Advice You - Business

ACSEA, the forty year old 2bn USD South East Asian subsidiary of a Japanese pharmaceutical group suffered a blow to its pride in 2003. A competitor which started operations just ten years back now surpassed it in t

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

he volume of Pharmaceutical-A produced, and its cost was now 13% lower than ACSEA's. The only hopes of responding effectively lay in the company's South East Asian Technical Centre whose role is to provide technica

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

l support to the factories and develop process technologies aimed at cost reduction for the organisation.

However morale at the centre was low, and its contributions to cost reductions for Pharmaceutical-A amounte

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

d to a measly 1% per annum. Hiroyuki Fukushima, a general manager with ACSEA, was sent to head the centre in July 2003. He immediately set about improving things to make the SEATC more effective. His boss believed

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

e was doing very well and he tended to agree with this assessment...

Until he read the 2000 Percent Solution by Don Mitchell, Carol Coles and Robert Metz. In his words, he was shocked at the extent to which stalle

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

d thinking had limited his achievements and those of the SEATC. He quickly took up the challenge to remake the SEATC using the ideas from "the 2000 Percent Solution".

Realise the Importance of Measurements

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

Excited by the possibilities Fukushima realised that if SEATC could innovate 20 times more than they were doing already, they could make ACSEA the top company in the group. He set that as their new v

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ision and introduced measurement systems to manage performance.

Decide What to Measure
Before this time, the technical centre tracked the number of reports produced as a way of assessing its

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ontributions. Fukushima realised that this and similar measurements had nothing to do with the purpose of the SEATC. He started measuring the cost drivers of the product Pharmaceutical-A.This led him to target ener

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

gy, intermediate chemicals, chemicals and depreciation (construction costs) as major cost drivers requiring improvements if the new vision was to be realised.

Identify Future Best Practice
In

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

trying to identify likely future best practices for the major cost drivers, Fukushima reached the conclusion that for energy, co-generation was the way to go. For intermediate chemicals, they were to be eliminated

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

. This would require development of new enzymatic reactions. Similar future best practices were identified for depreciation (construction cost) and chemical consumption. Implement Beyond Future Best Practice Cost

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

per ton of Pharmaceutical-A were expected to reduce from $350 to $265 if the future best practices were implemented - a very different picture from the 1% per year improvements being achieved already. Meanwhile, cu

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

rrent best practice in the industry was $310 per ton. Fukushima and his team designed projects with a maximum implementation timeline of three years to achieve these.

Identify Ideal Best Practice<

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

br> For ideal best practice, Fukushima assumed the best solutions that were scientifically possible. This meant for energy cost for example, they would make use of a renewable source like solar. For intermediate c

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

hemicals, ideal best practice would mean increasing the yield of enzymatic reactions from 60% to 100%.

Pursue Ideal Best Practice
Considering the capabilities of SEATC, Fukushima decided to g

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ve priority to the development of a new enzymatic reaction. He also decided to have his process engineers develop a simplified process to reduce cost of new plant. Both of these projects are estimated to last five

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

years.

Implementation of these practices will yield a cost per ton of $158.

Provide People and Resources
Realising that he needed his very best people to implement the planned changes and im

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

provements, Fukushima decided to select - to use his words - self actualised team members to spearhead the projects.

Repeat
Fukushima began this journey about eighteen months ago and is well

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

on the way to achieving the future best practice targets. He realises that the very successes they achieve will give birth to new stalls and is already on the look out for the next 2000 Percent Solution opportunity

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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