SuperTutor
$15/per page/Negotiable
Stanford Global Supply Chain
Management Forum Case #6-0022 Biogen-Idec: Growing a Customer-Focused Supply Chain
Sitting tensely on the edge of her bed, Abby1 eyed the long needle attached to the
dark blue tip of the syringe. Inside the syringe, a single ml of the drug Avonex was
warming from its refrigerated state. She sighed and slowly squirmed out of her
jeans. The alcohol-soaked wipe gave her a shiver as she slowly wiped the top of her
leg. Time seemed to stop in the darkened bedroom, and she might have sat for
minutes or hours had not the voices of her daughters in the hallway jolted her back to
the task at hand. Shaking, Abby snatched the syringe and quickly drove it deep into
her thigh. She was so concerned about doing it right, that she didn’t even notice the
prick of the fine needle. As she pushed the plunger of the syringe she felt a slight
burning, but it was swiftly forgotten in the relief of removing the empty syringe.
Elated, she turned and picked up the phone from her bed stand, quickly dialing the
number she already knew by heart. Gushing with pride, she squealed into the phone,
“I did it… I did it … I did it myself!” Beth, her case manager at Biogen, celebrated
with her while quickly accessing her notes from their last conversation. With her
case history displayed on the workstation, Beth peppered her with questions: How
did it feel? Where did she do it? When was her next visit to her doctor? Had she
heard anything more from her insurance provider? As Beth hung up the phone she
continued typing the details of her call into Abby’s patient record in the Siebel
customer relationship management (CRM) system. She hesitated a moment when
she reached the date entry next to the word “graduation” on the bottom of the form.
Abby had graduated that day and while Beth was happy for her, she felt a small
sadness knowing that she would not likely speak with her again. From this point on,
Abby would be passed to another case worker who focused on patient follow-up and
retention.
Beth’s focus was to bring new patients to graduation day. She had first talked to
Abby six weeks ago when she was still reeling from her diagnosis. Beth had handled
hundreds of such patient calls, but somehow she never got over the tragedy of the
disease. Abby was a typical, yet no less tragic, case. An otherwise healthy, 32 year
old mother of two, she had begun noticing a funny tingling and loss of muscle
This case was written by Professor M. Eric Johnson and Center for Digital Strategies MBA Fellow Julia A. Kidd
of the Tuck School of Business at Dartmouth. It was written as a basis for class discussion and not to illustrate
effective or ineffective management practices. Version: June 12, 2005.
© 2005 Trustees of Dartmouth College and Stanford Global Supply Chain Management Forum. All rights
reserved. For permission to reprint, contact the Center for Digital Strategies at 603-646-0899.
1 Patient and case manager names are fictitious. Characters are based on composites of individuals we interviewed, but do not
represent any specific person. Any likeness to a specific individual is coincidental. Biogen #6-0022 control in one hand. While out jogging one autumn morning in the woods, she
sensed something was different about her gait and half way through her run she
tripped on a small twig lying on the trail. At her next routine physical, she
mentioned the incident and the numbness to her primary care physician. That led to
a series of visits to a specialist, who eventually diagnosed her with early stage
Multiple Sclerosis (MS). The morning of the diagnosis, the specialist sat down with
her and explained the hand-full of treatment options – all involving regular injections
of Interferon-based drugs either subcutaneously or deeper into a muscle. While
Abby was not excited about any of the treatments, she knew that if left untreated, the
disease could relentlessly progress, ultimately resulting in permanent disability.
With the help of her doctor, she tentatively decided on the Avonex treatment because
it only required weekly, rather than more frequent, treatments. Avonex was
produced by Biogen, a biotech firm based in Cambridge MA. Together with her
doctor, she filled out an activation form that was faxed to Biogen and she left the
office with purple notebook-size box with booklets and a video on MS and Avonex.
She learned that day that Avonex wouldn’t cure MS or even treat acute symptoms,
but rather it would prevent “flare-ups” and slow the disease’s progression, helping
patients lead normal lives. However, the treatment was expensive and required that
patients give themselves an intra-muscular injection once a week.
