written on 01.10.2012
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Interview with Philippe van der Hofstadt, Founder & CEO, B & C Group

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Can you tell our readers about B&C Groups main mission and also highlight some of its most notable achievements and milestones since its founding in 1999?

Earlier in my career, it became apparent to me that that the supply chain was highly fragmented. In 1999, I decided to found B&C Group with the aim of providing a new approach to the supply chain in the clinical research industry while our main objective is to combine it into a single fully integrated supply chain.

More specifically, throughout a clinical study, investigators receive on average between seven to eight shipments before they can commence with the trial. We intend to consolidate this process and to minimizing the number of shipments thereby simplifying the investigator’s workload.

We find ourselves in an environment today where the pharmaceutical industry is focused on minimizing its expenses. At the same time, we see increased complexity of transport requirements (e.g. geographical spread, controlled conditions, etc…) and absolutely no consolidation where there is a potential for this. B&C Group therefore operates as a fourth party logistics provider integrating packaging of drugs and assembly of sampling kits. In addition to this we also organize warehousing and distribution of drugs and kits as well as ancillary supplies such as ECG machines, centrifuges and all other materials required by investigators.

Furthermore, as a fourth party logistics we coordinate downstream transportation — either through specialized integrated couriers or by way of our own drivers. At the end of a clinical study we collect all material from the investigators sites, such as remainders of drugs, biological specimens, CRF’s and any other material that needs to be recollected.

Finally, B&C stores the biological specimens for long-term periods in its bio-repository and archives the reference samples of the drugs. These activities make up B&C’s core business model and its innovation. Currently, there is not a single competitor providing all these services under one umbrella as we do.

What is the geographical distribution of your business activities? Are your operations locally concentrated or internationally dispersed?

I should note here that most of our operations are derived from abroad — only 30% of our revenues generated come from Belgium. Our contracts are primarily with the headquarters of big pharmaceutical and biotech companies and as such operate in an international environment. More specifically, in 2001 we have started expanding our services in Russia and Ukraine. More recently, we have begun exporting to Asia, become involved in vaccine development in African markets and are currently directing our focus for a set-up in the United States, where we currently export 35% of our production.

Therefore, although we are a Belgian company we are better known outside the country. Lately, however, we have begun to increase our brand awareness in the Belgian market. Geographical proximity is good to have with the services we offer but it is certainly not as important as one would imagine.

As you mentioned earlier, B&C innovated the supply chain of the clinical trials industry. Could you elaborate on this?

Perhaps this is best illustrated through a case example. A pharmaceutical company that was setting up a clinical trials project involving around 120 sites on a global scale. Initially, before contacting us they identified a distribution site in the US that was supposed to provide ECG material to all sites worldwide. Another site in Canada was providing the holter monitoring equipment while we were going to provide all sampling kits from Belgium and in France they were organizing IMP distribution. This was their initial set up. We looked at it and concluded that since 75% of the sites were based in Europe we were able to save 40% in transport costs by warehousing all supplies at B&C in Europe and organizing consolidated shipments to the sites rather than have each supplier ship directly.

Therefore, by thinking through the supply chain and consolidating shipments we can realize significant savings on the one hand while also improving the tracking of the entire supply chain on the other hand. Moreover, once clinical trial investigators are required to provide the full history of study after it has been carried out, they are able to do so much more easily using our centralized tracking.

What is the breakdown of your revenue according to the different services that you offer? And where do you see the largest potential for growth?

Our fastest growing activity is the bio-repository activity, or the storage of biological samples. More specifically, this service has been growing the last three years at over 30% per year. Today, we are reaching about 22,000 incoming specimens per month to be stored at -80⁰C in our facilities. This is in sharp contrast to last year’s figures where we stored 11,000 per month and the year before with 7,500 specimens.

The reason for this significant growth is that the storage of biological specimens allows for the execution of analyses retrospectively, if need be. Furthermore, regarding Alzheimer disease for instance, it allows the Sponsor to assess the evolution of the pathology. With biological samples one could see what links can be established between images and biomarkers within biological specimens. Considering that the biomarker industry is rapidly expanding at the moment, there is an increased demand for larger storage capacities.

When we founded B&C in the late nineties, bio-banking and bio-repository was another main focus besides the integrated supply chain, however this is only now beginning to precipitate. Similarly, the model that we have identified and developed in the supply chain will also only breakthrough in perhaps the following five to ten years depending on the speed or increased financial pressure from the industry.

