Supply Chain Security within the

Pharmaceutical Sector

TAPA Asia Pacific Supply Chain Security Conference in Ho Chi Minh,

Vietnam

06 October 2016

Presented by Scott Kammer

Head of Global Product Protection, Takeda Pharmaceuticals and

Rx360 Board Member

Content

• RX360 Overview

• Supply Chain Risk, Threats and Trends

• Supply Chain Complexity and Management

• Case Scenario

• Conclusion

2

Rx-360 Mission and Objectives

Bringing Industry and Regulators

Together to Protect Patients Worldwide

1. Educating

2. Sharing information

3. Standardizing

4. Promoting best practices

5. Sharing Audits

Protect patient safety by sharing information and developing processes

related to the integrity of the healthcare supply chain and the quality of

materials within the supply chain.

Membership 501(c)(6) nonprofit organization

Broad and Inclusive

• Global

• Small and large companies

• Suppliers and manufacturers

• Branded and generic

• Regulatory agencies, standard

setting bodies, and industry

organizations participate as

Observers

© COPYRIGHT BSI 2016

Supply Chain Risk, Threats and Trends

Global Pharmaceutical Cargo Theft

Trends

• BSI data shows that pharmaceutical industry losses represent seven percent of all cargo theft incidents

• Brazil, Italy, Mexico, and United States account for 58.3 percent of all cargo thefts

• Additionally, 71.2 percent of all pharmaceutical cargo thefts are recorded in one of these four countries

– Also account for about 56.5 percent of the global value of stolen pharmaceuticals

• For 2015, BSI forecasted the loss of nearly

$7.5 billion of cargo in these four nations

Copyright © 2016 BSI. All rights reserved.

Global Pharmaceutical Cargo Theft

Trends

• BSI records a disproportionately high rate of hijackings among

pharmaceutical cargo

• Additionally, there is a heightened rate of driver and employee

involvement in thefts

– 2.5 percent of all incidents

involve collusion, while 7.5

percent of pharma thefts

involve collusion

• About 85 percent of pharma thefts involve cargo trucks, while 14

percent involve warehouses

– However, warehouse thefts

constitute 52 percent of total

value of stolen pharmaceuticals

• Despite the number of thefts affecting the trucking industry, data

suggests facility insecurity results in greater losses

Copyright © 2016 BSI. All rights reserved.

Non-Pharmaceuti

cal Theft

Pharmaceutical Theft

Rate of Hijacking

22% 53%

Value of Hijackings

2.7% 25%

Rate of Truck-Related Thefts

88% 85%

Value of Truck-Related

Thefts 61% 45%

Rate of Warehouse

Thefts 10% 14%

Value of Warehouse

Thefts 19% 52%

Global Pharmaceutical Industry Cargo

Trends

• The pharmaceutical industry records a lower level of compliance to security standards than the non-pharmaceutical industry

– 80.7% rate of compliance within pharma industry compared to 91.1% for non-pharma suppliers

• Increasing compliance gap in higher risk

countries for pharmaceuticals

– 74.9% compared to 85.3%

Copyright © 2016 BSI. All rights reserved.

Country Non-

Pharmaceutical Industry

Pharmaceutical

Industry

Brazil 82.5% 64.3%

China 90.8% 85.0%

India 84.5% 81.9%

Indonesia 83.8% 79.0%

Mexico 91.6% 76.2%

United

States 86.7% 86.2%

Other* 83.3% 69.1% *Other includes Argentina, Colombia, Russia, and Turkey

China

• Top Risks

– Cargo theft occurs occasionally

– Pharmaceuticals not disproportionally targeted

– Some signs of increased sophistication among thieves

• BSI Threat Ratings

– Cargo Theft:

– Hijacking:

– Counterfeiting:

– Diversion: • Rate of cargo theft in China is not especially high, but large

amounts of freight throughput contribute to significant total losses

– Primarily stolen in cargo truck and van hijackings

Copyright © 2016 BSI. All rights reserved.

India

• Top Risks

– Cargo theft and hijackings

occur regularly

– BSI recorded sophisticated

techniques and targeting of

exports in 2015 • BSI Threat Ratings

– Cargo Theft:

– Hijacking:

– Counterfeiting:

– Diversion: • Hijackings of in-transit trucks and thefts from warehouses highlight

threat to range of modalities in India

• Concentrations of theft in major shipping hub locations such as

Mumbai, Chennai

• Pharmaceutical products targeted, including pharmaceutical

chemicals/ingredients

Copyright © 2016 BSI. All rights reserved.

• Product security threats exist across the end-to-end supply chain • Intentional adulteration • Theft • Illegal diversion • Counterfeiting

• Global supply chains grow increasingly complex with more raw

material suppliers, manufacturers, logistics providers, and different national regulatory maturities and expectations

• Typical supply chain phases:

Supply Chain Complexity Requires an

Integrated Approach to Manage the Risk

Internal

Mfg

External

Mfg Warehousing Provider

Raw

Materials Transportation

Distributor /

Trade

Partner

Consumer

• The objective is to enhance patient safety by combating these

serious and nimble threats

• The complexity of this challenge requires a comprehensive approach and collaboration across the industry’s supply chain

• The management system can provide • a common perspective to enhance collaboration • an integrated approach that leverages countermeasures

across the supply chain • A tool for individual firms to understand potential gaps

• The management system is the foundation for a maturity

model that will drive sustainable and continuous improvement

Management System Integrates Functional

Activities into a Comprehensive Program

•GMPs

•Security

•Incident

reporting

• Anti-

counterfeiting

•Serialization

• Waste

management

Manufacturing 2

Focusing on

End to End Supply Chain

13

• Auditing

• LSP Mgmt

• Segregation

• CTPAT

• Security

• Inventory

Control

• GMP and GDP

Warehouse

Security 4

• Carrier

Assessment

• Shipment

Tracking

• LSP

Assessment

• Security

Cargo

Security 5

Market

Surveillance 6

• Reporting of

counterfeit

signals

• Education and

adoption of

controls by

distributors

Customer

•Implementation

of local

serialization

solutions

•Compliance with

local security

features

requirements

Product

Authentication 3

•Supplier

Oversight

•GMP

•Material

Qualification

•Risk Mgmt

•Inspection and

testing

•Security

•Transportation

and logistics

Materials 1

Holistic Risk Based Approach

Conclusion

• Threats to our global supply chains continues to grow

– Intentional adulteration, diversion, counterfeiting, theft, tampering, substandards

• Criminals are exceptionally clever and adaptable

• These threats have serious implications

• We need to work TOGETHER to win this war

Share best practices and implement in

collaboration with supply chain partners