BRIEF

J&J reshaping its supply chain around therapies of the future

AUTHOR

Jacob Bell@realjacobbell

PUBLISHED

April 19, 2018

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Dive Brief:

• Tucked into its first quarter earnings presentation, Johnson & Johnson disclosed plans to revise its supply chain to better serve future products.
• "Looking forward into the future we need more of some newer technologies — like biologics, like an investment in CAR-T, for example —  and we need less of the technologies that are related to some of the older parts of the portfolio," Dominic Caruso, the big pharma's chief financial officer, said during an April 17 earnings call.
• J&J noted discussions are ongoing, but so far the plans look like they'll focus on using strategic collaborations to a greater degree, reducing complexity within the supply chain, and improving cost-competitiveness, capabilities and network optimization. Once complete, the initiative should result in $600 million to $800 million in annual savings, according to the company.

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Dive Insight:

Innovative treatments like cell and gene therapies are testing the limits of an already complex pharmaceutical supply chain, in turn putting pressure on drugmakers to find solutions.

Technology has been key in that regard. GlaxoSmithKline plc recently tapped Viant Technologies Inc., an Ethereum-based blockchain platform, to help implement blockchain into its supply chain systems. Advancements in big data and computing are also opening doors, according to J&J's Chief Supply Chain Officer Kathryn Wengel.

"We're not just making products anymore. We also make a product's digital twin​," Wengel wrote in a opinion piece published last summer on Supply Chain Dive. "This twin is the basis for how we collaborate across the healthcare supply chain to create a digital thread that will allow our healthcare systems to shift over time from a pay by use to pay for outcomes."

J&J's planned revamp comes on the heels of new supply chain investments. Late last year, the big pharma's subsidiary Janssen Sciences Ireland agreed to spend €300 million ($355 million) to expand its 400,000-square-meter facility in Ringaskiddy, County Cork, with the goal of revving up biologics manufacturing. And in December, J&J waded into the world of CAR-T manufacturing through a $350 million licensing deal with Legend Biotech for one of the Chinese drugmaker's investigational treatments.

Future products like Legend's clinical candidate were a primary driver of J&J's supply chain investment. The big pharma touts a fairly extensive late-stage, spanning across some of the hottest therapeutic areas in drug development, such as oncology and neuroscience.

The U.S. is also a focus. On the earnings call, Caruso noted his company was committed to bringing the supply chain investments stateside, especially with regards to additional R&D.