The Logistics of a Successful Product Launch

By Scott Cubbler, Exel

Introducing a new pharmaceutical product into the highly competitive and cost-conscious market of today is a highly complex and risky process. Successful launches can “make” a small pharma company; an unsuccessful one could kill it. The life-or-death consequences of a product launch for large multinational biopharma companies are not as pronounced, but hundreds of millions of dollars in sales and net revenues are at stake. A product launch should, and usually does, focus the efforts of large parts of a biopharmaceutical organization.

Product launches are, of course, the culmination of years of clinical research, market and healthcare-provider assessments, coordination with payors, and education among physicians and other healthcare professionals. This article focuses on the very last steps in this process: the physical distribution of products to distributors, pharmacies, hospitals and clinics, so that they can be dispensed and prescriptions filled as soon as final FDA approval (or other nations’ regulatory agencies) is granted. Ensuring that the product is physically available when prescriptions begin to be written is a critical aspect of a successful launch.

Whether it’s brand or generic, prescription or over-the-counter, the product must arrive on store shelves precisely on schedule. A delay of even a few hours can result in millions of dollars in lost sales. Nothing less than 100% on-time delivery is acceptable. The delivery schedules are extremely compressed because the drug license holder is never absolutely certain that there will not be a last-minute change in a label, packaging component or other detail. For this reason, the products can rarely be “pre-shipped;” the risk of doing so and then being obliged to recall the products is too severe.

Typically, the manufacturer or license holder works with a third-party logistics (3PL) company and/or directly with carriers to coordinate the distribution. 3PLs also work with major wholesaler-distributors when those organizations are called on to assist in the launch.

Common obstacles

Whether branded or generic, product launches generally share a set of key hurdles.

Wide geographic area. A successful launch is measured by the product arriving on store shelves across a given country on the same day. To ensure neutrality, the product must arrive at every store of every retailer — from Wal-Mart and CVS to locally owned neighborhood pharmacies – on the launch day.

Uncertain approval dates. If the launch is contingent on approval by a regulatory body, such as the Food and Drug Administration in the U.S., the actual launch date may not be known until the last minute. In some cases, a product must be launched to thousands of destinations within hours of final regulatory approval.

Holiday launch dates. Depending on the date when a branded drug’s patent expires, a generic drug must be ready to hit the shelves immediately. That often requires launching products over holidays, so logistics providers and carriers must be prepared to staff a major project at a time when employees want to schedule time off.

In addition, pharmaceutical manufacturers are challenged by the lack of global standards for getting regulatory approvals and bringing a new product to market. As a result, there is really no such thing as a “global launch.” While there are ongoing discussions about global standards, at this point manufacturers must work on a country-by-country basis.

The “official” launch period is agreed upon between the manufacturer and its business partners. Typically, the launch of a branded product lasts eight to 10 months after launch day. After the six-month mark, the demand has usually stabilized, order patterns are set (or, the growth pattern is clear) and the product is generally put into the standard supply-chain circulation.

First-out generics have a six-month exclusivity period (by Hatch-Waxman regulation). Supply patterns can be tracked and analyzed during this period. The introduction of direct competition at the six-month mark typically requires a new round of demand-planning analysis. Typically at this point the launch technically ends.

Usually all this demand planning work is done on the customer side between their marketing, planning, sales and manufacturing groups. The Supply Chain group’s role is to maintain inventory accuracies, provide visibility into product/order flows, and reacting to changes in both the inbound and outbound demand patterns.

These are just a few of the challenges for launching a new pharmaceutical product. Every launch presents distinct challenges that require a flexible solution that adapts for size, scope and geographic region. Standard planning and execution processes are not sufficient. Our company has handled over 100 product launches over the past three years, with the launch “size” ranging from one pallet to over 30,000 (the average has been around 1,000). Our largest launches required the coordination of upwards of 7,000 trailer loads, and 150,000 sq. ft. of staging capacity. Air freight can also be a key part of the logistics process, where its higher cost is justified.

There are four keys to success for ensuring a successful product launch: collaborative planning; proactive management on launch day; sophisticated information technology systems; and clear accountability.

Success through partnership

Development of a comprehensive launch plan is best accomplished through a collaborative effort by the manufacturer, logistics provider and carriers. The logistics provider plays a key role with several groups involved, including operations, quality assurance and information technology.

A collaborative process ensures that all partners have a thorough understanding of the timing, scope and geography of the launch. Key transportation lanes and potential bottlenecks are clearly identified. Contingency plans are developed to overcome any obstacles that might block products from hitting the shelves on time, from flat tires to bad weather and road closures.

As part of the planning process, the logistics provider should develop a detailed labor and equipment assessment. Through an engineered approach developed by quality assurance professionals, the logistics provider should precisely identify staffing needs based on the exact time needed to pick, pack, stage and load the shipments. Time and motion studies might be conducted on distribution functions (e.g., case picking, pallet picking, truck loading/unloading, etc.)

