Case study – Gilead Sciences

Executive Summary:

Gilead Sciences is one of the large US based Biotechnology company that is eager to create a
strong brand presence in India through a strategic business partner. Considering the fact that
Indian pharmaceutical market is huge and is poised to grow at a CAGR of 22.4% over 2015 – 20,
all major Pharmaceutical brands want to ensure they have a strong presence in the Indian
market.

Gilead Sciences primarily focuses on antiviral drugs used in the treatment of dreadful ailments
like HIV, Hepatitis B / C etc. It is ranked one amongst the Top Pharma companies in the world in
lines of Pfizer, GSK, Merck, Roche group etc. The pharma major’s global strategy always has
been to limit their manufacturing facilities to selected sites, where the drugs get manufactured
and from those manufacturing facilities they get supplied to their various strategic partners /
dealers across the globe.

This strategy has been a firm principle of the company since their inception which was in the year
1987, and it is still true today. This strategy is primarily to ensure high quality standards of their
drugs produced at all times.

Considering the quality standards and perishable nature of some drugs that Gilead Science
manufacture, it is very imperative that the such category of drugs are always maintained at
certain temperature which is +2C to +8C, from the manufacturing plant till they are delivered to
their partners in respective countries. Gilead Sciences has been very strict in selecting their
vendors for logistical support, considering this Temp controlled nature of their shipments.

DGF India has been strategically trying to make it big in this temperature controlled pharma
space for quite some time considering the high yielding nature of this business. Gilead Sciences
is therefore a strategic and high potential target customer for DGF owing to its global presence
and strong need for Temp controlled Logistics support from their manufacturing site in USA to
their strategic business partner based out in India.

In addition to being a partner to Gilead Sciences, the Indian business partner also had similar
contracts with other Pharma multinationals and it was quite possible that if DGF manages to win
this RFQ, it will be opening up a newer opportunities for DGF.

History:

In June 1987, Micheal L. Riodran a graduate from John Hopkins School of Medicine and who
later went to the Harvard Business School along with two scientific advisors, Peter Dervan and
Doug Meltan of Harward created this company – Gilead Sciences. The company’s primary
therapeutic focus was, and continues to be, in antiviral drugs, a field that interested Riodran
because he contracted dengue fever a viral disease, while working on a research project in
Philippines.

In 1990 the company entered into a collaborative research agreement with Glaxo for the research
and development of genetic code blockers, also known as antisense. This collaboration was
terminated in 1998 and Gilead’s antisense intellectual property was sold to Lonis
Pharmaceuticals.
As of 2018, Gilead’s challenge apart from reaching out/exploring newer markets, is to develop or
acquire new blockbuster drugs before its current revenue-producers wane or their patent
protection expires.

Challenge for DGF:

DGF has a solution christened ‘Thermonet’ which is specifically designed to meet the customer’s
requirement of moving temperature controlled shipments from their manufacturing facilities in
USA to India.

Considering the time sensitive and Temperature controlled nature of the customer’s shipment,
DGF has an opportunity to retain a healthy margin of about 40% on the price that we quote to the
customer.

Below given were add on challenges that was part of this RFQ.

 They required the Temp controlled drugs to be available at their distributor’s warehouse
in Hosur. The warehouse in Hosur was about 47 Kms away from the Bangalore airport.
 The strategic partner also wanted a process in place which will ensure 24/7 monitoring of
shipments and a temp record logger giving details of the temperature in which the
shipment travelled right from manufacturer’s facility in the US to their warehouse in
Hosur.
 The customer also had a very stringent audit compliance in place to check the process
followed by DGF for this specific temp controlled movement and also had a special audit
machine at their end to do sample quality check of the drug at their premise.
 Additionally, there was a penalty clause, where in if the shipments get damaged or tends
to be unusable due breach in temperature during transport, DGF will have bear the entire
cost of the consignment’s invoice value.
 There was also a clause in the RFQ, mentioning that, the annual contract of about 30
Tons a month will be awarded only after the selected logistics partner is able to rightly
deliver the first consignment meeting all of the customer’s requirement.

Possible solutions:

1. DGF withdraws from this RFQ bid considering the fact that there is a penalty clause in
place and if DGF is unable to deliver the consignment in the specific temperature it is
meant to travel, it will have to bore the total invoice value of the consignment and also
there are chances of losing out other existing customers on Temperature controlled
logistics to competition.
2. DGF participates in the RFQ bid, but states that they will be able to provide service only
up to the Bangalore airport and the customer will have to take control of the last mile
delivery of the consignment from the airport to Hosur and possibly lose out on the RFQ
bid to competition.
3. DGF leverages their expertise in handling Temp Control logistics and devises a special
SOP for handling the customer’s shipment right from their manufacturing facility in US to
the distributors warehouse in Hosur, India. DGF appoints right vendors to manage the
last mile delivery of shipment in specialized refrigerated trucks from Bangalore airport to
the customer’s premise in Hosur.

Conclusion:

DGF created a special SOP exclusively for this customer’s Temp controlled movements and
ensured all the internal stakeholders are rightly aligned for the customer’s shipment.

Air Thermonet solution of DGF enabled the customer’s get higher visibility of his shipments via
LifeTrack and 24/7 proactive monitoring of shipments. DGF ensured the client’s need is fully
covered through DGF Air Thermonet’s established network of Certified Life Science Stations,
Certified Life Science Specialist, IT Platform and Smart Sensor Technology.

DGF’s Thermonet Solution ensured customer gets the below value:

1) A standardized Service with Global Reach

2) A stringent auditable compliant process, ensuring product integrity
3) Anywhere, at any time reporting and visibility to their product within our cutting-edge
technology – Lifetrack
4) Greater control of their product handling.

With the right alignment amongst the internal stakehoders, DGF delivered the customer’s first
shipment in the manner customer wanted it and managed to win the annual contract.