With the arrival of the fax at Biogen, a patient record was created in Biogen’s
Customer Relationship Management (CRM) system and a number of work-processes
were initiated including a shipment of information to Abby and a welcome phone
call from Beth. Beth and the other case managers at Biogen answered questions
about MS and the Avonex, talked patents through the treatment process, and
explained service options like having a nurse come to the patient’s house to teach the
patient and their caretakers how to administer the injection. They also guided the
patient through insurance approval and treatment financing. Often it would take a
patient weeks to decide upon the treatment and negotiate the insurance maze to gain
access to the drug that cost more than $10,000/ year. Once the financing was in
place, the first dose of the drug would be shipped directly from a specialized
pharmacy to the patient’s home.
Over several phone calls, Beth had listened to Abby’s concerns and fears and
explained what to expect from the treatment. She sent her additional information
about the disease and Avonex along with supplies and a journal to record her
reactions to the therapy. She also helped arrange for injection training. She was
happy to watch Abby progress: a home nurse had visited and taught her how to
administer the injections; the insurance provider had approved the treatment; and the
first doses had been shipped via FedEx directly to Abby’s home. With each
interaction, the CRM system would be updated with Abby’s progress and provide
Beth with new information for their next interaction. At the end of each phone call, Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 2 Biogen #6-0022 Beth would stress to Abby that she should call back if she had any questions and
Beth would always schedule a future appointment to check in on her. Abby really
appreciated the support and came to look forward to Beth’s calls.
The last call Beth had made to Abby was five days earlier. The Siebel system had
reminded Beth that Abby had received the drug and should be ready to inject.
However, Beth found Abby shaken that day. Even though Abby had been through
the training and had given herself a practice injection with the help of a nurse, she
was still fearful about giving herself the injections. Beth had reminded her that one
of Biogen’s area business managers (ABMs) could help her find a local clinic that
was near her home where she might stop for her weekly treatment. But Abby didn’t
like the idea of having to interrupt her weekly schedule with a visit to the clinic. She
said she would try to do it herself next week….
Now that Abby had given herself the first injection, Beth’s job was done. She
double-checked the patient record to make sure the information on Abby’s doctor
was updated. When she was finished, the system would automatically generate a
letter to Abby’s doctor confirming her first injection. She noted a few personal
details shared during the call and then she changed Abby’s status to “graduated.” She
took a deep breath and collected her thoughts. The phone was ringing again, and she
needed to focus all of her attention on the next caller. Moving from Discovery to Patients
Biogen was founded in 1978 by a group of scientists, including Nobel laureates Dr.
Walter Gilbert and Dr. Phillip Sharp. The initial business model was focused on
developing new compounds that might later be used to create new drugs. Biogen
would license the compounds to large pharmaceutical companies who would bring
the product to market. In 1980, Biogen licensed its first major breakthrough, beta
interferon, to Schering-Plough. That success led to an IPO in 1983. In 1986,
Schering-Plough successfully used the Biogen-developed compound to bring
Intron® A (interferon alfa-2b) to market for the treatment of hairy cell leukemia.
Ten years later, the research-focused business model was completely upended when
Biogen decided to pursue the approval of its own drug, Avonex. With an FDA
preliminary approval in 1994, Biogen began a race against time to bring its
blockbuster MS drug to consumers. Building a supply chain from scratch would not
be easy. There were four key elements to the Avonex supply chain: Bulk
manufacturing, formulation, packaging, and final warehousing and distribution. The
chain began in a laboratory-like facility where the basic compound was created in
bulk. Next, in formulation, the drug was freeze-dried and stored at very low Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 3 Biogen #6-0022 temperatures. Later, the bulk drug would be packaged into individual doses ready
for shipment to patients. The final product had to be stored in refrigerated
warehouses that provided specialized distribution services. From the warehouses,
the drug would be shipped to pharmacies and then on to the patients.
