Artificial Intelligence in Healthcare: Real Opportunities

Healthcare and AI

Doctors have always been a little cautious about the “worried-well” diagnosing themselves with fantastic ailments using the web. Increasingly, though, it seems there’s a solution: Cut out the middle-man.

Artificial intelligence in healthcare is growing rapidly. Across diagnosis, research, prevention and treatment, AI solutions are promising a revolution. The next big name in healthcare may, in fact, be Google: The company’s DeepMind AI business is in partnership with a number of NHS trusts, helping see if its technology can spot early signs of eye conditions that doctors would miss, for instance. Wearables maker Fitbit, meanwhile, is connecting with Google’s dedicated healthcare cloud so doctors can easily access data from its wearables.

In fact, there’s countless ways AI could transform healthcare, across every part of healthcare, and there are ever more businesses serving the sector. It’s not just governments and healthcare businesses that could benefit. AI could also help businesses to build healthier workforces and improve employees’ well being, getting them diagnosed and treated more quickly, and healthy and back to work faster. It could even help encourage them to live healthier lifestyles to prevent them getting ill: A worthwhile investment for many businesses.

Data security

Digital Security and data protection. Conceptual illustration with advanced technology digital display.

The technology doesn’t just promise new treatments and innovations. It also gives us the opportunity to do the same things more cheaply; it’s been suggested it could cut the soaring costs of drug development for pharmaceuticals businesses, for instance. Researchers could generate accurate hypotheses faster, “making the drug discovery process less expensive and more effective”, according to one data and analytics company director.

All technology brings challenges, though, and AI is no exception. We’re already seen the UK’s Information Commissioner’s Office, for instance, rule that DeepMind’s partnership with one NHS Trust breached the Data Protection Act. There are outside threats, too, as last year’s Wannacry ransomware attacks showed, affecting not just PCs but connected medical equipment such as MRI scanners and blood testing devices, too. As connected technology becomes ever more ubiquitous in healthcare, the potential disruption grows.

Not surprisingly, it’s not just data regulators businesses who are interested in AI; the FDA in the US is already taking a keen interest in the regulation of AI applications in healthcare.

AI and the supply chain

3d rendering android robot control forklift truck

None of this diminishes the potential of AI in healthcare, but it’s a reminder that the sensitivity of data and dangers involved warrant special protection for the field. It should also serve as a reminder for businesses to look to the low hanging fruit as well.

There will definitely be powerful applications of AI developed that overcome the challenges of privacy and security. But there are also applications that often don’t involve such sensitive data but could still have a significant impact on the business. The supply chain, for instance, is likely to be another key area where AI can make a real difference, and it’s already being used to cut shipping times and costs; yet there’s not widespread adoption.

As AI develops, it should make supply chains faster, more efficient, more robust and transparent. Businesses that want to make the best use of the technology will need to look to every part of their business, and grab the opportunities where they find them.

The blockchain supply chain in pharma

Man in chemicals warehouse with hard hat and clipboard checking stock

Is blockchain the new supply chain, as some are claiming?

Certainly, there’s a good deal of hype around the technology. Touted as everything from the future of banking to farming, it’s easy to be cynical, particularly since the rhetoric to date has far outrun the practical applications of the technology that we’ve actually seen, beyond bitcoin.

But blockchain does seem an extremely good fit for modern, complex, widely distributed supply chains. The technology provides a method for securely recording, storing, and verifying transactions. Crucially, though, it uses a distributed ledger (a database) – with the records of data and transactions stored across a network of computers rather than centralized, with the database accessible for users to review, without being able to alter or delete records.

It’s “a way for one internet user to transfer a unique piece of digital property to another internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer”, as American entrepreneur Marc Andreessen has put it.

Another way to look at it is that blockchain “democratises” access and therefore validation of records. In the supply chain for instance, it could bring transparency so consumers could see in one place a record of every time a product changed hands. As this article puts it: “Before blockchain, much of this vetting responsibility was delegated to the retailer. Now, the policing power has been placed into the hands of the person that matters most: the buyer.”

Blockchain in pharma

Close up of blue pills against white background

That’s perhaps not a concept that sounds like it might sit so safely in the pharmaceutical supply chain, but blockchain pharma, as well as blockchain healthcare more generally, could soon be a reality. The key characteristics of the blockchain – transparency, security and reliability – have obvious benefits. In fact, some argue that healthcare could be the biggest adopter of the technology after financial services.

