Report from Day 2 at Healthcare Distributors Alliance 2019 Distribution Management Conference and Expo held in Palm Desert, CA, March 10-13.
Panelists included Matthew Letow, Amerisource Bergen—Integrated Commercialization Services; William McGrath, Ferring Pharmaceuticals Inc.; Amy Winnen, Consultant, and Mark Meier, Pernix Theraputics.
For smaller manufacturers and emerging suppliers who lack the infrastructure, a strategic partnership with a 3PL can free up a lot of bandwidth for internal teams to focus elsewhere.
Even very large drug companies can use 3PLs for specialty products, new launches, cold chain products, etc.
Selecting a 3PL takes time and resources. You have to develop an RFP that covers every aspect of the services you are seeking. When you begin, you may not even have a full understanding of what you actually need from the 3PL.
You can ask for a redacted invoice so you can see the billing categories you may have not taken into consideration.
The RFP process must begin with your evaluation of needs. It’s recommended to start 12 months in advance, especially in cases where new state licenses must be applied for—and approved in time.
Are you shipping multiple products? A single drug? Biologics needing the cold chain? Gene therapies to -60 degrees that may have a 20-minute window once opened? Daily delivery or once a week? Will your delivery be going to two or three specialty pharmacy customers or 100 locations? Some 3PLs are better equipped to handle certain special circumstances than others.
Manufacturers who have multiple products and acquire new ones that are currently being distributed with another 3PL, may choose to run parallel 3PLs for six months to a year before making any transitions to a single 3PL due to integration of processes and related regulatory/quality requirements.
If it’s your first RFP, there are consultants who can help develop a template for you. You usually can take over after the first time you go through the process with their assistance.
It usually takes at least six months to implement once you have chosen a partner, so you need to get your whole team on board before you choose—quality, legal, production, etc. Write your RFP, review it internally and send it out.
Once you receive your responses and you have narrowed down your choices, it’s time for a site visit. Here you check for cleanliness, security, employees, culture, etc. It is important to have the right fit. You want robust service but organizational flexibility.
Reference checking is critical as well. The more you know about your partner the better.
Some 3PLs can aggregate data, especially during launch, but ultimately it might be best to use a service dedicated to data management.
Make sure your supply chain partner is innovating for the future. The services you need at start up may look different 18 months into the launch. Is your provider equipped to deal with evolving needs?
How do you decide if you should go the 3PL route? Work the numbers and find your break even. Can you afford warehousing, logistics team, back office software and people?
Most small or medium startups lack the infrastructure and must count on a solid relationship with a 3PL partner.