Jim Mullen (who at the time was VP of Operations), proposed a novel approach to
creating a biotech value chain. Instead of licensing its new drug to a pharmaceutical
company or developing an entire supply chain, he proposed expanding Biogen’s bulk
manufacturing capability and outsourcing all other components. Partnering closely
with three key suppliers (Ben Venue Laboratories for formulation, Packaging
Coordinators for packaging, and Amgen – another biotech firm – for distribution),
Biogen achieved a breathtaking feat. Over the months it waited for final FDA
approval, Biogen and its partners honed the supply chain. When the FDA gave final
approval on May 17, 1996, the supply chain was ready. Within 35 hours Avonex
reached the pharmacy shelves – a record within the industry.2 Six months later,
Avonex became the market leader for MS treatment growing to over $1.25 billion in
sales by 2004.
Jim Mullen went on to become CEO of Biogen in 2000. However, by that time the
five-year rocket ship drug that carried Jim to the top of the company had become a
bit of a problem. While financially successful, Biogen was essentially a one-product
company with Avonex accounting for 82% of its 2000 revenue. Jim set off to
remedy that with some sweeping changes. 1) He reorganized the development
process to stoke the drug pipeline. 2) He made a $200M investment in bulk
manufacturing, opening a new 250,000-square-foot large-scale manufacturing plant
in Research Triangle Park, NC. That plant sported 90,000 liters of bioreactor
capacity and was one of the largest biologic manufacturing facilities of its kind in the
world (Exhibit 1). 3) He made large investments in developing a customer-centric
enterprise, investing over $20M in a CRM system to support patient interaction in
the call center and provide account information to the sales force. That investment
included outfitting the sales force with PDA devices that were integrated into the
CRM system to enable mobile access. With these large investments, Biogen’s
supply chain was ready to support much more than a single product. 4) So in 2003,
he negotiated a merger with Idec creating the third largest Biotech firm in the world
(Biogen-Idec) with projected revenues exceeding $2 billion in 2004 (see Exhibit 2
for financial results). Idec had two successful cancer drugs for treating B-cell nonHodgkin’s lymphoma. Together in 2004, they had four products on the market (see
Exhibit 3 for details on the products) and a pipeline of other promising drugs (see
Exhibit 4). 2 Bovet, David and Martha, Joseph, “Biogen Unchained,” Harvard Business Review, May-June 2000, p.3. Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 4 Biogen #6-0022 Sales and Patient Services
Sales forces were employed by all drug companies, but there were some key
differences that highlight the uniqueness of the biotech sales process as compared to
a typical pharmaceutical firm. On average, pharmaceutical sales reps got 4-5
minutes of the doctor’s time per detail (doctor visit). Often sales reps would arrive at
a physician’s office without an appointment and simply wait until they could get a
few minutes of their time between patients. In cases where the doctor was too busy
to see them, the reps might speak with the head nurse or simply leave samples or
reading material. Other strategies included bringing snacks or lunch, scheduling
lunches out, or hosting small lunch/evening seminars. Typically, the sales reps had
several objectives for the short time they had with a doctor: a) discuss results from
recent drug trials, b) share information about recent research on a given disease or
drug, c) convey general drug information, d) update the doctors on any advances or
changes regarding adverse reactions to the drug, and e) provide samples or branded
office gifts. In every case, the goal was to move the doctor towards a commitment to
prescribe the drug or to reinforce their prescription tendency.
While the general goals were the same for pharmaceutical and biotech sales reps,
there were some key differences. The high cost and complexity of many biologic
treatments precluded sampling, a common practice of pharmaceutical companies.
Also, because biologic treatments were complicated and were usually sold to
specialists, the sales reps received more face time with the doctors (as much as 11-12
minutes per detail). This allowed the reps to go into more detail about medical and
drug information.
