MSD: Building a digital superhighway
MSD's origins go all the way back to the 17th century, when Friedrich Jacob Merck purchased a drug store in Germany, which later evolved into a drug manufacturer. Today it is not only one of the world's largest pharmaceutical companies but is also one of the world's biggest companies in any sector, ranked 69 on the 2021 Fortune 500 list.
Five years ago, MSD began a digital transformation programme, with the aim of accelerating growth and modernizing operating models across the business, including the supply chain.
Paolo Migliari, Executive Director Supply Excellence and Head of Connected Channels Global Blockchain Programme explains that the patient is at the core of the digital project. "Everything we do in terms of digital transformation should be patient-centric. Whatever we build in our digital portfolio must have the patient at the centre."
MSD has a "plant to patient" programme with four key priorities: leveraging data to enable automation and move towards more advanced analytics; streamlining decision-making and ways of collaborating; focusing on growth drivers; and innovating with Blockchain technology to create additional value.
A key goal is to get products to the patients as fast as possible, as well as reducing overall cost and friction. "We are building solutions to make the supply chain more secure and of higher quality, and also helping other institutions to help with patient adherence" Migliari adds. "The aim is to create an ecosystem that will allow us to make this possible."
Within MSD's digital transformation is a digital logistics programme. Fredric Brut, Head of Supply Chain for EMEA and APAC, explains: "Supply chain transparency and real-time visibility of inventory positioning and movement, driven by increased value of freight, time / temperature sensitivity of the product portfolio, and potential for freight diversion, offered an opportunity to engage in more real-time alert track and trace technology.”
In 2015 MSD began to review its technology, and invited TransVoyant on board as a partner to provide IoT capabilities.
TransVoyant provides a consolidated data platform that helps MSD track products through IoT (Internet of Things) monitoring services, that offer real-time visibility and responsiveness in terms of shipment position, temperature, light and other critical aspects of shipping. "TransVoyant is a key partner for us," Brut says. "We leverage their digital technology in a cloud-based platform, to drive data integration, return shipment visibility, lane risk assessment and predictive analysis. It's a really great application and service for us to track our products through. and with some 3rd party warehouses”.
A good example of how real-time information is key in achieving a secure supply chain is how it supported MSD during the Suez Canal blockage in March 2021. "With just one click we could check where our products were. At the time we had 12 shipments going from Europe to Asia Pacific, and fortunately, they had already passed the canal, but we were able to immediately identify and ensure this."
The use of IoT has provided MSD with several clear benefits to date. "In less than 18 months and to prevent loss of product in transportation we have tracked 7,000 shipments, reduced shipment expenses and inventory discards, optimised the sales when supply is constrained, increase our company reputation from missed customer commitments and made insurance premium cost reductions," Brut explains. The total sales value of benefits is above average, he adds.
To date, all manufacturing sites, including critical CMO Partners, have been enrolled and are utilising the complete digital portfolio, or are engaged with the IoT device use, as the global implementation is finalised.
Next step will be to use Digital Logistics data as an input source and with a Supply Chain Control Tower, reduce resource intensity and mitigate logistics disruption. We want also to facilitate the integration to other data sources and ecosystems to improve collaboration within the logistics networks.
The COVID-19 pandemic highlighted the importance of supply chain visibility. “At the start of the pandemic, due to restrictions imposed in many countries, across the world, we saw massive supply disruption that rippled through the entire chain, causing shortages of different products in many locations. From this experience, many organisations and governments see the importance of supply chain resilience. Through digitalisation, and a trusted network ecosystem, organisations can make use of connected devices and leverage the application of digital twins in their supply chain operations. This will allow a bird’s eye view of the end-to-end supply chain, enabling real-time alerts of potential risk events, quicker decision making, and greater flexibility to react to sudden shocks globally, ensuring patients and customers of MSD can continue to rely and trust on a stable supply.
In a post-pandemic world, the behaviour of consumers (and patients) has changed as well, the shift in frequency/channel of purchase will require a corresponding change in supply chains. So digitalising our supply chain will allow for the organisation to better cater to this paradigm shift – for example supply-replenishment, connectivity with e-commerce platforms (direct to consumer model for prescription medicine),” Brut says.
Another key element of MSD's digital journey is the use of blockchain technology. "Imagine a future where we digitally connect to our external partners," Brut says. "We are looking at how we can utilise blockchain technology to build an external digital superhighway that will gather and provide information, even make decisions based on algorithms built into the blockchain. For MSD, blockchain is a game-changer."
