Allergan PLC, one of the largest pharmaceutical companies in the world, has undergone a metamorphosis of behemoth proportions in the past three years which has necessitated a major overhaul of its logistics operation.
In March this year, Allergan was acquired by NYSE-listed Actavis creating a $23 billion diversified global pharmaceutical company and a leader in the new industry model, Growth Pharma. The deal brought together businesses now extending across 100 countries boasting more than 40 manufacturing plants.
Allergan has a Brand portfolio featuring seven blockbuster franchises in key therapeutic categories including: Dermatology and Aesthetics, Eye Care and Women’s Health and Urology, while it’s Generics portfolio comprises more than 1,000 generics, branded generics, established brands and OTC products and is the third largest generic manufacturer in the US.
Just three months after conclusion of the Allergan deal, the emerging butterfly is shedding it skin with the announcement that Israeli company Teva Pharmaceuticals Industries Ltd has agreed to purchase Allergan’s Generics portfolio in a transaction valued at $40.5 billion.
Val Pétursson, Allegan’s Managing Director of International Logistics, said: “Teva’s offer was simply too good to refuse and the company made the strategic decision to focus on branded products.”
Historically, the business has been strongly focused on the production of generic drugs but more recently has been building its branded portfolio with and growing its business through seven branded therapeutic areas of focus.
New Allergan is focused on developing new medicines that address unmet medical needs in critical therapeutic areas as well as increasing access to high-quality affordable medicines.
This year the company has invested significantly in Research & Development focusing on developing innovative and durable value-enhancing products within brands, generics, biologics and OTC (Over the Counter) portfolios.
The massive growth of the company through its acquisitive nature meant that while it was very good at integrating new businesses, it also needed to focus on developing and implementing a globally-organised logistics’ strategy. Hence, Pétursson’s appoint in December, 2012.
He said: “When I arrived, the company had gone through tremendous change, and there was a critical need for a strong, globally coordinated logistics approach. There was limited visibility on how supply chains were operating. In short logistics was an opportunity for us to improve the way we would do business with our customers going forward.”
“The strategic focus was set on a fast deployable global solution that could be easily scaled in the upcoming years. With the company growing from around $5 billion annual revenue to $23 billion revenue within 3 years the term scalability was stretched to the limit, but we always managed to integrate the new companies in to the solution at the pace needed.”
It soon became apparent to Pétursson there were three options for establishing coherent and viable logistics’ solutions. The first was for Allergan (then Actavis) to establish its own control tower with in house IT development, the second was to outsource full logistical control to specialized Logistic Solution Provides (4PL solution) and the third was the hybrid solution he opted for.” In retrospect I believe the hybrid was truly the only right solution for us as both other options would have been either too cumbersome to deploy or not scalable enough.”
Allergan’s international headquarters is in Switzerland, while its Global headquarters are in Dublin. Administrative headquarters are in Parsippany NJ.
He said: “We are not a logistics company we are a pharmaceutical company, and we needed to leverage our strengths and work with others who could provide us the services and support we needed. That’s why we decided to work with an IT solutions partner to tailor a program to meet our needs to better deliver for our customers.”
Pétursson shopped around for a control tower solution provider and subsequently teamed up with the global forwarding company. Agility which operates the control tower from its Bristol branch using a single, strategic platform and a unified data set. In the last 3 years the relationship has developed to a true win-win partnership, resulting in a world class pharma-logistic solution.
With Allergan’s 2,300 shipping lanes operating globally, the single platform control tower solution enables the business to have visibility on every single shipment and provide excellent top down business intelligence for strategic and tactical improvements over the entire network
It provides Pétursson and his -strong global logistic teams all around the world exact information on myriad of things including expenditure thus enabling a more cost-effective and efficient system bringing direct benefits to customers.
The control tower facilitates an on-line portal through which all freight movements are booked and monitored irrespective of where they are in the world, enabling a much better control and proactive alert management.
“We have around 40 sites and 200 third-party manufacturers and all of their shipments get booked in the same way. On top of the cost visibility, we now have high level and low level visibility on service performances of all our carriers, in to all markets, as well as container and truck utilization. We are able to send push alerts to all of our markets in case of delays or other problems. It furthermore enables us to bring better strategic solutions to the table for our customers in terms of service or cost improvements said Pétursson.
Another extremely important facet of the logistics transformation has been its strict adherence to the Good Distribution Practice and ensuring product quality for its customers.
The ever more rigid growing GDP guidelines require that medicines obtained from the licensed manufacturer are consistently stored, transported and handled under suitable conditions as required by the MA (Medical Association).
According to Pétursson, Allergan has played a leading role when pushing for and piloting new solutions to ensure better and safer transport of pharmaceutical goods, he said: “We are a very demanding customer when it comes to temperature controlled solutions and other aspects of the supply chain that are critical in providing, safe, reliable transport of our medicines to our customers and their patients around the world. We have collaborated with leading manufacturers for some time now and in some cases pushed them towards better and smarter solutions.”
“For a year we have been piloting new technology on temperature monitoring devices, currently a very promising real time data logger solution now using GPRS technology. Our aspiration is to be the first major pharmaceutical company able to deploy this technology on all our vital and/or sensitive shipments globally.”
“The real time data loggers can tell at any given time the cargo’s condition, so for example, it can transmit data relating to the rise and fall of temperature critical for some medicines and allows my team and my customer within the 60 markets we serve to know precisely where cargo is from stock to customer and proactively act on incoming risks.”
“Being able to mitigate temperature excursion will add massive cost advantage to our Supply Chain in the upcoming years as it drives out a lot of operational waste for our quality and supply chain teams, while it adds greatly to product safety. It is also extremely effective in diversion and theft control.”
“Allergan has been working with Icelandic industry leading specialist on temperature monitoring devices, a company called, Controlant. There are many good solutions out there but Controlant has been extremely good in bringing in and deploying new technologies, first the RFID (Wireless) tracing technology, and now real time technology, to help us monitor a product’s transit through the supply chain – from manufacturer to customer and then to patient.”
“Allergan is one of the first companies in the pharma sector to use this technology on this scale, which until recently was very expensive. Now it is becoming affordable and bringing us extremely good results. I do believe that the industry will move more and more in to real time monitoring solutions in general.”
“Another critical aspect of the secure pharma supply chain is the right investment when it comes to temperature packaging. We have for years spent significant amounts on secure packaging, are proactively collaborating with the specialist packaging company Softbox Solutions to develop the very best packaging for our products irrespective of its nature and sensivity”
Allergan’s development and growth of its more complex generics and branded products has spearheaded the drive towards adopting temperature controlled packaging systems. The most frequently used products from Softbox is a unit which can keep Allergan’s products at the right temperature for five days, during Air transit
“Our products often have to travel vast distances through many different climate zones and it’s crucial that they are kept at the right temperature while in transit,” explained Petursson. “We are very happy to have partners such as Controlant and Softbox as it is a win-win situation for us all.”
The Teva’s acquisition of Allergan’s generics business will mean that the two logistic systems now in place will be merged in one. Pétursson said: “It is a very dynamic world and since I arrived here things have changed so fast, merging the systems will be an exciting and enormous task. Prior to the announcement there was some sharing of good practices between the two companies and it will continue now on a much more detailed level where we will undoubtedly merge the better of the two worlds in what is to become perhaps the largest pharma logistic network in the world.”