Biogen’s approximately 200 sales representatives visited doctors (in their offices or
at lunches or dinners). The reps typically had more education and skill than the
average pharmaceutical salesperson and were called Area Business Managers
(ABMs). The AMBs also hosted seminars for both doctors and patients where they
disseminated information about advances in MS and treatment and recent trial
results. Due to privacy regulations, ABMs did not regularly interact directly with
patients. However, there were several cases where patients could choose to interact
with ABMs. For example, ABMs would host information sessions in major cities
where they would feature a celebrity who was an Avonex user to discuss their
experience - both with the disease and the drug. This created a sense of community
for the patients and helped them understand what it meant to live with the disease
and how Avonex could affect their lives. Occasionally, a patient would ask to talk to
an ABM while visiting their doctor or a patient might ask an ABM to help them find
them a convenient clinic where they could receive treatment (in rural area, patients
would often have to travel long distances to see their specialist, but could get
injections at a more convenient clinic). Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 5 Biogen #6-0022 In addition to the sales force, Biogen employed highly educated customer service
representatives to help patients with many components of their treatment.3 The call
center included personnel who fielded inbound calls, case managers, insurance
specialists, Medicare specialist, and therapy support coordinators. The customer
service center was not used as an outbound sales tool, and ninety-nine percent of all
calls were from people who have already seen a doctor and discussed a treatment. Customer Relationship Management at Biogen - 2001
In 2001, Mullen began plotting an expansion plan for Biogen. With new drugs in the
pipeline and possible acquisition targets in sight, he felt he needed to scale the
organization to support at least three major drugs by 2005. Mullen was convinced
that Biogen had to make a key IT platform investment to support a multiple drug
company. Given the company’s growing focus around sales and patient support,
Customer Relationship Management (CRM) was the natural platform to form a key
block of the IT foundation. Moreover, Mullen believed that any other biotech firm
that they may acquire would likely have poor customer IT systems. Quickly
migrating such acquisitions to a strong platform would speed the integration and
unlock more value.
Broadly speaking, CRM focused on strategy and practice of selecting and managing
customer relationships in order to maximize long-term profits. Companies in many
different industries employed a variety of software products to track sales, provide
post-sale support, help determine which customers to target, and extend sales into the
customer base. These were typically broken down into categories based on
functionality and user base.
• Sales Force Automation tools helped sales people target their pitches.
Typically, sales people tracked information about their clients in the
software. Also, the software was used to analyze trends and outside
information to identify strong customer prospects. • Customer Service tools comprise such varied products as automatic response
systems, call routing and monitoring software, email management, and
customer and interaction records. These systems were designed to enable
companies to provide effective customer service and to track customer
behavior. 3
All customer service representatives at Biogen had college degrees, most in biology or pre-med disciplines.
Many representatives eventually left Biogen to attend medical school or nursing programs. Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 6 Biogen • #6-0022 Analytical Tools could be used at any point in the customer relationship to
target sales or improve products or service. CRM Capability
During the five year period 1996-2001, Biogen’s CRM capability had evolved
haphazardly with components managed by multiple systems and processes.4 John
Vaeth, CRM / Internet Capability Development Manager, noted several key
limitations (see Exhibit 4) of the patchwork system including:
•
•
•
•
• The systems could not support more than one product.
The European sales force automation tools were rudimentary.
There were few analytic tools to help gain customer insight.
There was no way to integrate handheld devices with the sales force
automation system.
The sales support was completely disconnected from the call center activities. Call Center
The evolving call center capability had become one of Biogen’s strengths.
Management ascribed much of patient retention to the skills of call center staff.
However, Vaeth admitted that the systems could not capture the appropriate data
needed to provide seamless customer service, shackling the call center’s potential.5
He noted several key limitations:
• •
• • Different customer service processes were managed by separate systems that
were not integrated. For example, an insurance service representative could
not see a patient’s interactions with case management service representatives
or interactions with the patient’s doctor.
Records, such as those of a doctor and patient, could not be linked.
The call center software was adequate for one product, but would be difficult
to scale to additional products. This problem was expected to compound
with each added product.
