PwC Challenge 5.

0: Round 1 Case Study

Industry Overview
The Pharmaceutical industry has developed as a truly
globalized industry with a highly integrated supply chain
network. However, the COVID-19 pandemic and the recent
political tensions have exposed the shortcomings of having
such highly integrated supply chain networks with global
dependencies.

With the onset of the COVID-19 pandemic, the industry

witnessed large spikes in demand and supply shocks
accentuated by the geopolitical tensions shaping due to the
Russia-Ukraine conflict. This was followed by trade
sanctions imposed on Russia and the discordance of diplomatic relationships, particularly that between
China and the United States of America. All these events have severely impacted the pharmaceutical
industry in the past 3 years.

These macroeconomic events pose a high risk to the future of this highly globalized industry since it relies
on multiple international markets for sourcing its critical starting materials - Active Pharmaceuticals
Ingredients (APIs) and small molecule generics. To understand the degree of inter-dependencies between
global markets for sourcing in this industry, let’s consider the example of a widely prescribed eye drop used
for treating glaucoma, intraocular hypertension, and cataract. Steps of developing generic eye drops
involves primarily sourcing the API for this product from China which is converted to finished product using
the manufacturing facilities in Belgium in the second step and finally it is shipped to India for sale through
distributors and retailers that ultimately reach the final customers.

Globally, pharmaceutical exports from China and India have increased by over 1,000% in the past two
decades meanwhile the United States has increased its imports by nearly 300% during the same period.
Supply chain disruptions can potentially cause a loss of 25% of a pharma company’s EBITA and growing
inflation is putting pressure on the profit margins.

With the supply chain disruptions forcing pharmaceutical and medical-care companies to optimize their
manufacturing strategies, there is also growing industry-specific concerns on how to recalibrate R&D
investments and reimagine the drug lifecycle as there emerges the need for better healthcare in the future.
Trends in the industry point to the advancement in technology and analytics - companies are turning towards
new technology-based solutions. Generative AI, Machine Learning, Automation-based digital solutions,
data-driven drug development, IoT Integration and many newer emerging technologies are finding
application, redirecting this industry into the Fourth Industrial Revolution.

Company Overview
DoloCon is one of the leading European pharmaceutical
companies that believes in turning innovative science into
healthcare that creates value for patients across the globe.
This 60-year-old firm has gained a reputation in Europe by
developing medicines for a wide range of chronic and life-
threatening health conditions along with revolutionizing the
healthcare industry through technology-driven solutions.
The exhibits show the sales data by region for the financial
year 2022-23.

Due to the rising geopolitical tensions, DoloCon has been

facing disruptions in its existing supply chains along with rising manufacturing costs, impacting its sales and
margins directly. Currently DoloCon’s manufacturing is based out of Switzerland and France. They are
heavily reliant on China-based suppliers for many of their APIs, however due to the geopolitical events
involving US-China and recent US policies for US-China decoupling, major pharma companies are looking
beyond China to immunize their supplies. With ~50% of the company’s FY’22 (Financial Year) sales
recorded in North America, DoloCon is exploring other alternative markets to base its sourcing from to
prevent a loss of customers from one of its major regional markets. The company envisions that in the next
5 years it wants to be an industry leader in innovation and wants to leverage upcoming modern technologies
to improve their operations and product development. The company management is particularly interested
in leveraging AI in developing new drugs and changing the formulation of the existing ones to combat the
increasing drug resistance among people

As the next steps the company wants to understand how to improve its target operating model to control
their costs and assess the profitability of changing their existing trade flow, their sourcing locations, and
changes in their further downstream operations. The Procurement team has many senior and experienced
members on the team who aren’t too convinced about the hype created by ChatGPT and other AI tools.

DoloCon’s leadership have shared their future vision for the company and their key issues which they want
to address in the next 3 years.

Chief Executive Officer

“We want to push the boundaries of science, data and technology to develop the next generation of
therapeutics globally”. We envision becoming a global leader in the pharmaceutical industry along with
being known for our business performance and technology-driven innovations. The recent political events
have forced us to revisit our supply chain and the way we do business. We need to develop a more resilient
supply chain, diversify our portfolio, and tap into new markets.

Governmental regulations and incentive schemes in each country, changes in trade routes and market
trends in potential markets are some aspects we are interested in understanding as we explore the options
available to us. We also want to leverage technology to improve our efficiency and new product development
initiatives.
Chief Finance Officer
“Definitely”, the rising costs of manufacturing primarily due to the supply chain constraints are impacting our
key financial metrics which is a major cause of concern for us. There is growing pressure from our suppliers
to revisit our contracts as the price of APIs rise globally. The company currently has multiple systems for
contract management operating in silos. The economies of scale that certain markets may provide certainly
will be beneficial for our operations and we want to evaluate what options can help us leverage these
opportunities.