Even though pharmaceutical industry is among the best in terms of scientific advancements, in business processes they are a decade behind any other industry and are rather conservative. Therefore, what we have been doing within B&C is looking at other industries and replicating their supply chain models to transpose them on to the pharmaceutical industry. We have adopted expertise from other business segments but in doing so we also adapt them accordingly to better suit our scientific and clinical research clients.

As an example, one of B&C’s major pillars is logistics. Rather than having an extensive transportation network, we work with our own drivers instead. Also, instead of collecting and shipping samples on a daily basis since it is expensive, we instead collect and ship samples on a monthly basis whenever possible or at a frequency that is required by a clinical protocol. When we consolidate pickups, we were able to make collections throughout Europe at an average cost of €220 euros per pickup while our drivers also conducted quality controls on-site. Hence, we managed to increase quality (0% loss of samples) and efficiency while decreasing costs. This has been our first service and has helped finance our growth throughout the years, including that of biomedical storage services which is now in full development. What has become apparent is that since the industry is under increasing pressure, they are beginning to realize the value of integrating their supply chain.

How does B&C go about ensuring that its client’s cold-chain products are consistently delivered in the appropriate conditions?

Our couriers use qualified boxes for road transport. Moreover, we are in the process of developing more advanced container boxes together with the inputs of suppliers in order to minimize the thickness of the boxes and to increase sustainability so that temperature variations are minimized. For example, if you would put dry ice in a thin cup and hold it, you would certainly burn your hands. But a cup painted with our specialty coating will prevent your hands from burning. This 2 millimeter coating allows you to have a much higher isolating factor in transport boxes and allows for transportation costs savings in terms of size and weight of the packaging.

To what extent does B&C invest in the latest technologies to ensure easy and transparent traceability?

In the past when we started out with our transport activity in 1999, every sample that we picked up was scanned. What set us apart though is the fact that each of our drivers was equipped with a preprogramed scanner containing all of the sample collection and shipment information. This allowed them to conduct quality control checks on the requisition forms and quantities of samples collected before packing the samples in dry ice. This ability to provide on the spot verifications of the test tubes has clear advantages for our clients since it is much more difficult to conduct quality control after the shipment has been received than before. Evidently therefore, our “Sample track & trace technology” formed the basis of our business development because the value added services were integrated into the systems.

Since then, our IT system and technology has evolved continuously to include more service capacities, easier use and increased quality. Moreover, since our model of different services under one roof is unique, we have developed our own Enterprise Resource Planning (ERP) system which we named ISIS — an Information System for Integrated Services – as the Greek goddess who was worshipped as the ideal mother and wife as well as the patron of nature and magic. ISIS means magic to our Customers.

What would you say is B&C Group’s comparative advantage against other global logistics providers such as World Courier for instance? What makes you the partner of choice for pharmaceutical clients?

With respect to each individual service we provide, not only do we have competitors but they are also much larger than us in terms of size and therefore less flexible. There is not a single integrated services provider offering the spectrum of services that we deliver under one roof with the level of expertise concentrated in our centers of excellence.

The challenge for us is that big pharmaceutical companies often prefer to conduct business with relatively larger players. However, today we are seeing that due to economic pressures, the industry has started to approach niche companies in search of their innovative solutions. This represents our uniqueness — we start providing one of our services and once we get into the door we start to build towards other services while delivering added value to our customers.

You mentioned earlier that because of the economic pressure companies are starting to approach you now. To what extent can you accommodate this increasing demand?

When companies approach us the doors are always open. B&C currently employs 50 people, none of which are dedicated to sales. Rather, we are promoting our services simply through the word of mouth. Instead of pursuing rapid expansion through a sales team, we opt to focus on delivering quality services to our customers while controlling our growth. We aim for a more gradual and organic growth of the company led by customers instead of sales people.

Nonetheless, although we are pursuing a natural growth strategy, it certainly does not suggest that we are growing at a slow pace. Our warehousing facilities are based on Eli Lilly’s former site where we currently have a capacity of 5,000 sq. meters with the capacity to extend this a further 3,500 sq. meters. Similarly, we used to acquire one freezer every six months for the storage of our samples but now we are purchasing an additional unit every month! Furthermore, last year we built an extra floor in order to double the capacity of freezers.

In conclusion, where would you like to take B & C in the following 1 to 2 years and what goals would you like to realize?

Our main objective in relation to this is to tap into the US markets in the near future. Today, we are feeling competition by American companies coming to Europe and we are not yet able to reciprocate this. Our motivations for this extend beyond reasons of competition but also include the fact that as much as 30% of what we produce in Belgium is exported to the US. Therefore, I reasonably expect that within the next two years we should have our own bio-repository and kit building operations up and running across the Atlantic.

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