Devising an International Clinical Trial Distribution Strategy: Genentech's Approach - A decision-criteria matrix and cost models helped pinpoint the best distribution approach for the short- and long


Devising an International Clinical Trial Distribution Strategy: Genentech's Approach
A decision-criteria matrix and cost models helped pinpoint the best distribution approach for the short- and long-term.

BioPharm International Supplements

Demand-Assumptions Model and Demand-Sensitivity Analysis

The net present cost (NPC) of each business model was calculated using shipment forecasts by region, as input to the costing models described earlier. The short-term (less than three years) demand-assumptions model was created based on the number of clinical trials per phase from a database owned by Genentech's clinical operations group. The database is a repository of active, approved, and planned clinical trials and studies. The data were distributed across the regions, based on estimated percentages of planned clinical trials for each region. These numbers were not risk-adjusted for trial failure.

Figure 2. Business process model for estimating clinical demand
The long-term (three-to-seven years) demand-assumptions model was based on information obtained from the company's product portfolio management group, which is responsible for providing decisions, guidance, and direction for strategic issues, and resource allocation for the entire product portfolio. The product portfolio management group provided data on a risk-adjusted number of projects of molecules by phase. These were converted, by the product operations strategic planning organization, to shipment forecasts, based on clinical trial duration and shipment assumptions. The project team built a business process to capture clinical trial shipment demand annually, as part of Genentech's manufacturing network long-range planning activities (Figure 2).

In addition to generating short- and long-term forecasts by region, Genentech conducted a demand-sensitivity analysis to determine the cost of each business model if the clinical trial volumes were incrementally decreased to half the forecast volume, or incrementally increased to three times the forecast volume. The sensitivity analysis provided insight into the clinical trial volume threshold that would make the total cost of ownership of one business model preferable to another if clinical trial volumes increased or decreased from forecasts.

Outsourcing as a Short-Term Strategy

Based on the qualitative analysis performed with the decision-criteria matrix and the cost models, the short-term strategy is to use a pure outsourcing model for Europe, Latin America, and the Middle East. A hybrid of the outsourcing and direct-ship models is to be used for Asia, whereas the direct-ship model will be applied to Australia and New Zealand.

The main driver for the outsource recommendation is the long implementation time required for a build or acquire strategy. Additionally, because of Genentech's limited international experience, it would have been challenging, in the short term, to quickly acquire local clinical-distribution and logistics expertise, particularly about the distribution strategy that woudl yield the proper ratio of regional depots to country-specific depots. From a total-cost-of-ownership (TCO) perspective, clinical trial volumes for the next two years made the outsourcing cost model the most desirable among the business models analyzed.

To implement the new short-term strategy, the company plans to diversify contract clinical distribution organizations (CDOs) to evaluate performance, with a long-term goal of dual sourcing so that strategic relationships are cemented and volume discounts are achieved. CDO performance evaluation is critical because CDO quality is not consistent across all regions.

blog comments powered by Disqus



Pandemic Vaccine Facility Dedicated in Texas
September 19, 2014
GSK Fined in China Bribery Scandal
September 19, 2014
Guideline Delineates How to Implement GS1 Standards to Support DSCSA
September 19, 2014
GPhA Supports Restricted Access Bill
September 18, 2014
Baxter Initiates Voluntary Recall of Potassium Chloride Injection
September 17, 2014
Author Guidelines
Source: BioPharm International Supplements,
Click here