The Digital Enterprise for Life Sciences SAP Leonardo

The Digital Enterprise for Life Sciences SAP Leonardo – Cold Chain Logistics & Manufacturing Mandar Paralkar, Senior Solution Director, Life Sciences Industry Business Unit, SAP 27 November, 2018

Executive Summary Cold Chain in Life Sciences Bio-Pharmaceutical and Medical Device Customers are focused on organic growth with quick return on investment. Process Excellence, Efficiency gains & Cost Control is key for business growth in today’s era of outsourcing. Solution Pain Points Trends Regulatory Pressure : Good Distribution Practice of Medicinal Products for Human Use” (GDP 2013/C 343/01), companies are required to track and report deviations in temperate of shipped products to the recipient of the products. • Storage Conditions like Time out of refrigeration • Patient centric outcome based approach • Quality implications - Costly biologics batch at risk • Consolidation of carrier, shipping market with potential rejection has big cost consequences on Financial books • Reusable packaging, Io. T sensor monitoring inside manufacturing plant site / warehouse and Distribution Center • Shipping Conditions like Temperature across shipments and delivery operations via wholesale, 3 PL, retail distribution, and to hospitals, pharmacy • Solution Components : • SAP Leonardo Bridge Apps – Connected Goods & Connected Assets • SAP Digital Manufacturing insights (DMI) • SAP Leonardo Technology – Bots, Machine Learning, Block Chain • Services Integration with Back end solutions : • SAP ERP-ECC & S/4 HANA • SAP Advanced Track and Trace for Pharmaceuticals (ATTP) • SAP Global Batch Traceability (GBT) Business Benefits Why SAP Ensure compliance and quality by maintaining visibility to actual temperature, deviations / exceptions in real-time due to equipment failure, 3 PL carrier issues throughout the entire value chain network, in both fixed locations and inventory in-transit • Thought Leader in Cold Chain – Owns back end business process data & Technology platform to deliver complete End to End Solution • Stakeholders : COO, CIO, VP Logistics, VP SC, VP Manufacturing, VP Quality, VP Finance • Industries Relevant : Process Manufacturing: Bio-Pharma, Consumer Products, Chemicals Others : Wholesale, Retail etc • Real Time Visibility into Logistics : Cold Chain conditions, Environmental conditions • Elimination of ruined commercial product batch/lot • Improved Customer Service , Brand Reputation and Clinical Trial Efficiency © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 2

Life Sciences Industry Update Several benefits from effective management of the cold chain process Key Benefit Areas Industry Proof Points • Improved Regulatory Compliance • By 2020 27 of the top 50 drugs will require cold chain • Lower SG&A through Greater Productivity • Average of 5%-6% growth in cold chain spend per year • Reduced Inventory Obsolescence • • Reduced Revenue Loss Analysts cite that a collapsed supply chain could cost companies hundreds of thousands of dollars per year • Compliance fines are significant, in the Food industry Sysco received a $20 M fine for unrefrigerated food storage • WHO notes that 10% of drugs are fake and “useless” A leading biopharma manufacturer identified 2% of inventory that is at risk and requires more effective cold chain management Sources: World Health Organization, Eye for Transport, Food Online, Pharmaceutical Commerce © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 3

Business Challenge Ensure products meet temperature control requirements throughout the logistics and manufacturing process Challenge Resulting Value Gaps • Monitor temperature, variances, • and failures at each stage of the full cold supply chain • Maintain visibility to temperature from ingredients into the manufacturing process (TOR) and down to the delivery to the final shelf in both fixed locations and in transit • Recalls of spoiled products are • • Difficult to track Time out of Refrigeration in the full logistics chain Value Drivers to Improve • Full insight in cold chain logistics • Spoilage noticed after delivery of the finished products Automatic tracking of Time out of Refrigeration • High fines involved if spoiled products get to market Full traceability of shipped goods to source • Become proactive in preventing spoilage due to exceeding temperature expensive and damage the brands reputation for a long time © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 4

SAP Leonardo – power the Intelligent Enterprise with intelligent technologies for every enterprise process to create better outcomes Optimize Embedded intelligence Extend Industry innovation kits Integrated capabilities that accelerate solving critical industry problems Embedded intelligence Industry innovation kits Intelligent technologies like machine learning, the Internet of Things, blockchain, and analytics embedded in the applications SAP Leonardo Transform Open innovation © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Best-in-class innovation with intelligent technologies delivered over SAP Cloud Platform 5