The European systems were unique to individual countries. They were not
linked to each other or the US systems. European Sales Force Automation
Biogen was selling directly into twelve countries, including the US. Outside of the
US, the sales force automation capabilities were limited. 4
5 Accenture, Biogen internal documents, interviews.
Interview with Chris Dillon and Claire Valle, 3/2/2001; Accenture documents. Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 7 Biogen • •
• #6-0022 One executive said that the features needed were as simple as capturing,
“[the] purpose of visit, key outcomes, and next steps within one to two
minutes.”6
The inability to capture and access relevant information resulted in ABMs
calling on an estimated 30% - 40% of the wrong customers.7
The scalability of the European sales organization was limited by the
technology they were using. As Biogen launched more products, they would
have to update the technology. US Sales Force Automation
The US sales force automation software was homegrown, and while effective in
tracking basic contact data, was not linked to other CRM systems. Also, it did not
have data mining or sophisticated analytical capabilities to segment and target
physicians. As a consequence, little information on physician visits was tracked by
the sale force. Culturally, ABMs felt that the information they maintained on each
physician they visited was a source of private competitive advantage. As such, many
did not actively use the existing sales force automation system, but rather kept their
own notes on their physicians. A $20M Investment in the Customer
Mullen was convinced that the CRM capabilities had to be stabilized and scaled
before they could support three products and $2 billion in revenue. Additionally,
Mullen believed that mobile computing would become a significant competitive
weapon in the drug sales process and he felt certain that any new sales solution
should include delivery on a personal digital assistant (PDA). He charged Bob
Hamm (Senior VP of Commercial Operations) and Pat Purcell (CIO) to form a CRM
team to examine the problem and make a recommendation. The team recommended
a global Siebel platform to support all customer facing processes. Knowing that a
move towards extensive sales tracking would require a major culture change for
Biogen’s sales force, they also concluded that mobility would be an important
facilitator of the new system adoption. Mobility would also extend the CRM
platform directly into the doctor’s office making both information access and data
capture more readily available at the point of need. The sales team liked the idea of
the flashy technology and thought it would make the process of entering data on each
sales visit more palatable. After examining many different devices, the CRM team
chose the HP-Compaq IPAQ device. 6
7 Interview with Mark Leuchtenberger, VP International 3/1/01; Accenture documents.
Ibid. Tuck School of Business at Dartmouth—Glassmeyer/McNamee Center for Digital Strategies 8 Biogen #6-0022 Everyone felt it was important to move quickly and get something implemented
within a year. Given Biogen’s internal IT capabilities (a staff of 7 people), the team
realized that they needed to hire an external consultant that could quickly staff the
project with a large team to implement the system using a ‘big bang” approach.
Accenture was hired to implement the Siebel platform while Everypath was chosen
to implement the hand-held application. Kevin White, Director of Commercial IT,
commented that “the advantage of using Accenture was their ability to go from 060mph in 3 seconds.” Accenture could staff the project with team 40-60 consultants
throughout the project. Everypath had the key software development skills to
implement a Siebel “light” interface on the palm device that could be synchronized
with the central data base. The plan was aggressive – a six month development cycle
to rollout first in Europe with a US rollout following within three months.
All together, the software, equipment, and consulting services comprised a $20M
project to create the extended CRM platform. For a firm like Biogen that focused
most of its internal investments on drug R&D, the project scale was immense –
requiring Executive Committee approval. Mullin, who was accustom to big bets,
gained the approval and never looked back. The rollouts occurred on schedule in
2002 with enhancements following throughout 2003. Benefits of the Extended CRM Platform
Sales Force Automation
Integration with handheld devices allowed ABMs to enter detailed information
quickly and easily after meeting with a doctor. Since ABMs often had to spend time
waiting to visit the physicians, the ability to enter the data in the doctor’s office was
important. The PDA was small, easy to carry, and did not require the time a laptop
did to boot up. It was expected that this would improve the quantity and quality of
information captured.
ABMs felt that the new sales force automation component of the Siebel system
helped segment and target doctors along several key metrics. One ABM explained
that the old system simply ranked neurologists according to the size of their
practices. Now, he could rank neurologists according to size of pra...
Attachments: