Life Sciences Supply Chain Management & Manufacturing Strategy

Pharmaceutical & Biotechnology Industry Forum John Danese, CPIM 16-17 April 2007 Life Science Strategy Director Mainz, Germany
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Safe Harbor Statement

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decision. The development, release, and timing of any features or functionality described for Oracles products remains at the sole discretion of Oracle.

Exciting Times for Life Sciences

Offering You the Gems of the Market
Acquisitions Just to name a few
PeopleSoft Top HCM JD Edwards Production Scheduling (Numetrix), Strategic Network Optimization (SNO) G-Log Transportation Management Siebel Top CRM, Analytics, Clinical Trial Management Demantra Demand Management

#1 in Human Resource Management

AMR Research The Human Capital Management Applications Report, 20052010 August 2006

#1 in Supply Chain Management

The Supply Chain Management Spending Report, 20052006, AMR Research, Lora Cecere and Wendy Davis, July 2006

#1 in Customer Relationship Management

IDC Market Analysis Worldwide CRM Applications

#1 in North America Business Applications

AMR Research Report The Enterprise Resource Planning Report, 20042009November 2005

Exciting Times for Life Sciences

Industry Focus Across Product Lines Dedicated Life Science Industry Strategy team
Clinical Applications CRM Marketing Analytics ERP

Topics
Supply Chain Management Strategy Manufacturing Strategy Regulatory Compliance

Whats New for Process in R12?

Key capabilities to support Pharma and Biotech Manufacturers
Features
MES for Process Manufacturing
Dispensing Comprehensive Electronic Batch Records Production Operator Workbench with process instructions and SOP links Nonconformance management Device Integration Labeling

Benefits
Reduce risk by
Minimizing data redundancy Reducing system complexity Enforcing manufacturing best practices Tracking all manufacturing actions in an electronic batch record Automating approvals

Ensure regulatory compliance by

E-Records Enhancements
Enhanced auditing with relining Additional approval methodologies Streamlined approvals

Increase speed of approvals Improve collaboration Simplify auditability of changes to critical data Reduce Risk by providing a single source of truth for inventory Improve efficiencies with automated warehouse task management Support postponement with better inventory information

Advanced Inventory Management for Process

Single inventory across the EBS WMS for process industries Advanced lot actions and genealogy (lot split, merge, translate)

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Supply Chain Management Strategy

Life Sciences SCM / Mfg Strategy

Enable Real Time S&OP
Provide integration of best-of-breed planning and analysis capabilities with the operational execution capabilities of the suite

Provide the broadest integrated drug development to commercial manufacturing platform Provide the deepest in-suite manufacturing execution capabilities of any top tier ERP Build configurable compliance into the platform

enabled by Key Investments

Demantra
Improve Demand Insights Improve Forecast Accuracy Assumption Based Forecasting Collaborative Real-Time S&OP

Strategic Network Optimization (Numetrix)

Visualize supply network in advance of new product launches Simulate impacts of changes to supply network Acquisitions; add/remove DCs, plants Contingency planning for unplanned events, such as cost changes, natural disasters, transportation or communication line

integrated with the suite

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Why Is S&OP Important?

Tangible benefits!
Demand Driven leaders have:
15% less inventory 17% stronger order fulfillment 35% shorter cash-to-cash cycle times
350 300 250 200

Which translates to:

60% better profit margins 65% better EPS 2-3X the ROA

150 100 50 0
Strong Weak

Perfect Order Cash-to-Cash

Inventory SCM Costs

Source: AMR Benchmark Analytix

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Why is S&OP Important in Pharma?

Push Mode is Inefficient and Costly

Measure Stock Turns On Time Full Delivery Equipment Utilization Demand Forecast Accuracy

Pharma Industry 3 to 5

World Class Factory 50 $91B 99.6% 92% 3X more output 75% - 85%

60% - 80% 30% 20% - 65%

Source: R. S. Benson and D. J. MacCabe. From Good Manufacturing Practice to Good Manufacturing Performance Pharmaceutical Engineering. July/August 2004.
Source: AMR Benchmark Analytix

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Oracle Closed Loop S&OP Planning

Demand Planning
Demand Data

Supply Planning
Constraint-Based Consensus Consensus Forecast Forecast
Production Scheduling Strategic Network Optimization

S&OP Meeting

Market Demand Market Demand Forecasting Forecasting

New Product New Product Forecasting Forecasting S&OP Review S&OP Review Promotion Planning Promotion Planning Evaluate Supply Evaluate Supply Constraints Constraints

S&OP Outputs: S&OP Outputs:

Inventory Inventory Optimization Optimization Safety Stock Demand Service levels Service levels Profitability Profitability Inventory Levels Inventory Levels Promotions Promotions DRP DRP MPS MPS