In the pharma supply chain, the technology could be particularly powerful in tackling counterfeiting. The generally recognised protection method is serialisation, which is in the process of being mandated by regulators. In the US, for example, the Drug Supply Chain Security Act in 2013 gives the industry until 2023 to implement unit-level track-and-trace systems for products across the supply chain. That simplistically involves unique identification and tracking of product at an individual unit level, with electronic verification of that pack finally going into the hands of the patient at point of service.

In the UK, meanwhile, the challenge of tracking the journey of individual product packs through the end of the supply chain is being addressed by innovations in labelling technology.  For instance, the ReMediES project – which we are proud partners in – is a collaboration between industry and funded research and one of its applications includes developing smart technology to track the quality of a pack throughout its lifetime.

Blockchain, though, could bring more granularity and transparency to the process, and help businesses meet increasing regulatory requirements.

Whether blockchain will prove the answer to counterfeiting in the supply chain remains to be seen, what is clear is the desire for transparency. And, with each technology development, expectations on the industry in that respect are only going to grow.

New Business Interruption Insurance for Pharma

image of red and white capsules arranged to make up a world map

Crucial cover for pharma with new business interruption insurance

We’ve seen all too often the disruption events such as extreme weather can bring to pharmaceutical production, but it doesn’t always require a natural catastrophe to shut things down. The end-point of regulatory risk is also often lost production while businesses are forced to remediate problems by regulatory sanction or the threat of it.

And, while the hurricane season is geographically confined, businesses operating in possibly the world’s most heavily regulated sectors can be hit wherever they are. Enforced and pre-emptive shutdowns due to manufacturing deficiencies are estimated to have cost pharma businesses about $10 billion since 2001.

For the most part, it’s a cost they have had to bear alone.

Uninsured losses

image of black downward arrow against a backdrop of money showing business losses

Unlike fires, floods and storms, regulatory risks are not covered by standard business interruption (BI) policies related to property damage. For cover, the interruption usually has to be the result of insured risk, and insurance don’t usually help with regulatory fines as a matter of public policy.

Nor will the losses necessarily be picked up by other policies. As this post explains, one recent case saw a producer with suspected contamination at its manufacturing site unable to claim even under its business interruption cover for extortion property damage: With no actual extortion demand materialising, the interruption was solely the result of a regulatory order to suspend production until the site could prove a quality control process preventing tampering with capsule batches.

Likewise, Contaminated Products policies often have restrictions that prevent a claim for regulatory interruptions.

Introducing  non-damage business interruption (NDBI) 

It’s these gaps that a new Non-Damage Interruption Policy for the pharmaceuticals sector from Munich Re, which we’ve working with, seeks to address.

It covers the complete or partial shutdowns of production on the orders of regulatory authorities, and even instances where companies suspend production to pre-empt a forced closure and protect brand and reputation.

It’s another valuable tool in mitigating the risks that pharma businesses face – and plugging a gap in coverage that’s existed for too long. As with any insurance, though, to see its value and apply it properly, businesses first have to identify and understand their risks. As one of the first businesses to take up the policy explains in the Munich Re post, that means starting by modelling exposures and quantifying supply chain risks. And that, of course, is what we’re all about.

Out and about at CPhI Worldwide

Greetings from Frankfurt where we’ve been at CPhI Worldwide.

We’re just returning from a successful week taking SCAIR to 36,000 pharmaceutical professionals.

You don’t have to be at the conference long to appreciate the importance of technology: The event brings in participants from every part of the pharmaceutical manufacturing and delivery, with over 20 dedicated zones covering ingredients, APIs, excipients, packaging, biopharma, machinery and so on. There are also participants from over 150 different countries.

Visiting this conference, it’s impossible not to get a sense of the both complexity of the modern pharma supply chain and its truly global nature. With new innovations announced every day at the conference, you also get a sense of how fast moving it is.

CMO uncertainty

And you get a sense of the risks: The annual report of the event’s organisers picks up on some of these, including including political uncertainty in the US, with a new administration that has shown a “keen political desire… to reduce drug prices, but with very little indication of policy”.

That’s left pharma companies and the contract manufacturing (CMO) “in the dark”, the report notes, and vulnerable to decisions that could disrupt their entire business model.

We’re at CPhI to show how technology such as SCAIR can address this type of risk, as well as more long-standing challenges that affect operators across continents and across the supply chain.