Industry innovation kits SAP Leonardo Retail ü Repeatable integrated capabilities that accelerate solving critical industry problems • Assets Consumer Products Discrete Manufacturing • Assets • Service • Logistics • Zero waste • Cold chain logistics Chemicals ü Industry innovation Sports and entertainment and assets Utilities • Service Travel and Transportation • Logistics and assets Telecom • Big Data margin assurance • Logistics • Pay for outcome • Spare parts Life Sciences Oil and Gas Mining Automotive services • Service and assets • Spare parts © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC • Venue • Team silver • Team gold • Assets • Cold chain • Service and assets • Fleet operations • Fleet insights logistics & manufacturing 6

Reimagine New Generation Business Scenario | Circular Economy FROM Linear Economy Product Start to End of Life Take – Make – Waste Cold Chain Manufacturing Distribution to Wholesale, Retail Outlets / Pharmacy Call Center captures customer complaints Strategic collaboration with suppliers leveraging co-pilot ensures cold chain compliance and traceability Smart sensors leverage Io. T and predictive analytics to manage Manufacturing, Quality with Time out of Refrigeration TO Circular Economy Proactive Brand Protection and Gain Market Insights supporting Regenerative design , Recycling ensuring Zero Waste Consumer / Health centric S/4 HANA Cloud Platform Raw Material, Ingredients from Suppliers (Farm), CMO – Contract Mfg. Organizations Leonardo Manufacturer reacts when brand image is compromised or decline in top/bottom line Machine learning optimizes distribution networks leveraging real time SC insights like geolocation, time in transit, and temperature monitoring in cold chain logistics Product information transparency and ongoing self service bolsters consumer trust and improves consumer sentiment

Reimagine Cold Chain Business Process : From Production to Patient with Io. T for Cold Chain Monitoring Integrated planning, scheduling and monitoring of all stakeholders for optimal delivery of medicinal products (incl special cooling or shelf-life challenges) Planning Project Mgmt Inbound Logistics Procureto-pay Biologics Manufacturing Internal Site Logistics Production Outbound Logistics Manufact. Execution Transportation Delivery/ DTP Anti. Counterfeiting Authentication Patient Treatment (Drug Infusion) Scheduling Dispensing Anti. Counterfeiting Return / Recall 4. Treat ment 1 Plan 3. Dispensing 1. Write Sr # & Cold Chain Info to Block Chain 2. Manage Project & Resources 3. Cold Chain Temp Status © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 1. Appoint ment Scheduling °C 2. Medicinal Product Temperature Check 2. Verify Serial #. Cold Chain info relabel 8

Innovation in Life Sciences SAP Leonardo intelligent technologies Design-led innovation Solution ideation and vision Rapid prototyping Integration blueprint Data Intelligence Business case development Analytics Cold Chain in Life Sciences : Blockchain Internet of Things 1. Manufacturing – Time out of Refrigeration Machine Learning Big Data 2. Logistics - Temperature Monitoring SAP Cloud Platform SAP HANA Data Management Suite Multi-Cloud Infrastructure Microservices | Open APIs | Flexible Runtimes | Integration SAP HANA | SAP Data Hub | SAP EA Designer Services | AWS S 3 SWIFT Hadoop … SAP © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 9

Typical Process Manufacturing: Shopfloor Lay-out & Cold Chain Process Flow Cold Chain Scenario integrated with Warehousing Goods Movements & Quality operations Inbound Logistics Compliant Manufacturing Outbound Logistics Cold Chain : TOR – Time out of Refrigeration Finished Drug to Customers Inbound Storage QC-Incoming Drug Substance (API) Outbound Dispatch Storage QA approved Warehouse Building Cold Storage (1) Room Drum # 1 – Full GR for Distribution Drum # 2 – Empty Drum # 3 – Partial Cold Storage (3) Freezer Racks / Shelves (Transit) Non-Cold Storage Item Location Manufacturing Site / Plant GI from W/H Cold Storage (2) Freezer Zone Drum # 3 (Calculation Remaining TOR : SF->FG) GI for Packaging GR from Prod to W/H Production Staging Area inside plant Packaging Production Operations: 1. Primary Packaging 2. Labeling 3. Secondary Packaging GI for Prod Bulk Production & Filling (Calculation of TOR : RM -> SF based on Temp. Zones) Transfer Orders / Process Orders Production Operations: 1. Thawing 2. Formulation 3. Drug Product (Filling) Active Pharmaceutical Ingredient (API) from Suppliers © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 10