Measure Financial and Customer Service Level Results

Execute

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Real Time S&OP

Compresses the Planning Cycle, Plan with Current Information Typical S&OP Process
Day 1
Review, Edit & Approve Demand Plan Constrained Supply Plan Review, Edit & Approve Supply Plan

Day 30

Collect Demand

S&OP Meeting

Publish Plan

Inefficient consensus process, enabled with disconnected spreadsheets

Real Time S&OP Process

Day 1
Review, Edit & Approve Demand Plan Review, Edit & Approve Supply Plan

Day 30

Collect Demand

Constrained Supply Plan

S&OP Meeting

Publish Plan

Automated approval process with role-based consensus process enables agility to respond to changes

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Real Time S&OP

Compresses the Planning Cycle, Plan with Current Information Typical S&OP Process
Day 1
Review, Edit & Approve Demand Plan Constrained Supply Plan Review, Edit & Approve Supply Plan

Day 30

Collect Demand

S&OP Meeting

Publish Plan

Flu outbreak in Texas

Distributor draws down inventories

Manufacturing disruption

Real Time S&OP Process

Day 1
Review, Edit & Approve Demand Plan Review, Edit & Approve Supply Plan

Day 30

Collect Demand

Constrained Supply Plan

S&OP Meeting

Publish Plan

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Real Time S&OP

Compresses the Planning Cycle, Plan with Current Information Typical S&OP Process
Day 1
Review, Edit & Approve Demand Plan Constrained Supply Plan Review, Edit & Approve Supply Plan

Day 30

Collect Demand

S&OP Meeting

Publish Plan

Flu outbreak in Texas

Distributor draws down inventories

Manufacturing disruption

Real Time S&OP Process

Day 1
Review, Edit & Approve Demand Plan Review, Edit & Approve Supply Plan

Review, Edit & Approve Demand Plan

Review, Edit & Approve Supply Plan

Day 30

Collect Demand

Constrained Supply Plan

Collect Demand

Constrained Supply Plan

Publish Plan

Automation enables flexibility to respond within the planning cycle

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The S&OP White Spaces

Decoupling & Visibility

Customers and Consumers

Demand Visibility

Supply Visibility

Contract Manufacturing

Suppliers

Channel Demand & Demand Management

Demand (Risk) Translation

Reliable, Profitable Response from Supply Based on Demand

Deep Manufacturing

EDW
SFA/CRM

? ?
S&OP
PLM

ERP

AMR Research

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Business Process Integration Plan

Advanced Planning SCM Demand Planning Demantra Demand Management Demantra Advanced Forecasting CRM Trade Promotion Planning Demantra Predictive Planning Demantra Promotion Optimization Demantra Deduction & Settlement Supply Planning Strategic Network Optimization Inventory Optimization Adv. Supply Chain Planning Sales and Operations Planning Sales and Marketing Sales Marketing

Supply Chain Execution Manufacturing Order Management Shipping Execution Logistics Finance Financial Planning and Budgeting

SRM Supplier Contracts

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Enable Integrated S&OP in Heterogeneous Environments

DM

Planning

APO

Demand Driven Business Solutions

RT S&OP

TPMO

Execution

R/3
Back Office Front Office

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Manufacturing Execution Strategy

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Oracle Manufacturing Strategy

Level 4

Business Planning & Logistics

Plant Production Scheduling, Operational Management, etc

ERP/SCM/Planning

ORACLE 11i Oracle Strategy

LIMS MES Quality CMMS

Level 3

Manufacturing Operations Management

Dispatching Production, Detailed Production Scheduling, Reliability Assurance, ...

Level 2 Level 1
Batch Control Continuous Control Discrete Control

EMI* Data Historians

APC & S Automation & Control

HMI/MMI/SCADA Level 0
Actual Production Process

* Future
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The MES Spectrum

Niche MES Players Post 12.1

R12.1

Oracle Manufacturing Execution System R12

Complexity (Compliance, Tracking, etc)

Shift Hour Minute Second

Volume and Automation

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Plant to Enterprise Strategy

Paper batch records, material-centric, minimal automation and manual data entry Electronic batch records, decentralized plants, highly automated, accept costs of maintenance of integration Electronic batch records, processcentric, low-med shop floor automation, standardization and data visibility across plants

Devices
3rd Party Integration

Devices
Oracle Edge Server MES for Process

MES
Web Services

OPM
OPM
Existing Process Manufacturing Suite

OPM
OPM + integration other MES
APIs and Web Services enable integration based on S95

OPM
OPM + MES for Process
Process Instructions & SOPs, Dispensing, Nonconformance Mgmt., Electronic MBR and CBR, Mobile, Labeling, Device Integration

Offering Choices for Various Manufacturing Needs

Oracle MES for Process Manufacturing

Process Flow Summary
Process Engineer Production Supervisor Complete & Close Batch Create Recipe Reverse Dispense Ingredients Dispensing Operator Production Operator