Depending on the type of launch, staff may require training in pharmaceuticals. The staffing plan should also include contingency plans for on-call staff and other issues. Also based on an engineered approach, the logistics provider can determine if additional equipment, such as lifts, will be needed to ensure the most efficient process.

If appropriate, the planning process will also include details on forward staging of product to licensed, temperature-controlled facilities. For instance, here in the US access to a network of facilities with an FDA-approved warehouse management system may be a critical part of the plan.

Also through collaborative planning, carriers will know exactly when each load will be ready and can ensure drivers are ready to hit the road as soon as the trailer is fully loaded. Again, the plan is precisely engineered. The carrier will know that a load will be ready to go at “Door 37 at 1:13 p.m.” Routes are mapped and carriers secured for deliveries days in advance. Extra drivers and trailers are on-call in the event of a breakdown, flat tire or someone calling in sick.

Proactive management

Planning comes to life—and pays off—on launch day. The collaborative approach should continue with representatives from the manufacturer, logistics provider and key carriers are on-site in a “war room” or “command center.” Working together, the partners ensure that the work is being executed according to the launch plan, and any obstacles are overcome.

Communication is critical to success, and bringing key partners together in the same location ensures issues are addressed immediately as they arise. The command center is staffed 24/7 until all shipments are delivered.

From our 3PL perspective, there are several key performance indicators that measure the overall launch project:

Delivery time from the warehouse to the point of delivery

Inbound delivery times from the manufacturer

Space utilization of the warehouse or staging facility, along with balancing of inbound and outbound volumes

Site throughput versus plan. This is monitored hourly to ensure that the storage/staging facility is adhering to plan

Costs, monitored daily for matching with the launch budget.

Advanced IT

Information technology provides critical visibility into the status of an active launch, ensuring all partners are informed of any issues that arise. Key participants must have real-time information regarding the flow of material from its storage location onto trucks, through the warehouse to the delivery points. With the right IT systems, partners can track progress against the launch plan and identify problems in the flow of material early enough to allow contingency plans to kick in and ensure product hits the shelves on time.

Key elements include:

EDI communications with carriers to track the status of all outbound loads. If a truck breaks down or a driver encounters a major traffic snarl that threatens to delay a shipment, the Command Center is alerted and can take corrective action to ensure on-time delivery.

Proactive alerts that help ensure every detail of the launch plan stays on schedule. For instance, based on the engineered labor plan discussed previously, we know it takes 47 minutes to load a truck. If loading has not commenced at Door 37 by 12:26 p.m. for that shipment that needs to leave at 1:13 p.m., floor managers receive a proactive alert to ensure action is taken.

Online tracking that enables everyone involved—senior managers, finance teams, planning groups, customer service teams and others—to stay in close touch with detailed information on the status of every order and load. Key players can monitor the launch from anywhere in the world with an Internet connection.

Effective IT systems improve communication throughout the organization, ensuring rapid decision making and enhancing coordination among a large team from a variety of organizations.

100% accountability —

for 100% success

While the planning process is collaborative, from our standpoint it is critical that the logistics provider take the leadership role—along with accountability for success. While the product will be handed off to carriers for delivery to end users, the logistics provider should “own” the process, providing the visibility and accountability essential to ensuring a flawless launch.

At Exel, we have learned this from experience. Several years ago, we worked with a pharmaceutical manufacturer to launch a product on Christmas Eve. The launch was flawless — almost. One delivery was missed when one driver for a carrier company stopped off to visit his girlfriend on Christmas Eve. Unfortunately, it took quite a bit of time and effort to find out where that shipment was and what had happened.

From that experience, we learned the importance of “owning” every shipment all the way through to delivery. Many of the systems we have put in place to ensure visibility were inspired by that single incident.

Collaborative planning, proactive war room management and advance information technology systems are essential to a successful pharmaceutical launch. Because every launch is unique, it’s valuable to organize a “lessons learned” meeting after the dust has settled. While 100% on-time delivery is the only standard for success, there are often valuable lessons to learn from near misses. The result—continuous improvement and streamlined operations for the next launch. PC

About the Author

As vice president of Life Sciences, North America, Scott Cubbler is responsible for operational performance and developing the growth strategy for DHL Exel Supply Chain’s Life Sciences business unit (260 Salem Church Road, Mechanicsburg, PA 17050; tel: 717-901-1987). He has previous work experience at Webvan Group and McMaster-Carr Supply Co. Scott graduated from the University of Pennsylvania with a Bachelor of Science in Industrial Systems Engineering. He represents DHL Exel at the Consumer Healthcare Products Assn. and the Healthcare Distribution Management Assn.