are personally committed to helping our clients achieve their business objectives and deliver better health and economic outcomes. Copyright 2018 Accenture. All rights reserved. Accenture, its logo, and High Performance. Delivered. are trademarks of Accenture. This document makes reference to trademarks owned by third parties. All such third-party trademarks are the property of their respective owners. No sponsorship, endorsement or approval of this content by the owners of such trademarks is intended, expressed or implied.