We don’t pretend to be able to control Trump, but SCAIR can enable businesses to quickly get to grips with the impact any changes may have. With the software they can visualise their end-to-end supply chains and quantifying accumulated exposures of the company’s product portfolio to each critical supply point.

Nat cat and compliance

This Supply Node Exposure module in the software is also used to identify locations critical to the company for natural catastrophe alerting. Warnings and reports of hurricanes, earthquakes and floods are overlaid on these locations to rapidly highlight potential losses.

Finally, SCAIR deals with another key concern across the industry and highlighted frequently at CPhI: Compliance. It collects and consolidates non-compliance and supply chain interruption information from leading regulators such as the FDA and EMA. Root cause analysis of data such as recalls, production shortages, enforcement actions helps avoid issues in future.

As fast as the industry changes, events like CPhI make it clear these traditional concerns, along with issues such as maintaining data integrity and good manufacturing practice, continue to be key. It also suggest, though, that those companies that tackle them successfully, can look forward to the future with considerable confidence.

Puerto Rico is hit again

The thing about the hurricane season is it’s always easy to speak too soo.

We noted a couple of weeks ago that Puerto Rico, a key production centre for pharma manufacturers, had escaped the worst of hurricane Irma.

Yet the clean up wasn’t even finished when the island was hit by the worst storm in 80 years, Maria, bringing “total devastation”. A number of factors have left the island particularly hard hit: Already fragile infrastructure leaving most without electricity – for weeks and many possibly for months; even cell phone coverage is limited; and widespread flooding has been exacerbated by the failure of the Guajataca Dam. The island also already filed for bankruptcy earlier this year, leaving it poorly prepared to tackle the costs of getting back on its feet.

Hurricane Maria might also have proved that it was a bit early to congratulate the industry and governments for avoiding drug shortages following Irma and Harvey. On Monday, the FDA warned that shortages could occur if the Puerto Rico pharma industry wasn’t helped to get up and running quickly.

“The island is home to a substantial base of manufacturing for critical medical products that supply the entire world. This industrial base is an important source of jobs and economic vitality for the island. It is a key to Puerto Rico’s economic recovery. The manufacturing facilities are also a pivotal source of critical medical products for the entire United States,” its statement read.

The problem, as ever, is both the scale of the storm – a “catastrophic event unlike many the United States has faced”, as the FDA put it – but also the scale of pharma manufacturing in Puerto Rico. That’s shown in a map taken from the tool in our SCAIRTM software of FDA Registered Drug Establishments affected:

With such a concentration in an area so prone to tragedy, the challenge for the industry to maintain supplies will alway be substantial.

When the storm comes

Hurricane Irma once again shows us the importance of mapping supply chain risks for the pharmaceuticals industry.

The storm has passed, but the effects will be felt for months to come. In the Florida Keys up to a quarter of homes in the low-lying islands are reported to have been destroyed. Many in the Caribbean have had it worse.

There will, as always, be lessons for industries, including pharma. Puerto Rico, for example, is a huge centre for pharma manufacturers – the fifth biggest in the world with more than 80 plants. It accounts for about a quarter of the country’s GDP.

The island was actually spared the worst of the hurricane, but still three died, 50,000 were left without water and 600,000 without power. The storm served once again to expose the fragility of the island’s infrastructure. Nor are hurricanes the only recent disruption to hit the island. Only at the start of the summer did it declare its outbreak of the Zika virus over, after it infected more than 40,000.

Weather risk: an unavoidable reality

It’s not just Puerto Rico, of course; Irma brought potential for disruption across the Caribbean, to Florida and on inland. And it’s not just Irma; it followed hard on the heels of hurricane Harvey.

The industry has got better in recent years at dealing with these events, not least because of government encouragement to avoid disruption to medical supplies that can exacerbate the tragedy. One of the untold stories of both hurricanes Harvey and Irma is the shortage of urgently needed medicines; untold, because the problem was largely avoided with some improved planning.

But we’ll be tested again. Yes, hurricane Irma was unusually strong, but we’ve seen storms this powerful – and perhaps more so – before. We’ll see them again. The role of climate change in developing such storms will continue to be debated. What’s unarguable is that pharma – and a wide range of other industries with global supply chains – will always be at risk of exposure.

Preparing in advance for real resilience

Modern technology is a big part of the answer to managing this risk. The information businesses and the public have on a hurricane’s trajectories and strength is unparalleled; they can now track it online in real-time. Combine that with modern software solutions and we can quickly map risks for at-a-glance understanding of exposures.

