In early July 2007, I spent some time with Kim Loughead, Healthcare Business Development Director of Axway, discussing the World healthcare market from a supply chain view point. Axway was formed in 2001 and is a wholly owned subsidiary of the French consultancy group, Sopra, who are a major European consulting, systems integration and application outsourcing company. Axway have over 8000 organizations worldwide of which 3000 are in the healthcare sector.

Company Background

Axway is headquartered in Scottsdale, Arizona, and has offices in 20 countries. In the last 18 months, Axway have made 2 major acquisitions:

• In January 2006, Axway acquired 100% of the company Cyclone Commerce in an all cash transaction. The merger combined two business-to-business market leaders to form a profitable $120 million corporation. The two product lines have, over the intervening period, been merged into a single offering under the trademark of Synchrony.
• In December 2006, Axway acquired the B2B software business of Atos Origin in Germany. This acquisition makes them the number one EDI and B2B solution provider in Europe. The Atos Origin B2B software products are to be maintained and integrated in an updated version of Axway's Synchrony™ platform, thus enhancing EDI formats and process integration technology specific to the automotive sector, as well as expanding the depth of Web EDI features and leveraging the privileged relationships with leading ERPs and the associated interconnection possibilities between B2B servers

Axway's market has been to sell individual technical solutions in the B2B integration space. Thus it has become known as the recognised technical leader in key technology sectors. Their customers in the healthcare sector read like a who's who. So, who better to ask about what is changing in the healthcare market?

Healthcare market overview

The current healthcare market has a number of business drivers associated with the increase in the elderly population, the penetration of counterfeit drugs, which could possibly lead to issues of patient safety, and the cost pressures of organisations involved in a much regulated environment with long lead times before ROI can be achieved. New regulatory and trading partner mandates are transforming the fundamental relationships and business processes required to distribute pharmaceutical products to providers and patients.

The US market

The evolving strategy in healthcare in the US can be summarised as:

• There is a move towards non-traditional care delivery with the exploitation of market channels around home delivery, mail order and the internet. This is leading to a Just-in-Time (JIT) supply chain.
• There is an increase in what Loughead termed "Consumarised Healthcare Services". This is where the retailer provides additional healthcare services such as anti smoking advice and diabetes support.
• There is more collaboration between supply chain partners. Areas where this collaboration has been seen include RFID Item Serialisation, Identification and Authentication requirements and collaboration of data integrity needs.
• There is considerable concern over counterfeiting, both from manufacturers in terms of brand equity and from wholesalers in terms of performance measurement around SLAs with manufacturers. Loughead's view is that, based on the figures of the WHO, this is less of an issue than it is in Europe and certainly less than in the Third World.
• From a retailer perspective, revenue is made from the sale of generics. The use of value added services such as retail clinics is all about keeping customers in the store.

European market

The European market is similar to the US market but in Loughead's view about 3 years behind. Axway have noted that Europe is just starting to see the results of sole distributor agreements between manufactures and wholesaler. A good example is the recent announcement of the deal between Pfizer and the Alliance Boots Group. The wholesalers are being squeezed. Loughead expects to see them offer other services. She also expects to see the formation of co-operatives between retailers to handle distribution areas in a more cost effective manner. In terms of regulation, Belgium, Italy and Spain already have track and trace legislation in place. Axway expect to see similar legislation come into force in other European countries.

Collaboration strategy

Loughead sees no driver at present to get all the parties involved in the healthcare supply chain to share information between themselves. In terms of vendor managed inventory, Axway can see the benefits that could occur but believe this is likely to be only possible with generics. However, there is a move towards decision making from within the 4 walls of an organisation into the "Cloud".

ePedigree

An ePedigree system is an ever-growing electronic chain of custody detailing a drug's path through the supply chain, in which each company involved in the manufacture or distribution of the drug adds to the ePedigree. The seller identifies the drugs and the full chain of custody, then certifies the pedigrees and transmits them in advance to the trading partner receiving the drugs, who authenticates the ePedigrees. When a drug shipment arrives, the pedigrees are matched to the products and signed, verifying their accuracy. ePedigree software maintains the product-to-pedigree match while the products are in inventory.

Loughead sees Pedigree as something that is being driven by US legislation. She feels that although the Californian legislation is supposed to go live in 2009, it will be watered down by the industry, particularly after the recent statement by Pfizer that they would not be ready to comply by 2009. Loughead also pointed out that the EPCGlobal standard for ePedigrees, although ratified as one option for California, actually does not fit the business process too well. Instead she believes that some sort of loosely coupled solution will be needed. As far as the European market is concerned, Loughead does not see a requirement. In fact she was told by one person from GS1 that Europe won't ratify the EPCGlobal standard!

RFID, as a way of implementing ePedigrees, is in a "slough of despond". The manufacturer trials in the main (major exception is AstraZenica) have stopped in favour of the use of 2D barcodes. A lot of this is due to the decision to use UHF tags rather other frequencies and its associated issues concerning different wattages and frequencies resulting in good results sometimes, but not always.

Because of the Californian legislation on Pedigrees, distributors are moving to isolate the State by using shared service models to mitigate the cost implications. The distributors will need the manufacturers to start to supply them with product that conforms by July 2008.

Retailers according to Loughead are looking for ways around pedigree legislation.

The Axway strategy

The Axway strategy is to look beyond the current perceived opportunities in the healthcare market around serialisation. One of these areas is Supply Chain Integrity.

Supply Chain Integrity, from Axway's viewpoint, covers the need for checking the authenticity of the product as well as checking its quality. The difference being that quality would cover issues to do with temperature management and packaging. The third piece of the puzzle is to ensure efficient delivery.

Axway have recognised that to achieve these three goals, the underlying solution must deliver visibility across the complete supply chain. This will involve the need to integrate across heterogeneous environments and organisational boundaries, with the need to control access to only information that needs to be shared. Another major requirement is the need to support agility, both in terms of the processes involved and also in terms of the players and business rules. The solution has to be able to turn data into information into knowledge and acumen to enable business to be able create business intelligence across the disparate parts of the supply chain. Axway's strategy is to deliver a solution that is enterprise centric rather than edge centric. This strategy plays to their product portfolio strengths in integration and collaboration.