Roles Process Engineer/Formulator

Manages recipes and advanced process instructions

Add New Enhanced Process Instructions

Review Control Batch Record

Production Supervisor
Log Nonconformances Dispense Ingredients Lock Operation, Follow PI, Execute Tasks

Create/Update Validity Rule & Review Master Batch Record

Creates and manages batch status Logs nonconformances

Dispensing
Schedule Batch & Reserve Materials

Pre-weighs designated ingredients

Production Operator
Processes batch operations

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Operator Workbench R12

Easy process navigation Details of active instruction

All instructions for the Operation

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UI Tester for R12+ MES Interface

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Operator Workbench R12.1

Touch Screen Enabled
Links to SOPs

Online Process Instructions

One-touch access to key transactions

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Dispensing R12.1
Touch Screen Enabled
Supporting Deep Manufacturing Operations Management Process guides move operators through work instruction view, progress reporting, and material consumption tracking Quality data collection and lot data capture for genealogy Integration to process equipment

Complete Process Support for Work Instruction Display, Dispensing, Batch Progress Tracking, and Ingredient Consumption Reporting

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When Best of Breed MES is Needed

Oracle S95 Approach
B2MML Standard Messaging

Enabled with Fusion Middleware

C re a te B a tc h Batch Information Requirements OPM C o m p le te B a tc h
Consumptions Record Actual

Material &

Material &

Resource

S e c urity

O r a c le F u s io n M id d le w a r e A d a p te rs B2B B P EL P M

Resource

BAM

M e ssa g ing

T r a n s f o r m a t io n

R o uting

O r a c le E n t e r p r is e S e r v ic e B u s

Completion

Oracle Objects pre-mapped to S95 Entities

Production

Production

Schedule

B2MML

B2MML

MES

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EMI Solution Architecture

Corporate ERP DBI
Schedule Data Released WO Released Batches Rel. Flow Sch. Master Data Item Master Subset Item Costs Resource Costs

MES

Prodn. Actuals Completions Scrap Main. Notifications Resource Charges

Corporate Plant

EMI Hub

EMI Dashboards Plant Specific KPIs Real-time KPIs

OEE SPC/SQC Schedule Adherence Agility-cycle times Productivity Batch Analyzer

Device Data Actual Counts Actual Times Parameter Values Actual Scrap Equipment Status
Automation & Control Historian SCADA PLC

Schedule Data Wo/Schedule to MES M/C Download

S-95

MES Data Actual Times WIP Transactions Quality Actuals

Transactional Systems MES LIMS Legacy Quality SPC/SQC CMMS

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Regulatory Compliance

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Business EfficientRegulatory Compliant

Automate Controls and Audit Capabilities GMP controls built into MES
Nonconformance management Dispensing Electronic batch records Configurable operational sequence control for operator process instructions Direct access to SOPs

21 CFR Part 11 compliance

Configurable for <100 events

Risk and Audit Management

Oracle Quality

Best practice templates

Pre-Built SOPs included with Oracle Tutor Accelerator for Life Sciences (new implementations)

Automated Test Scripts

ePedigree
Technology Partner initiatives

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Safe & Secure Supply Chain

Control and Traceability Across the Supply Chain

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Drug Counterfeiting
Cumulative US Counterfeiting Losses: Over $1 Billion Average impact to major manufacturer: $50 to $100 Million annually
7% of the World Drug Supply Chain is Counterfeit Wrong WHO
packaging Wrong ingredient

U.S. Counterfeit Cases

20 22

5%

25 20 No active ingredient 15 10 5 0 6 4 6 6

7%
Sub-potent active ingredient

21%
Poor quality

43%

24%

1997 1998 1999 2000 2001 2002

1% of the US Drug Supply Chain is CounterfeitFDA

Additional losses occur due to negative brand impacts and the costs of recalling suspect product

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The Targeted Pedigree Process

Data Collection Data Sharing Data Analysis

Pedigree Pedigree PharmaDrug EPC serial # Manufacturer

Pedigree Pedigree PharmaDrug g EPC serial # Manufacturer r Wholesaler 1

Pedigree Pedigree PharmaDrug g EPC serial # Manufacturer Wholesaler 1 Wholesaler 2

Pedigree Pedigree PharmaDrug g EPC serial # Manufacturer Wholesaler 1 Wholesaler 2 Pharmacy

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ePedigree Solution Architecture

Provides the tools necessary for data consolidation and integration Facilitates sophisticated data manipulation, analysis, and reporting Enables better interpretation of data Supports pedigree reporting across the supply chain

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Oracles Information-Driven Supply Chain Management Offering Enables You to

Drive Operational Excellence Enable Regulatory Compliance Manage Supply Chain Risk

Get Richer Information. Make Faster Decisions. Deliver Better Results.

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