Solution Approach : Scenario # 1 - Manufacturing (By Personnas) Digitize Paper Based Cold Chain Tickets to Automated IT out-of-the-box solution How We Might – Overcome TOR : Time Out of Refrigeration Barriers with Business Process & Systems Approach Cross-functional end-to-end Cold Chain (CC) process steps requires alignment between 4 Personas Cold Chain Mfg Cold Chain Tracking Current State Future State SAP ERP - ECC Process Order (Batch), Warehouse Goods Movements Inspection Lot Decision Prod Plan Production Performance MES Rockwell AMPS Data Historian OSI PI Automation SCADA (Sql/Oracle DB) Plant Manager & Site IT Lead Reporting / Alerts Warehouse Technician Cold Room / Freezer Goods Movement Shop-floor Manufacturing CC Batch Record Start Automated Data Entry Time In/Out Process Engg. & Automation CC Process Batch Automation Record End MES Weigh Dispense / Prod Operations CC Batch Record Production Review Container Movement CC Batch Record QC - Quality Control Quality Automation © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Automation Data Integration # Mfg Ops. Process Orders Plan TOR (? ) Actual Time In-Out 1 DS Thaw 40 A 2 Formulation 40 B 3 DP 40 X 4 Pack 20 Y 5 W/H-Ready Distribute 10 Z TOR (Hrs) 150 Lot OK Batch Review Record CC Batch Record Data Entry GR / GI from Freezer / CC Room Container Staging Quality Engineer CC Batch Record QA - Quality Assurance Process Order Batch to MES Production Operations Warehouse Logistics Production Supervisor 1. Batch Ticket Mgmt. UI – Data Correction Cold Chain Event Repository 2. Intra-Site Automated R/F Events 3. QC/QA Deviations, Batch Status 11

Solution Overview Industry innovation kit concept Moving Assets Analytics Cloud Generate insights for the full cold chain from Inbound, during manufacturing down to the hospitals, pharmacies or retailers. Leonardo Bridge Track and Trace Connected Goods SAP Cloud Platform Backend (S 4, ECC, etc. ) © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 12 * standard: customer does not need to provide

Solution Approach : Scenario # 2 – Logistics (Inbound & Outbound) ERP-ECC / S 4 Repository - Capture SC Events, Global Batch Update for Returns / Recalls Material Define Temperature Budget per Material Create Event Handler for Batch Event Handler Batch Adjusted Budget due to QA results Split Batch into Handling Units* Quality Inspection Lot HU* Event Handler Transport the Handling Unit* from A -> B Batch HU* Event Handler Note - * Handling Unit is not necessarily an ERP Handling Unit but rather depicts the units managed in Leonardo Repository based on Aggregation from ATTP (e. g. pallet, case, bundle, serialized item) Mfg Site Warehouse Transportation to customer Inbound Logistics / GR Calculate Transport Penalty DC-Warehouse QC QA Hospital-Pharmacy GI / Distribution Not Ok – Recall (Temp Issue) Alert / Warning from Sensor in SC / VC Container with Sensor installed OK - Invoicing Container with Sensor Returned (No Errors –> Billing) Sales Order Cold Storage Outbound Delivery © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Handling Unit(Cooler) Transport Order(TM) Inspection Lot (Post Process) Goods Issue GR at Customer Proof of Delivery Inspection Lot (Incoming) 13

Solution Overview Digital and real time insights into Time out of Refrigeration with Io. T Technology and Business data SAP Leonardo for Life Sciences cold chain logistics option is a cloud-based solution delivered on the SAP Cloud Platform, that creates full insights for Time out of Refrigeration. From incoming source materials, throughout the manufacturing process and down to the hospital/pharmacy Sensor Data Business Data Temperature Diagnostics Transportation Diagnostics Sensors capture temperature data to monitor (raw) materials from source into production and up to the pharmacy / hospitals for usage Sensors capture location and additional data to monitor the location of storage units and/or trucks shipping goods deviations from nominal operations Production Planning Time out of Refrigeration Get notified if source materials are at low stock and jeopardize planned production planning. Leveraging Io. T sensors, Time out of Refrigeration can be determined by the system without manual work. Be upfront informed if time may run out to take steps to overcome the risk of spoilage © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Life Sciences – Cold Chain Logistics 14

Concept Framework Integrate Cold Chain Operations with Digital Manufacturing Transform Connect Enterprise Systems • Manufacturing Systems • Automation and Control Business Models Manufacturing Operations Your Global Plant Network Connect to people & things • Reimagine Deliver Real Time KPIs Improve Asset Efficiency Manage Energy • Shop Floor Workers • Management • Embed Cold Chain Track and Trace Sensors, Machines, RFID Tags, Scanners, Printers SAP HANA Platform Monitor and send real-time alerts to and from intelligent devices Plant A © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Plant B Plant C Drive Cost, Quality, and Overall Performance Top Floor Shop Floor Extend Your Product Networks 15

