Michael Sassano & Antonio Guedelha:: GMP #18: Sales Planning for Pharmaceutical GMP Facilities

Authored By: Michael Sassano & Antonio Guedelha 

Michael Sassano

Antonio Guedelha

 

All startups, including new pharmaceutical manufacturing facilities, need to grapple with the complexities of launching. Pharmaceutical products are a considerable challenge and require a longer-term perspective. You will face more than regulatory hurdles associated with registering pharmaceutical products and will be challenged to coordinate a talented sales team with your production capacity. We will walk you through some ideas to help you plan sales efforts more efficiently.

Product and Equipment Validation Greatly Impact Sales

A common early-stage conundrum involves starting with lower sales quantities to validate equipment and batches economically to preserve capital. 

Equipment sizing and market size are significant issues for manufacturers since the equipment has minimum quantities to operate to comply with GMP rules. Your equipment size will dictate your batch size, which will, in turn, set the amount of product you can make throughout a manufacturing cycle. The process of equipment and product validation is the first step to producing industrial batches for sale and will aid in forecasting your manufacturing output volumes for sales. 

Futurecasting a Nonexistent Large Market is a Big Gamble

Another problem many manufacturers face is that they size their equipment for a future larger market. GMP rules require you to validate your size capacity (depending on the equipment task) to a maximum or percentage of that equipment’s capacity. Suppose you validate for total capacity and the market only needs small quantities. In that case, you may run into a situation like not selling your product as its shelf life expires, forcing you to destroy part of your batches. Consequently, you may start producing small quantities, and the product is a success. And in one month, all the stock has been sold, and it’s necessary to immediately increase the product’s production quantities and validate your equipment for higher volumes once again. 

One way to optimize the sales planning for pharmaceutical GMP products is to work closely with all the leading team players: sales and marketing managers, supply chain managers, industrial managers and top executives like the CEO and COO. Step by step, you can work through critical decisions to arrive at a reasonable expectation given your budgets and projections.

Monthly Sales Plan Updates Provide Supply Chain Data

Every month the sales and marketing department must analyze client leads, sales of the past few months, and orders received or to be obtained from clients in the future. With these data points, the sales plan is updated and provided to the supply chain department. 

Supply Chain Monitoring and Coordination are Essential

The supply chain department will check the new sales projections against the existing stock, production plan and client orders. If necessary, the supply team may require the production plan to be changed to support the quantities expected for clients in the future, or they may need to suggest a slower (or even stop) production if there is a decrease in the demand in the sales plan.

The Production Team’s Industrial Plan Guides Minutiae

The industrial department (production team) will review the production plan and analyze any limitations of production capacity and batch size imposed by GMP. If there is a decrease in quantities to be produced, one result may be a decrease in hours of work and a reduction of hours of the workforce. If there is an increase in quantities, this may imply an increase in the number of equipment work hours, an increase in worker hours, or even adding another shift. Some changes occur over time, while others may take months to implement.

Additionally, monitoring the raw materials and stock needed to make products is vital. Ramping up will mean checking all variables and slowing down to reduce expenditures on planned raw materials that may need adjustment. 

Making Critical Sales and Production Plan Decisions 

After the update of the sales plan and industrial plan, usually, all sides need to come together to find a solution to increase resources or sub-contract manufacturing services to help the strain. 

One level of meetings is at the executive level, where the CEO, COO, president, sales manager, industrial manager, and supply chain manager will go through the options and make decisions. Generally, there are a few choices with pros and cons for each path. Financial planning will play a critical decision arbitrator when analyzing these choices. Decisions on procurement of raw materials, stock replenishment, increasing the number of shifts, acquiring additional process equipment and other items will occur.

Additionally, as a follow-up to those decisions, the team will usually assemble monthly to assess end results and evaluate the target goals and sales plan accomplishments. Then, the process starts again from the top with a new sales plan for the new cycle. 

Coordination and Communication Close the Loop

Sales plans can undergo significant changes; production plans can have delays due to problems; and raw materials and packaging materials can have delivery delays. Most notable is the communication between all areas and the speed in finding a solution that allows the company to satisfy the client’s needs. With proper coordination, your company can solve the difficulties of pharmaceutical manufacturing and planning.

 

Top 200 Cannabis Lawyers

We Support

Cannabis Law Journal – Contributing Authors

Editor – Sean Hocking

Author Bios

Canada
Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Nicaragua
Elvin Rodríguez Fabilena

USA

General
Julie Godard
Carl L Rowley -Thompson Coburn LLP

Arizona
Jerry Chesler – Chesler Consulting

California
Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Colorado
Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Florida
Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

Illinois
William Bogot – Fox Rothschild

Massachusetts
Valerio Romano, Attorney – VGR Law Firm, PC

Nevada
Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Oregon
Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Pennsylvania
Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild