*This partner content was produced by the Financial Times on behalf of Citi Commercial Bank
Regardless of sector, when the smooth running of organizations is discussed, a quote attributed to US General Omar Bradley is often employed: “Amateurs talk strategy, professionals talk logistics.” A company could sell the best, most innovative product or solution, underpinned by a brilliant marketing strategy, but if the logistics for delivering the goods aren’t optimal then that company will underperform.
Martin Christopher, Emeritus Fellow of the Chartered Institute of Logistics and Transport, and author of the bestselling book Logistics and Supply Chain Management, concurs: “The real competition in business sectors is between supply chains, not companies.” This critical battleground is particularly tricky for the pharmaceutical industry. Stringent regulatory compliance and complex approval processes can lead to product launch delays and supply chain disruption. End-to-end supply chain visibility, while desirable for mitigating risks and optimizing operations, is often difficult to ensure.
As detailed in this 2022 study by EY, the global nature of pharmaceutical distribution, usually involving various external partners, makes for a complex mix of worldwide shipping solutions across ocean, air and cross-border trucking. Integrating shipping data across these solutions can be hugely challenging and costly. Add in supplier supervision, geopolitical and trade considerations – plus the pharma-specific requirement that is cold-chain management (ensuring goods are kept at the correct temperature) – and it is clear that the sector requires world-beating supply-chain organization.
A specific set of challenges
Fast-growing Taiwan-based biopharmaceutical company PharmaEssentia is one firm that can attest to the logistical challenges of operating a globally expanding pharmaceutical business. The Covid-19 pandemic, for example, saw PharmaEssentia potentially heading for supply problems as the worldwide demand for items such as syringe barrels skyrocketed. “Like many pharmaceutical and biotech companies, we rely on different CMOs (contract manufacturing organisations) and suppliers,” says Samuel Lin, PharmaEssentia’s VP, Head of Business Operations and Strategy. “During Covid, we were asked to share commoditised components like these with vaccine manufacturers. So we had to ensure we had sufficient stock to guarantee a stability of service to our customers and, ultimately, to patients.”
For business continuity, PharmaEssentia turned to its global banking partner, Citi Commercial Bank, for an injection of working capital, helping the firm to carry on providing innovative medicines to patients in dire need. Laura Fogarty, Citi Commercial Bank’s Healthcare Industry Head in North America, agrees that this was essential in order to avoid shipping disruption. “There was a lot going on at the time,” she says. “Around November 2021, at the height of the pandemic, PharmaEssentia had received approval across much of the world for its lead drug candidate BESREMi, a biologic used to treat a rare blood disease. It was also launching in the US, and all of that required significant investment. Our working capital solution provided the company with the financial flexibility it needed to maintain its core business while ensuring the US launch of BESREMi was a success.”
Local market knowledge is essential
Ko-Chung Lin, PharmaEssentia’s founder and CEO, points out that Citi’s global footprint – together with a deep knowledge of local markets – helped it weather the storms of Covid-19 and ensure a robust supply chain, as well as funding further commercialisation in global markets. “Citi gave us solutions and dynamics for different markets,” he says. “They didn’t just help with capital but also in an advisory capacity. We are essentially a group of scientists – that’s our focus – and Citi brought the financial expertise we needed.”
To support the market expansion of PharmaEssentia’s lead product, BESREMi, Citi helped the firm raise capital through the issuance of global depository receipts in Luxembourg. Tapping the overseas markets allowed PharmaEssentia to elevate its brand recognition, as well as obtain access to new investors. In April 2023, this was the largest overseas offering at the time by a Taiwanese healthcare issuer. Citi also introduced a “host-to-host” solution to automate payment flows and create better operational efficiencies. “Host-to-host allows full automation of files – sending and processing without the need for manual intervention,” explains Fogarty.
Ko-Chung Lin describes that future forecast trajectory as “hockey stick growth”, with more investment and the hiring of many more talented scientists ultimately resulting in a greater number of successful patient treatments. “This is such an exciting and rewarding client to work with,” says Fogarty. “There’s a genuinely positive patient impact that you’re a part of – that’s why we come to work every day.”
All opinions expressed by the participants in this article are their own and do not necessarily represent the opinions of Citi Commercial Bank