Business Value Gain full and reliable insights on time out of refrigeration for every batch produced LS Inbound / Outbound managers can: LS Manufacturing managers can: • Track status of each shipment for on time delivery and within the defined • Ensure products meet temperature control requirements throughout the temperature thresholds down to individual shipment units • Get proactive alerted if shipments are at risk • Take immediate action with system proposed options to mitigate risks and spoilage of a shipment logistics and manufacturing process • Track the Time out of Refrigeration for each ingredient and every production batch relevant • Get proactive alerted if Time out of Refrigeration may exceed based on projected outstanding production time • Take immediate action with system proposed options to mitigate the risk of exceeding Time out of Refrigeration and secure the production batch © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 16

Summary : Leonardo Bridge & SAP Cloud Platform Cold Chain Apps leveraging SAP Technology from SAP Partner Ecosystem (1) Bot / co-pilot – Inbound Logistics CMO collaboration Pharma. Co Supplier/CMO IBP Demand Planning - Tanks Sub-Con PO / GI Used Tank QC-QA / Billing Forecasting / PO Conf / ASN / Invoice GR Used Tank / GI Clean Tank Cleaning Service – Cryogenic Tank (2) ML – Manufacturing, Outbound Logistics Predictive Quality Non-conformances - Based on history of nonconformance patterns for Material Batch Temperature Profiles, Bio-Pharma companies can now : • Better monitor potential non-conformance issues by predicting and identifying probability of batch quality at risk and potential return. • Improve handling by prescribing course of action based on historical behavior of Io. T temp. sensor data during equipment failure © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 17

Next Steps: SAP Leonardo : Customer engagement model and SAP Leonardo Services Awareness Discover and Design Explore Deliver Academies 1 2 One-day design thinking workshop Clickable interactive prototype with the SAP Build tool 3 Events Customer Interest Contract • Value assessment and architecture 8 -10 weeks to production starting at € 60 k Reimagine © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Additional SAP Leonardo services to advance new business or service models and to scale up and pursue additional use cases • scenario design Industry innovation kits Open innovation path • Functional prototype Scale Create Scale and transform Validate As few as 10 weeks to production Cost depends on use case(s) 18

Explore EXPLORE DISCOVER DESIGN DELIVER Customer involvement: 1 day In the Explore phase the business decision makers and IT business partners identify challenges, issues and opportunities around business processes with the help of SAP UX and industry experts Results from Explore Phase • Prioritized business scenarios and use cases • Identification of key stakeholders for use cases © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Customer Benefit of Explore Phase Be inspired on co-innovating towards a new business model or an improved business process 19

Discover EXPLORE DISCOVER DESIGN DELIVER Customer involvement: 5 days In the Discover phase, SAP experts go on site at the customer location to analyze the as-is processes with end users of the use cases identified in the Explorer phase and perform a technical assessment The results are used in a design thinking session with the customer business experts, IT business partners, end users and other stakeholders to identify the to-be process and come up with an initial solution prototype Output • • Visualization of the ’as-is’ process with agreed pain points and areas of improvement Low-fidelity prototype of a solution © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Customer Benefit After the Discover Phase Understand visualize the road ahead 20

Design EXPLORE DISCOVER DESIGN DELIVER Customer involvement: 2 days In the Design phase the customer works with SAP experts to create a high fidelity, interactive mockup application of the solution based on the to-be process A high level architecture of the solution will be chosen The solution will be validated by end users of the customer in an interactive session Output • • A high-fidelity prototype using the SAP Leonardo BUILD tenant or other prototyping tools (depending on preference) User and expert feedback the high-fidelity prototype © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Customer Benefit After the Design and Prototype Phases Be sure that the target solution is well targeted on the use case and that end users are going to adopt it 21

Deliver EXPLORE DISCOVER DESIGN DELIVER A development cycle to create a functional and customer validated proof of concept for the use case Output • Implemented proof of concept on an architecture chosen by the customer • Validated desirability, viability and feasibility with end users and business • Technical blueprint for customers landscape and value assessment of proposed solution © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC Customer Benefit After the Deliver Phase Have a working foundation to create a production solution for the use case 22

Thank you. Mandar Paralkar Senior Director, IBU Life Sciences, SAP +1 -610 -662 -4820 Mandar. Paralkar@sap. com

Appendix: Demo Use Cases – Industry Innovation Kit : Mock-up Screens 1. Manufacturing Cold Chain Demo Scenario 2. Inbound Cold Chain Demo Scenario © 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 24

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