The Importance of Operations

By Rebecca Goozee, Deputy Editor

Ken Murtha, Regional Vice President Supply for the Americas for AstraZeneca, talks about operations, supply chain management and counterfeit medicines.

After training as a pharmacist, Ken Murtha joined Merck & Co. in 1982, working in the operations function. Murtha worked in a variety of roles across the operations and technical services areas, before becoming appointed Global Lead for Technology and Engineering. “With responsibility for one third of Merck’s world markets, my primary focus was bringing new products successfully to market,” clarifies Murtha.

In 1992, along with eight other colleagues, Murtha became one of the original founders of Astra Merck, and responsible for the operations function. From the outset Murtha’s aim was to establish end-to-end supply chain management and ensure that the company leveraged maximum competitive advantage from the distribution network – both key focuses that he continues to work at.

As of January 1 2008, Murtha became Regional Vice President Supply for the Americas. Murtha is now accountable for overseeing distribution in Latin America and supply sites in Argentina, Brazil, Puerto Rico and Mexico in addition to his North American responsibilities. “I am the key interface for AstraZeneca in the South American region. In my view I have ultimate accountability for ensuring that patients in the Americas are able to get safe, effective medicines when and where they need them,” explains Murtha.

In practice this means that Murtha has to make sure that all the supply sites in South and North America are being run according to the right standards of care, that medicines are produced in line with market demand ad regulatory requirements, as well as ensure that customers’ needs are met, and that all employees are provided with growth opportunities and career advancement.

Murtha believes that his founding in commercial intimacy and understanding of the marketplace, developed as a member of the AstraZeneca US commercial leadership team since 1992, will help him be successful in his new role. “My aim is to bring together commercial insight with technical knowledge of operations,” hopes Murtha, “in order to identify further ways in which we can partner with commercial functions and drive revenue growth.”

In AstraZeneca, production and quality are combined into one function. Murtha believes that this has made a significant difference to the speed and quality of the products produced by AstraZeneca. “Now that these elements are part of the same team with production, the quality people are no longer seen as internal police,” remarks Murtha. “There is a more collaborative environment as we work to ensure that we deliver high quality products on time.”

AstraZeneca has a strong presence in North America and is striving to achieve the same in South America. They are continuing to outperform in a market that is realizing double-digit growth and are in strong position to drive further commercial value by taking advantage of the many opportunities here. Murtha believes that from what he has seen so far in South America the market is a very complex one, and can see that by simplifying some of the processes the business will continue to do well. “Having said that,” comments Murtha, “on my early site visits I have picked up on the uniqueness of each country in the region. My objective is to develop a thorough understanding of what it is that makes each market and their customer base so different from their neighbors and then put in place the processes that best support their unique needs.”

Supply chain
The pharma market demands lower priced drugs but with R&D and drug discovery costs rising, and more being spent in sales and marketing, operations is the obvious place to cut costs. While it may appear to be difficult to cut costs without compromising quality, Murtha feels strongly about keeping quality in first place. “Throughout my entire career I have thought of every drug the company dispenses as going to my mother and father. If a product doesn’t pass the test, it doesn’t leave the leave the plant,” he stresses.

However, Murtha continues, cutting corners and cutting costs are very different things. He believes that there are lots of ways in which non-value adding activities can be removed to reduce costs without impacting on quality.

For Murtha, a good supply chain is a reliable supply chain. Ultimately, he says, AstraZeneca’s supply chain has to ensure that safe and effective medicines are delivered on time and in full when needed. The first step in creating a good supply chain, according to Murtha, is talking to the customer in order to fully understand their needs. And, he says without this step a supply chain is almost certain to fail.

“With this insight you then work backwards to look at how you fulfill their requirements and then drive optimum performance by establishing clear key performance indicators (KPIs) around critical elements,” advises Murtha. And he should know. AstraZeneca’s US operations was recently named Number One Supplier among major pharma by the Healthcare Distribution Management Association. “Being recognized as reliable by peers and customers is a fantastic accolade,” says Murtha.

