Life sciences companies face many challenges on their way from product development to commercialization. And each phase of the journey comes with its own requirements, tasks and concerns. One facet that’s consistent from the start is maintaining FDA compliance. However, other challenges are just as prominent, like expense management, inventory control and the commercialization process.
If you’re a life sciences professional, an ERP solution—particularly a cloud-based system—can help you accommodate business requirements as they change, meet regulations, easily scale your system as needed and improve the efficiency of your processes. The difference will be especially evident if you’re moving from primarily manual and/or paper-based processes.
So, what are the key challenges life sciences companies face in each stage of the product lifecycle? And what should you look for in an ERP system to meet these challenges?
Ensuring Compliance with FDA Regulations
Getting approvals from and staying compliant with the FDA is one of the biggest, most constant challenge for life sciences companies. Your life sciences ERP software should support actions and documentation required to meet compliance for a range of functions, including security, quality controls and audit trails. The move to the cloud shines a light on the importance of these challenges, as companies must adapt to a world of regularly scheduled software updates and remotely managed infrastructure. This translates to a need to ensure that customizations can be built such that they upgrade seamlessly with the release of each new version, and that tools exist to allow for efficient and automated testing of critical business functions prior to accepting the new software update. Security and disaster recovery capabilities also have to be at the forefront of cloud provider selection criteria.
Managing, Tracking and Reporting Finances
The requirements for managing finances and expenses evolve from one stage to the next, moving progressively from a “control the spend” focus to increasingly complex reporting needs.
In the early stages of discovery and development, you must closely monitor and manage expenses because existing funds have to be made to last until revenues can be generated or another round of financing can be obtained. The company isn’t yet turning a profit and is relying on investments in research and development. Your ERP solution should give you full visibility over your expenses and offer reliable, intuitive functions for budgeting and forecasting. It should have purchase approval workflows, effective built-in budgeting controls, good financial reporting capabilities and management tools for keeping your project from going over budget.
In the early stages of discovery and development, you must closely monitor and manage expenses because funds are relatively finite. The company isn’t yet turning a profit and is relying on investments in research and development. Your ERP solution should give you full visibility over your expenses and offer reliable, intuitive functions for budgeting and forecasting. It should have purchase approval workflows, good financial reporting capabilities and management tools for keeping your project from going over budget.
In clinical trials, funds must be similarly guarded and managed to stay within budget and capture the costs of preparing a product for the market. Your ERP solution should have functions for project accounting, managing purchase requisitions and approvals, and capturing costs. You may also want a punch-out capability for streamlining the purchase of supplies over web portals from key vendors.
Upon commercializing the product, finance and expense management evolve. Your ERP system needs to perform more sophisticated and complex functions to support a more robust financial operation. For example, the Sunshine Act mandates strict regulations for tracking and reporting payments to healthcare providers. Your sales team must follow guidelines for interacting with and spending on clients. And there must be financial transparency in your reporting, as well as the capability to produce P&Ls by product or product line, regardless of whether sales are managed in-house or by a 3PL. Your business management system should provide real-time information on your finances to give you full oversight and control. It should support monitoring spend and communications with clients, and it should have approval functions, budgeting functions and limitations, and superb reporting capabilities.
Supporting Product Commercialization
When you take your product commercial, you need an ERP system that can support all-new aspects of your operations, including sales, production planning, quality management and manufacturing (or integration with a third-party manufacturer or 3PL). These are the key functions to consider as you go commercial that the right ERP can support:
Traceability is not only a key requirement for FDA validation, it is also important for efficiency and the optimization of quality management. With traceability that is fast and easy to access and interpret, you can improve your ability to react to recall events and take corrective actions to quality issues at minimal cost and impact to your supply chain. The right ERP system can be your “system of record” and provide the traceability you need without having to resort to external tools and processes.
It’s important that quality teams have the tools to ensure patient safety and FDA compliance, such as quarantine management, quality testing, expiration date management, and releasing inventory for consumption. At that same time, those tools should allow for performing these functions as nimbly as possible, so as not to unnecessarily delay operational processes. An ERP system with capabilities for quality management and control that is built with modern toolsets designed for mobility, security, and ease of use can help you keep a close eye on your products with real-time tracking and information that doesn’t slow you down.
Security and Data Maintenance
Security is a vital function of any business, but life sciences companies are held to a high standard under FDA guidelines. It is important that your ERP system has the tools to meet requirements for controlling system access, ensuring data integrity, and maintaining and auditing segregation of duty requirements.
Fulfillment / Manufacturing
Life science companies can either manufacture products themselves or integrate with a contract manufacturer. Likewise, warehousing and distribution may be managed in-house or via a 3PL. Your ERP system should support your needs, whether that means providing strong integration with those third parties or supporting your in-house manufacturing processes, and it needs to support FDA Good Manufacturing Practices (GMP) regardless of your mode of operation.
Inventory Management and Control
Planning for materials and maintaining the right levels of inventory are important for manufacturing and meeting demand. An ERP with sales forecasting capabilities, materials requirement planning (MRP) functions, and real-time inventory management can make this process seamless.
Customer Relationship Management (CRM)
Managing potential clients and client communications is an important part of managing a life sciences company, especially with regulations around client communications. Your ERP may incorporate a CRM or integrate with one so that you can efficiently manage those client relationships for compliance and better communications.
E-commerce can be particularly complex for life science companies, where sales are often highly regulated. It is important that your ERP software is able to provide the necessary controls for ensuring that only those authorized to purchase the product are able to do so, and for tracking that the product was shipped to a valid location.
It can be challenging to accurately account for revenue in life sciences, especially if your fulfillment is handled by a third party. You frequently must account for products that expire or are passed from distributors to end consumers before revenue can be recognized. The right ERP system can give you the visibility you need to manage recognizing revenue more accurately and efficiently.
Of course, there are more facets to operating a life sciences company post-commercialization. If you’d like to discuss the ways in which a cloud ERP can help, contact us today.
Benefits of using a cloud ERP system for life sciences
Microsoft Dynamics 365 can comprehensively, intuitively and affordably meet changing requirements throughout the lifecycle of life sciences products.
- Subscription model means you can easily scale the system to your needs
- Using cloud services typically costs less than operating on-premise systems
- Disaster recovery and security are more effective and affordable in the cloud
- Helps you comply with FDA regulations and guidelines
- Integrates with contract manufacturers and 3PLs
If you’re interested in upgrading to Microsoft Dynamics 365, we have experience in the industry and consult with Life Sciences companies at every stage of the product lifecycle. We perform business assessments and evaluate specific areas like commercialization planning, financial reporting and regulatory compliance. Get in touch to learn more about your options.