Blockchain is a team effort, Migliari says, and for this purpose, MSD is part of a research and innovation consortium called PharmaLedger where the company has heavily invested to build the collaboration and network with 11 pharmaceutical companies and 17 other entities, including patient representative organisations, research, and academic organisations. It is a 3-year expedited co-creation effort between the industry and healthcare stakeholders. The project is sponsored by the pharma industry – EFPIA and the EU Commission with a total EUR 22 million funding.
Industry collaboration is the key success factor in the journey to unleash the power and potential of blockchain technology. MSD has been championing this challenge with the creation of a Global Blockchain Consensus Board. The forum, which has so far brought together 14 of the biggest pharmaceutical companies in the world to facilitate progress in blockchain adoption, has no cost, is open to all industry members to join and operates under a legal framework and anti-trust compliance.
"In terms of the ecosystem we have to engage in mindful supply chain partnerships," says Brut. "For instance, MSD is also partnering with wholesalers, distribution partners and clinics in Asia Pacific and Canada to seek rapid customer integration, demonstrate the benefits achieved, and meet the transformation agendas of governments while leveraging the digital twin and blockchain capabilities.”
If we talk about applications on top of blockchain-enabled networks, our goal is to expand our business case portfolio and the deployment of solutions under major capability areas, such as product traceability and anti-counterfeiting; eLeaflet; inventory visibility; and auto-order management, Testing on Importation among other possibilities at the Supply Chain domain. In Clinical Trials we explore eRecruitment, eConsent , IoT use in trials and more through the consortium.
Geography is equally important, as it can dictate the partnerships, choice of network, with the most useful applications (i.e. anticounterfeiting in emerging markets, eLeaflet for paperless markets).
This can be achieved with technology. The objective is to have a foundational stack with a modular architecture, to join existing networks vs creating our own, depending on geography and aligned strategies.
Zuellig Pharma supports the physical distribution, warehousing and order fulfilment of MSD products in the Asia Pacific region, through blockchain-based solutions. An example of this is the mobile application used in Hong Kong for MSD’s Gardasil®9, HPV vaccine. It was created to enable healthcare providers and patients to verify the provenance on a unit level and report suspicious packs and with that help increase safety in a region challenged by counterfeit medicines.
In APAC, MSD and Zuellig Pharma are co-developing and testing a trusted network to which MSD expect will attract more of its Pharma peers. The partnership with distributors and wholesalers adds enormous value to the traceability of pharmaceutical products, without the partnership of Zuellig Pharma or other distributors the final benefit to the customer and patient would be reduced.
Having a robust, external partner network is part of MSD's Connected Channels programme. "The reason we call it Connected Channels is because we need to be sure that the ecosystem we are building, starting from the manufacturer and ending with the patient, with partners, stakeholders, pharmacies and doctors in the middle, are all able to be connected with each other" Migliari explains.
Connecting these different actors must require little effort - it could be via an app on a smartphone, or a system used to manage a clinics. "It's so patients and healthcare practitioners can really take advantage of what we are building as an added service and can be part of that value creation as well."
Migliari says they are ensuring data will be correctly managed and secure and will also enable patients to take ownership of the data. The architecture must have “privacy by design” as its core concept and data must be self-sovereign for the people using it.
“It's really an environment where all the partners and stakeholders own their own data and understand how this data is used."
Migliari emphasises that it's important for pharmaceutical companies to collaborate with each other. "Pharmaceutical companies absolutely must compete, but we also need to really take advantage of collaboration, within legal parameters, especially in the case of logistics. All pharmaceutical companies should collaborate to be sure that the genuine product will arrive as fast as possible to the patient."
Collaboration will also help to reduce counterfeit products, another key aim of the aforementioned PharmaLedger. "Once we have all the pharmaceutical companies and supply chain partners on board it will really change our approach and make the environment easier to use and also more secure," Migliari says.
He hopes the concept will become widely adopted. "The idea is great, and this digital ecosystem will be of advantage to everybody as the purpose is to be patient-centric. I believe that is an objective of all pharmaceutical companies."
MSD’s digital innovation journey is the walk of the talk. It started with a good look into its own operations and infrastructure and in finding the right partners to digitalise logistics. Now it continues to evolve towards an outward focus and the creation of a common utility network which the industry can adopt, and customers and patients can benefit from.