The next step for Murtha is concentrating on Lean. “We are looking at all our processes through a Lean lens and removing anything that does not add value. As a result inventory will decrease, freeing up capital that can be invested in the discovery and development of new medicines,” predicts Murtha. “And, as I like to say, ‘our efficiencies today create new medicines tomorrow.’”

Challenges
Development of new medicines is becoming increasingly difficult as factors such as cost pressures and regulatory restrictions mount, and for Murtha the most important challenge facing the pharmaceutical industry is continuing to bring innovation to the marketplace despite these factors. In the current climate, operations contributes by delivering quality medicines reliably and efficiently, and ensuring that money is not being wasted in the supply chain that could be better invested in R&D.

Counterfeit medicines are increasingly on the up. The World Health Organization (WHO) defines a counterfeit medicine as one that is deliberately and fraudulently mislabeled with respect to identity and/or source. The WHO estimate that 10 percent of medicines in developing countries are counterfeit, rising as high as 30 percent in parts of Africa. However, in developed countries where effective regulatory systems are in place, counterfeits represent less than one percent.

“It is incumbent on us to protect the supply chain and ensure the integrity of the final product,” says Murtha. Within AstraZeneca a number of technologies are being used to address the threat posed by counterfeiters, including 2D bar coding and track and trace solutions. Monitoring of the supply chain and market activities are also observed by the company as is working with supply chain partners to address product security issues and supporting increased awareness and education for patients and healthcare professionals.

“Packaging is one of two major competitive levers that the operations functions can pull to help patients and commercial colleagues,” suggests Murtha. “By adapting our packaging we can improve patient education and help to protect the integrity of the product against counterfeiters. The end result is that we deliver better healthcare.”

“Another challenge we face is around reputation,” believes Murtha, “pharma has been demonized in recent years and we all need to be advocates for the industry, for patients and innovation in challenging these negative perceptions.”

Looking ahead
When Murtha started out in the pharmaceutical industry it was highly revered and respected. “I hope that we can restore this reputation by helping people to truly understand that we are driven by a mission to make the most meaningful difference to patients’ healthcare.”

As Murtha often reminds his colleagues, the operations function is the last touch point between AstraZeneca and the patients, and as such is a significant competitive lever for the company. “Since EVP Operations, David Smith, introduced a new mindset focused on delivering value,” says Murtha, “we are well on our way to achieving this reputation goal.”

NGP. AstraZeneca is widely recognized for its leadership and innovation in providing superior customer service. How do you find new, effective ways to deliver value?
KM. The first thing I would say is that you will never find these innovations in your office. You have to go out and engage with your customers and hear about their needs first-hand. This is something I do routinely.

In Operations we are also working with our colleagues in Commercial to understand where they are aiming to deliver value and look at what we can do to support that. For example, patient compliance. We are exploring ways in which packaging can help to improve compliance, thereby improving the effectiveness of the medicine and also driving volumes.

Kenneth Murtha is Vice President, Supply Americas, AstraZeneca. After graduating from the University of Pittsburgh with a Bachelor’s degree in Pharmacy, Murtha began his career in 1982 with the Merck manufacturing division. In 1992 he became one of the original founders of AstraMerck.

Murtha was Head of Operations for AstraMerck and Astra Pharmaceuticals and later held the role of Vice President, Supply Chain Operations & Strategy for AstraZeneca. He became Vice President of Business Operations in the United States after which he took on the role of Vice President, Business Operations. In addition, he also had responsibility for the Business Integrity and Assurance Team (BIAT) the team that oversees US compliance and ethical standards for the US Business.

Murtha is currently on the Board of Directors of a number of organizations, including: the University of the Sciences (formerly PCPS) of Philadelphia; the International Leadership Forum for the International Society of Pharmaceutical Engineering (ISPE); the American Red Cross of Delmarva; and the Delaware Chamber of Commerce.