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Pippa Nixon, Director of Enterprise Resource Planning, Life Sciences Practice
It can take 15 years and over $1.7 billion to bring one drug to market. In an industry where time truly is money, a day in the life of sample can mean hundreds of thousands of dollars to its manufacturer.
Luckily, emerging life sciences companies are uniquely positioned to reap the benefits from established drug and device manufacturers. To tap into the lessons they've learned and help emerging companies apply them effectively, we spoke with Pippa Nixon, Director, ERP Life Sciences. With over 20 years of experience, Nixon has helped numerous companies create a strategy for sustainability and growth and integrate their business and IT processes in order to respond quickly to the needs of their customers, researchers, and regulators.
After securing the initial round of funding, what are some key elements that emerging life science companies need to consider as they build their business?
Clearly, R&D efforts are paramount since the creative energy and focus of the company is key to their success. However, unlike many traditional businesses, a life science company presents particular types of challenges other companies simply don't encounter. Their evolutionary process shifts radically in focus and mission from research to product launch and through commercialization. To ease regulatory pains, address compliance issues, and mitigate risk, they also need to define solid business and technology strategies, which will serve as the blueprints for their business.
What's involved in a business strategy? Isn't a business plan enough?
A business plan is not enough. Too often, emerging life sciences companies excel at one part of the equation, demonstrating that their innovation may lead to next-generation solutions. While their business model may show that they can make money at what they do, too often the plan doesn't involve a long-term strategy. It's not surprising when you consider that short-term goals such as meeting the next regulatory review or reaching the next research milestone, often take precedence. Unfortunately, those short-term catalysts only work well for short-term success.
But when you take the time to invest in your people and the business processes that make the most sense for the 10-15 year path to success, you can reap substantial rewards.
Mapping out a strategy that incorporates aspects like regulatory and compliance issues, timing for your sales and marketing build-out, logistics, and ramping up for large-scale manufacturing can actually help you reduce costs and increase future profit margins.
With an emphasis on creating the next blockbuster and filling the pipeline, it can be easy to put technology on the back burner. What's wrong with that approach?
Technology is nothing more than a tool. It does, however, prescribe best business practice and applies a sense of organizational accountability. But too often, executives fail to see this crucial connection. Successful companies, however, are ones that have viewed technology as a critical step in the road to commercialization.
Is there a simple way to incorporate technology into the business?
Again, technology itself is not the sole solution. Often, many life sciences companies see a problem that needs fixing. Employees need to get paid, for example, so an organization might implement smaller, second and third tier software packages to manage their payroll and accounting. While this works well in the R&D phase, it can mean trouble later as the organization grows in complexity, moving closer to commercialization. However, a little foresight and planning can pay off substantially in the long run. We've found that emerging companies that have grown into established organizations have one thing in common - they understand what they currently have in place regarding budget, resources, and pipeline and then forecast what they will need when they produce, market, sell, deliver, and invoice their product. For example, balancing their current state with their future goals, they may select a robust ERP (Enterprise Resource Planning) system that will assist them and grow with them; time its implementation appropriately; effectively involve their people in the planning; and review, define, and incorporate all of their key business processes.
Why would an R&D organization want to use a system that has production or inventory capability when their costs are, for the most part, tax-deductible?
The use of a computer system encourages organizational controls and disciplines. These in turn, start to build the infrastructure that is critical to sustain the business post-commercial. This is where good business practice starts. And equally important, it paves the way for a scaleable ERP system as well. Your technology, business processes, and people all work together so that when your business evolves in complexity, the transition you make with your ERP system, for example, the business processes it addresses, and the team that uses it, will all be synchronized and your business won't miss a beat. When the initial technology has driven the organization to a good understanding of what constitutes good business practice, and highlighted the actual cost, for example, of clinical trial production, the business is well positioned to understand and capitalize on solid cost management that will ensure future profitability.
You referenced best practice, business process, and team a few times. How does this tie to the benefits of technology?
You truly can't have one without the other. We've helped executives from some of the leading pharmaceutical and biotech firms understand this. Your system will work effectively if you have capable people using the best benchmarked practices and efficient business processes that streamline your operations. It may sound simple but if you don't look holistically at the way you do business and turn to an ERP system to solve your problems, you'll find that the system will actually magnify your challenges rather than help you overcome them. Approached and implemented effectively however, your system can yield countless short-term, and most importantly, long-term sustainable benefits.
Investing in new technologies in the areas of imaging, genomics, proteomics, etc. makes sense, but how do emerging companies justify an investment in other areas such as analytics, human capital management, financials, operations, and corporate services?
Perhaps the question should be "how do they not justify such investment?" Any serious investor is going to look to solid fiscal management, the ability to project the business success beyond R&D, and the ability of the incumbent team to make a successful transition to commercialization.
How can an ERP system that maps to a solid business strategy optimize the supply chain and distribution process?
The integration aspects of a top tier ERP system require that the system be designed to align with known end-to-end business processes (such as "procure to produce", " requisition to pay" or "order to cash"). These processes along with the rigorous data requirements and recommended best business practice for acceptable system integration drive out information that is essential for optimization of the supply chain and distribution processes. Without a robust ERP system, getting to the information needed for optimization is onerous at best.
Can it help facilitate operational and regulatory compliance without compromising quality and safety?
Absolutely. It simply takes careful planning. By incorporating all of the elements along the way to commercialization - for example, the commercial, financial and regulatory compliance pathway - the transition to a good ERP system implementation, which automatically offers excellent controls around operational processes, can be seamless. Very often the ERP implementation event is what triggers the process of change (or acceptance thereof) and the organizational pain of those requirements becomes a daunting experience. Quality and safety are addressed in a good ERP system, which includes fully integrated lot and batch management related to incoming raw material and subsequent finished product inspections. The usual labware systems, for example, can be easily integrated to the ERP system if required, to enable quick and decisive action in the event of a product safety issue.
If an emerging company appears to be doing well without an investment in IT, why change?
Once the business ramps up for commercial production and sale of product, the required subsequent management of the data volume for regulatory purposes is typically not possible with paper records. Appropriate integrated batch management with commercial volumes, for example, is typically not possible with paper systems. We have worked with clients with emerging products who have acknowledged that they would have been unable to get their new product out the door using their "legacy" approach to batch management. Leaving the decision to adopt a robust, scaleable ERP system too late in the product life cycle can be extremely disruptive to the business and ultimately more costly than it needs be.
While it may seem an ERP system can appear at face value both expensive and time-consuming, successful companies have found that they can easily leverage their data to mitigate their risk, ease regulatory pains, and make the quick and effective business decisions necessary to grow their business. In the end, with a solid approach that aligns to business goals, successful biotech, pharmaceutical, and med device firms have discovered they can receive a rapid return on their ERP investment while positioning themselves well above their competition.
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