when supply is of public interest roche and tamiflu
DESCRIPTION
RocheTRANSCRIPT
Assessed Case StudyGroup 1 (Operations Management)
When Supply is of Public InterestRoche and Tamiflu
Background Tamiflu in 2005 Capacity management issues Response and improvements Tamiflu in 2007 Going forward
OUTLINE
Tamiflu (oseltamivir phosphate) - an oral antiviral drug for seasonal flu 3-5 million seasonal influenza (flu) cases yearly Over 48 m flu patients in about 100 countries Patent protected until 2016 in 30 countries WHO recommended governments to stockpile Tamiflu Less than 15 countries had stockpile
BACKGROUND
MANUFACTURING PROCESS
6 months
2 months
Shikimic Acid
Epoxide
Azide
Active Pharmaceutical Ingredients
Blending, Encapsulation & Packaging
Step 1
Step 2
Step 3
Step 4
Step 5
PROCESS MAPPING (2005)
Customer
Demand Forecast(Ongoing Process)
Step 1 Step 2 Step 3 Step 4 Step 5
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Market Research 30%
Blending, Encapsulation & Packaging
Active pharmaceuticalingredients
AzideEpoxideShikimic acid
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Based on Order
Stock
5
2030= = 18.5 %
Suppliers
20
5 30
3035
5
10 15 35
5
10 15
60
270
Plan Capacity
KEY PERFORMANCE INDICATOR (2005)
KPI 2005
Flexibility Hardly can match global demand (3) *
Quality Patent & 90% of Market (8)
Speed 8 months process (2)
Dependability It has Technical ability + patent (9)
Cost Affordable Price (5)
CAPACITY MANAGEMENT ISSUES
Limited capacity
Complex production process
Long production cycle time
Capital expenses
Logistic
Capacity Management
Issues
Government assurance
Unpredictable spread of pandemic
SCALE UP THE PRODUCTION CAPACITY
Options to increase production capacity up to 400 million treatment in 18 months :
Redesign Development Process > Time constraints (approx. 2-3 Years) Building New Plants > Time constraints Sublicensing Focus production mainly on Tamiflu Expand supply network, especially on material Outsourcing Improved technology
Preferred option
SCALE UP THE PRODUCTION CAPACITY
Increase production capacity up to 400 m in
18 months
Redesign Development Process
Building New Plants
Sublicensing
Focused production
Expand supply network
PROCESS MAPPING (2007)Customer/GovtDemand Forecast
(Ongoing Process)
Step 1 Step 2 Step 3 Step 4 Step 5
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Order
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Strong Demand
Suppliers50% (+20%)
Stock
10
1010= = 25.8 %
10
10 10
1020
5
5 15 15
5
10 10
40
155
KPI - 2005 vs 2007
KPI 2005 2007
Flexibility Hardly can match global demand (3) *
Capacity increased (x15), with no obligation to use suppliers (7)
Quality Patent & 90% of Market (8)
Patent & 90% of Market (8)
Speed 8 months process (2) 6 months process + faster transportation (5)
Dependability It has Technical ability + patent (9)
It has Technical ability + patent (9)
Cost Affordable Price (5)Good price for buyers + lower margin for the company (8)
Tamiflu
MediaInvestors
Suppliers
General Public
WHO
Government
STAKEHOLDERS’ EXPECTATIONS
FUTURE PRODUCTION CAPACITY
?
SCENARIO ANALYSIS
Option Direction Pros. Cons.Plan A Increase - Public image
- Strengthen stock level (can meet global needs)
- Heavy stocks - Government approval - Profit margin reduction
Plan B Maintain - Production capability- Flexibility
- Necessity to keep communication between external network-High level stock
Plan C Reduce to 100 million
- More efficient- Less stockpiling
- Risk of public criticism- May lose business opportunities
Plan C
Forecasted demand is 30 million
Sublicensing to India and China
No immediate/low risk of pandemic
Invest in R&D
Technology Transfer
Sublicensing
Improved capability to respond to pandemic
Several countries with sufficient stockpile
Reduce Capacity to 100 million
WHAT SHOULD BE ANNOUNCED
KEY MESSAGES
Efficient usage of KPI is an important element to judge on current operation (Good or Bad). Also, it shows the gap between current performance & how it wishes to perform (strategic goal)
1
2
3
Use media effectively, ignoring or over reacting to media could lead to external & internal pressure on the company & its performance.
Efficient use of outsourcing will affect the operation performance positively