MOLECULAR DIAGNOSTICS TESTING: Industry Overview and SCM Challenges
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1 MOLECULAR DIAGNOSTICS TESTING: Industry Overview and SCM Challenges Alan Wells, Vice President, Diagnostics Laboratory Operations, Life Technologies Mike Crowell, Sr. Director of Supply Chain, Verinata Health 10/18/2013 October 18,
2 Molecular Diagnostic Testing Molecular diagnostics (MDx) is a class of diagnostic tests that identify nucleic acids or proteins to test the status of a disease. These nucleic acids or proteins help determine a specific therapy, or risk of developing a specific disease, or other health conditions. MDx is the fastest growing segment within the invitro diagnostic (IVD) space. driven by accuracy, high sensitivity, fast turnaround time, easy workflow, and cost-effective testing. 2
3 Poised for Growth Molecular Diagnostic Testing Market The global molecular diagnostics market is witnessing a period of profound growth. Projected to Reach $14Billion in 2014 The increase in the aging population and incidences of various chronic diseases. Global market is expected to double its market size by
4 New Technologies reduce entry barriers Molecular Diagnostic Testing Market Molecular Diagnostics involves multiple technologies to identify genetic variations in individual patients. PCR, FISH, hybrid capture, sequencing and microarrays. US Market is highly fragmented with >500 Companies represented. $55Billion by
5 A New Paradigm? Navigating the Abyss No template to go by Delighting which customer? (Patient/Physician/Lab Gatekeeper?) Diagnostic testing is a demand driven activity that requires a responsive supply chain. Driven by actual customer demand rather than expected usage. A real need for advance information Regulatory Environment ambiguous and fluctuating CLIA regulations How do these fit within traditional business processes and systems? FDA and uncertainty over regulation Commercial sense of urgency VC Funding and low barriers to entry 5
6 SCM Challenges Traditional Manufacturing SCM does not always fit into the LDT/CLIA mold. Investments in SCM infrastructure are usually small by comparison Competitive Business Drivers are the same. vcogs, Quality, Customer Service and Delivery Time (TAT) Requires doing more with less in a changing environment Creative Solutions lead to evolving Best Practices, tools, and networks. 6
7 Example Commercial Lab SCM Flow Strategic Sourcing and Procurement Supply Planning Materials Management Logistics Management SCM= Optimization of Extended Enterprise - Achieving Synchronous Flow to Add Value for the Customer
8 Organizational Challenges Gaining trust of SCM within a CLIA environment. How do you balance the needs of commercial ops/client services vs. the needs of SCM? Working with intermediaries and suppliers with little knowledge of the diagnostic companies needs. Reagent manufacturers Logistics Providers (Specialty Couriers/ Clinical Study )
9 Planning Challenges Operating in a Make to Order environment Demand Driven Long Range Forecast Inaccuracies are the norm S&OPS planning difficult Biology and process variability can make traditional planning tools suboptimal BOMS/MRP are challenged * 9
10 Sample Acquisition Logistics Challenges Inbound logistics is part of the service delivery model Sample Stability (frozen, 2-8, Ambient) * Sourcing/Managing logistics service providers * Reverse logistics (blocks and recycled kit materials) Optimizing freight charges. Sample Management /Visibility 10
11 Materials Management Challenges Single Sourcing is the norm CLIA validation requirements Mitigating risk of stock out with suppliers lot sequestering/deduct and hold/safety stock?) Vendor Managed Inventories * Kits and materials at client sites Replenishment Distribution costs Leveraging CLIA s competencies in the lab?
12 Recap Market to see 15% Year over Year Growth 55% of the market is made up of SME s We are faced with new SCM challenges Regulatory, Planning, Logistics, Sourcing, Best Practices and tools are evolving. This is our forum to share experiences and solve some of today s more contemporary issues. 12
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