Supply chain vs. value chain: need-to-know essentials
by Heidi Hagen | October 17, 2019
In a recent blog post about Quality Risk Management, we talked about the importance of considering the entire “value chain” when assessing risk. Looking at the entire value chain gives a broad perspective rather than simply analyzing the supply chain, and aims to assess potential risks from every angle. But why is the distinction between the supply chain and value chain important in cell therapies, gene therapies, and personalized cancer vaccines?
As it turns out, it all comes back to the patient. Let’s step back for a moment and understand the difference between the supply chain and the value chain in the context of advanced therapies.
What are personalized therapy supply chains and value chains?
Supply chains are the discrete entities, materials, activities, and other inputs that go into making a drug product, from the procurement and delivery of source materials to the eventual delivery to the end recipient. This includes all individuals, organizations, resources, activities, and technologies involved in making the drug product and delivering it to patients — such as raw materials, manufacturing, transportation, and storage.
Value chains represent the full range of activities that make a product valuable, and are therefore a much broader concept than the supply chain. The drug product value chain starts at product development and continues through patient identification, production, marketing, treatment, and post-treatment activities. It includes the supply chain, and expands upon it vertically and horizontally as the different supply chain components are incorporated and combined to create value.
The supply chain is an active, participating, “nested” part of the value chain in personalized therapies, and it cannot be managed separately. In traditional drug products, the different supply chain activities required to make the drug product can often happen independently from each other and may not be coordinated tightly with product sales and administration.
In personalized therapies, however, live patient or donor cells are a key raw material, and are integrated into the supply chain and thus the value chain. The inclusion of live human cells in some, or all, parts of the process means that the supply chain and value chain are interactive and operating in “real time.” Simply put, in advanced therapies, sponsors cannot manage one chain without considering the other.
From the start of cell collection, coordination of critical “living” raw material (patient or donor cells) is needed to successfully produce the drug product and administer it to the patient safely. In traditional drug product supply chains, activities like raw material procurement, manufacturing, and logistics often happen on independent schedules, with other drivers such as efficiency and cost steering the process. But in personalized supply chains, these supply chain activities demand precise orchestration. These activities are dependent on one another to successfully create drug product and complete the value chain. This also results in a large number of stakeholders actively participating in the value creation behind a single batch of drug product, starting with identifying the patient for treatment and continuing on through order, cell collection, manufacturing, treatment, and post-treatment follow-up.
The value of patient safety
A primary goal, and key component of “value,” in the personalized therapy value chain is always patient safety — ensuring that patients receive the correct drug product at the right time. One way patient safety is assured is through Chain of Identity (COI) and Chain of Custody (COC), which further differentiate the personalized therapy supply and value chains. Much like the supply chain is only a part of the whole value chain, the COC, often called vein-to-vein, is only a part of the COI. The COI starts when a patient’s treatment is ordered and provides traceability throughout the entire drug product process. The COC is more directly related to the supply chain activities. It tracks the human cells -- and information on their handling-- from the point of collection to delivery of the physical product (either to the treatment location or, as an interim step, to an inventory location).
If value is viewed purely from the perspective of the end user — the patient — then the value is essentially a safe and efficacious, possibly life-saving, treatment. But many stakeholders actively provide and receive value all along the chain. The healthcare providers have an additional therapy to include in their treatment arsenal, and the biotech sponsor receives income and goodwill for offering a successful therapy, especially for diseases with limited treatment options. There is also value in the experience and data gathered from more and more personalized therapies progressing through clinical trials and achieving commercialization. This advances scientific understanding and the industry as a whole.
Value chain essentials — the bottom line
The supply chains and value chains for personalized therapies are inextricably linked and operate in real-time because live human cells are the key raw material. This adds a time-sensitive, interactive aspect to the supply chain, directly linking it to value creation.The value for the patient is receiving a safe and efficacious treatment that either contains modified human cells or is based on a personalized formula, both of which can have long-term implications over the lifetime of the patient. This unique situation requires active participation from all stakeholders in the value chain — from the point of identifying a patient to creating the order and COI, making and administering the drug product, and through follow-up for the lifetime of the patient. In the case of cell and gene therapy, we all hope, the value -- and the chain behind it -- is life-long.
At Vineti, our leading software platform helps our biopharmaceutical partners manage complex cell and gene therapy value chains every day.
Heidi Hagen is the Chief Strategy Officer and a Co-Founder of Vineti. Over the course of her career, she has overseen the operations and delivery for more than 100,000 doses of cell therapy. If you’d like to learn more about how Vineti’s software platform supports cell therapies as they scale, please contact us to schedule a demo.