That’s always useful in directing emergency responses when the storm comes. It’s more useful, though, used to map exposures and build resilience through continuity plans before. The power of Irma may have been a surprise, but storms in the hurricane season are not. Fortunately, we have the tools to weather them well; we just need to make sure we use them.

Brexit and the pharmaceutical supply chain

There’s work to be done on all sides – not just by the negotiators – to prepare supply chains for a future outside the EU.

For anyone already sick of Brexit, Michael Barnier’s recent announcement won’t have been encouraging: “The hard work starts now,” the EU’s chief negotiator Michel Barnier told reporters – more than a year after the UK voted to leave.

It’s a big issue – and a particular challenges for some.

One is the pharmaceuticals industry, and a couple of days before Michel Barnier was urging the UK to knuckle down, leaders in the UK and EU pharmaceutical industry were issuing a warning to both Barnier and Britain’s Brexit Secretary David Davis of the risk to supplies of life-saving medicines.

“In the case of an unorderly withdrawal, there is a risk that all goods due to be moved between the UK and EU could be held either at border checks, in warehouses or manufacturing, and/or subject to extensive retesting requirements,” the letter warned.

And it’s not just the industry that’s worried. The week before, the UK’s health secretary and its business secretary called for continued co-operation with the European Medicines Agency after the UK left the EU – “in the interests of public health and safety”.

Preparing your supply chain

Hopefully, these warnings will have their desired effect, and arrangements – transitional or otherwise – will be in place when the negotiations finish. In that case, this will all be put down as a crisis averted or just another “scare story”, according to taste.

As we’ve noted before , though, whatever happens Brexit will be a game changer not just for pharma but for all businesses. The currency volatility we’ve already seen could well return as the deadline for negotiations gets nearer; the regulatory framework remains uncertain; and supply chains are going to have to get more complex – perhaps in the short-term, as contingencies are put in place, or in the long-term to deal with new realities.

Many companies have already made changes to their supply chains to make them more resilient to whatever results from the negotiations; many other are still looking but have at least gained an understanding of the risks they face and the vulnerabilities in their supplies. For any that haven’t made much progress, though, or those that haven’t even begun, the hard work truly does need to start now. Time is not on our side.

The long road to continuous manufacturing in pharma

Continuous manufacturing could have significant success in improving the pharmaceuticals supply chain, but challenges remain.

The journey to continuous manufacturing in pharmaceuticals is going to be a long one. As a recent report on another, related technology – 3D printing – made clear, the shift to continuous manufacturing in pharma has been “slow”. Most still hold to traditional batch processing methods.

That’s despite the benefits it potentially provides – proven in a wide range of other industries like oil, gas and petrochemicals. Most notably, perhaps, is efficiency: Frost & Sullivan’s report notes that continuous manufacturing can cut production time to less than 10 days (which could then be further cut with 3D printing); the US Food and Drug Administration (FDA) has estimated some drugs that take a month to manufactured through batch processing, could be produced in a day.

Linked to that, continuous manufacturing also promises to cut manufacturing costs: by up to 40 to 50 per cent, according to the US National Science and Technology Council’s Subcommittee for Advanced Manufacturing. Estimates put waste from inefficiency in the pharmaceutical industry at up to $50 billion a year.

A quality argument for continuous manufacturing

Finally, continuous manufacturing has the potential to improve quality. Reducing human input – and error – from production, it could help cut contamination and mistakes that lead to waste and product recalls. And it’s not just the technology companies making that case: it’s one reason the FDA has been keen to accommodate uptake of continuous manufacturing.

As the deputy director in the FDA’s Office of Pharmaceutical Quality, Center for Drug Evaluation and Research, has put it: “[B]y eliminating breaks between steps and reducing opportunities for human errors during the stops and starts in the batch process, continuous manufacturing is more reliable — and safer.”

In short, continuous manufacturing could help address both drug shortages and recalls from production issues: two key supply chain challenges the industry faces.

Demand for data

So, if it’s faster, cheaper and results in better quality, why has the move to continuous manufacturing been so slow?

There are a number of reasons. One is the up front costs, with the need to invest in new equipment. For some producing small quantities, it may also be difficult to justify round-the-clock production.

But there is also the fact that the move to continuous manufacturing is demanding – and potentially risky if not handled correctly. The benefits to quality, particularly, are achieved only by building it into the continuous process at the outset – so called “quality by design”. Regulators, too, must be satisfied that the process and controls in place are adequate.