I am also keen to understand how technology investments we plan to make will provide value and what
capital planning will be required for the next 2-3 years.

Chief Operating Officer

We are looking at keeping our operations highly efficient while providing impactful healthcare products. We
want to use the best-in-class technology in areas like managing inventory, performing accurate projections,
and ensuring shorter production cycles along with cost optimization.
We are also looking to maintain the optimal distribution channel strategy ensuring seamless integration
across the channels. The company wants to leverage technology in distribution to increase channel
penetration. We want to leverage technology to make our supply chain more resilient to global events and
ensure data-driven product development happens as a part of the drug lifecycle - from development to
manufacturing. Electricity prices have risen 10-fold for some drug factories in Europe and raw material
costs have risen by between 50% and 160%. We are looking beyond Europe to build our manufacturing
base and immune ourselves against geopolitically induced supply disruptions, expensive fossil fuel prices
and ease of doing business. With the rising costs we also target to increase our revenue by 30% in the next
3-5 years. We should also think of leveraging AI in scheduling and planning to optimize costs and increase
efficiency of our supply chain.

Chief Technology Officer

Although our immediate concerns are aimed at improving our operations, modern technology is an area I
am keen on exploring!”. With digitally enabled and data-driven healthcare, we can start to shift our focus
from traditional approaches to digitally advanced methods of drug discovery, clinical trials, precision
medicine, safety and much more. That is the future of healthcare and we DoloCon want to be at the center
of the upcoming pharma revolution.
The current trends in the technology space talk about various applications of Artificial Intelligence and Big
Data Analytics and success stories of the same, such as the breakthrough discovery made by a Japanese
pharmaceutical giant in designing a potential treatment for Alzheimer's by working alongside a British AI-
based startup’s drug discovery software.
I want to understand how the new-age technology can first help address our company’s operational issues
and help us improve our R&D efforts. We are also interested in developing our digital capabilities to create
a technology-based digital ecosystem to improve our trade operations efficiency and product lifecycle
management.

Chief Marketing Officer

We not only want to explore the application of technology for innovating our product lifecycle and
manufacturing but also want to leverage emerging technologies such as Generative AI and Machine
Learning in developing effective marketing strategies and reach out to new markets and customers.

We want to target new customers through two key customer groups for the pharmaceutical industry -
doctors and patients. We believe that through modern technologies, doctors can help in improving their
diagnosis and treatment process, making them as personalized and precise as possible for patients. For
this we should think of providing AI based care management and symptom checker solutions which can
also act as part of our sales funnel to attract doctors. When it comes to our goal of targeting a broader
consumer-base, we aim to build a strong and trust-worthy brand image and at the same time provide
tailored communications to our audience to enhance their experience with our brand and eventually our
company’s products.

I believe through Artificial Intelligence, Big Data, Machine Learning tools, Data Management platforms and
automation of communications can be a good starting point for us to explore our goals to reach new
consumers with our improved product offerings in the future we envision for DoloCon.

Summary Of Deliverables
As for the next steps, DoloCon would like you to conduct an outside-in assessment of the business and
prepare a Point of View on company’s key strategic decisions:

1. Develop a broad 3-year roadmap for DoloCon based on vision shared by CXOs and pharma
industry trends to position DoloCon as a leader in the next pharma revolution.

2. Identify growth opportunities and suggest tech-based solutions looking into the landscape of the
latest and upcoming technologies (financially and operationally viable) to DoloCon which will
help them achieve their overall objective.

3. As DoloCon scans for favorable markets to set up its sourcing and manufacturing base, conduct an
opportunity assessment of alternative supply network landscape and trade routes focusing
on the supply chain model and discuss parameters like (but not limited to):
a. Political Barriers
b. Regulatory landscape
c. Logistics & Transportation
d. Risks & challenges
e. Competition in the potential markets

General Instructions For PPT

Please use the following format for the presentation:
1. Executive Summary:
a. Mandatory and should not exceed 2 slides.
b. Body - Should not exceed 10 slides for the main body of the deck (excluding executive summary
and appendix). Use your own judgment to decide the number of slides for each deliverable.
c. Appendix - Should not exceed 50 slides.
2. To keep the content readable, do not go below a font size of 10. Preferably, use 12 or above. For
slide headers & content use font type ‘Georgia’ and ‘Arial’ respectively.
3. Please make assumptions wherever required. Also state them clearly in the footer section.
4. In case of quoting data from external sources, please mention references in the footer. Use
American Psychological Association (APA) style referencing.
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