Optimising Supply Chain Investments – An Integrated Approach

Abstract

Managing supply chain issues is becoming a critical success factor for branded and generics producers alike. Biotech products and their generic versions require complex supply chain strategies or large capital investment decisions to be made at a time when product launch is still uncertain. This paper describes the issues around making supply chain investment decisions for new generic pharmaceuticals and biogenerics. An integrated planning approach, based on real options valuation, is described, which incorporates product valuation risk with supply chain investment risk. This then forms a more robust basis for making supply chain decisions and for developing alliances with third parties such as contract manufacturers.