Two things are particularly important to meeting that challenge, and both were picked up on in a speech earlier this year by Stephanie Krogmeier at Vertex Pharmaceuticals.

First, is the data challenge that continuous manufacturing can bring, ensuring the right information is available to control the process and satisfy regulators. The move to continuous manufacturing and increased oversight of data are closely tied in the FDA’s approach.

Second, and possibly even more important, is leadership. As Krogmeier made clear, the move to continuous manufacturing needs commitment, and that has to start at the top. As she said: “You need the full support of management. If you don’t have someone in senior management driving this, you will fail.”

Going local? Brexit, Trump and supply chain challenges

Businesses have a window of opportunity to make preparations for a more protectionist future. It will not be open forever.

John Major’s intervention aside, a hard Brexit remains the government’s position on the EU, and industries are starting to take note. Today, The Times reports UK car manufacturers are looking to source more parts domestically in response to the threat of tariffs when the UK leaves. Over time, the current ratio of two thirds sourced internationally to one third at home may be reversed.

The concerns are not restricted to the UK, nor worries over Brexit. Going local was a key message at this year’s Davos meeting of the World Economic Forum, as businesses try to pre-empt a Trump-led populist backlash against globalisation.

America first: bringing production home

Furthermore, while they’re particularly exposed, it’s not just car makers in the firing line. According to the new head of the President’s National Trade Council, repatriating international supply chains is a priority for the new administration.

“It does the American economy no long-term good to only keep the big box factories where we are now assembling ‘American’ products that are composed primarily of foreign components,” Peter Navarro told the Financial Times

“We need to manufacture those components in a robust domestic supply chain that will spur job and wage growth.”

In the UK, meanwhile, the Road Haulage Association has warned of fresh food rotting as Brexit “cripples” supply chains – tariffs or no tariffs – if the right customs controls aren’t in place.

Time to future proof the supply chain

We’ve noted before that predictions about the impact of Brexit are particularly unreliable. Confirmation the UK will exit the single market and full membership of customs union have given us some indication of what to expect from Brexit. Until negotiations get well underway, however,  and even then, there will continue to be massive uncertainty as to the final trading relationship, tariffs and customs arrangements in place.

The same is true to an extent in the US. Despite the frantic activity of the Trump administration, it will be some time yet before it becomes clear to what extent Trump wants – and can – pursue an isolationist trade policy.

These are not reasons to wait, though. Rather, they give time to act – and it may end up being a narrow window of opportunity. The speed and size of currency movements since the Brexit vote has already shown how quickly things can move. Likewise, in the US, should some of the more worrying potential consequences of the new administration’s policies and rhetoric materialise, they could do so quickly.

If organisations don’t yet have the confidence to anticipate the future trading landscape, they do at least have sufficient warning that changes are on the way. They need to be building resilience in their supply chain now – ensuring they have the visibility and flexibility to react when the time does come.

No lucky strike for supply chains

It’s a new year, but the problems for supply chains are much the same. Among them, increasingly, is industrial action.

December drew comparisons with the Winter of Discontent with strikes or threats by Post Office staff, train and tube drivers, airport workers, and even Argos delivery drivers. With the tube strikes this week, that discontent has followed us into 2017.

As others have noted, comparisons with the 1970s are overplayed. It actually became harder for unions to take legal strike action in the UK last year, for example, with the passing of the Trade Union Act in May. Unions now require a ballot turnout of at least 50% for industrial action – and 40% support of all eligible to vote when it comes to vital public services such as health, education, transport, border security and the fire brigade.

Nevertheless, recent activity does suggest something of a resurgence in the UK following a near-record low in the number of days lost to industrial action in 2015. The action we’ve seen also has significant impacts. Academics estimate the Southern Rail strikes alone have cost the UK £300 million. The tube strikes this week may even cost the same, according to some of the higher estimates.

Moreover, while levels of UK industrial action have trended downward in the last few decades and remain modest, they’re much higher elsewhere, including in some of our near neighbours. France, Denmark, Norway, Belgium (which saw a particularly high number of strikes last year), Spain, Finland and Ireland have all lost anything from double to seven times the number of days as the UK to action in recent years. If businesses are not directly affected themselves, others in their supply chain may well be.

All of which is simply a reminder that industrial action remains a key threat to the supply chain. Businesses need to build in resilience and redundancy to account for it, and to do that, they need to have an accurate view of their exposures.