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1998-05-07 16:49:28


Pharmaceutical Industry: Cut Back, Scale Down, Soon



This report focuses on the pharmaceutical industry. What it says applies to every industry.

A company's suppliers can make or break it. A company must select a few core suppliers and work with them. It must scale back to its core operations.

I wonder how General Motors scales back to its core operations. I wonder how it decides which of its 85,000 suppliers are core suppliers.

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NEW YORK, May 7 /PRNewswire/ -- As the millennium draws nearer, life sciences companies are moving into a new phase as they plan for the Year 2000 computer bug: preparing for disruptions that may occur due to failures of others in the supply chain. Computer Sciences Corporation (NYSE: CSC), which recently released a Year 2000 study on the financial markets, reports that there are systemic vulnerabilities inherent in a drug company's "development- to-delivery" cycle. . . .

Given the interdependencies among all segments of the market, systemic breakdowns present the greatest risks. Business disruptions from Year 2000 glitches could seriously impact revenues, profit and executive compensation based on company performance.

A series of small disruptions could have a significant impact on overall processes, regardless of whether a Year 2000 failure occurs within a company's own applications or among customers, suppliers, vendors, and strategic partners.

"Senior management must now focus on safeguarding the core business," said Kohn. "Based on our experience, many Year 2000 programs are not focused adequately on protecting the company from the disruptions that will create the greatest business impact."

The appropriate action, he said, is to revise the Year 2000 program and properly prioritize on the business impact of potential failures.

"Identify potential 'break points' in your supply chain and develop appropriate contingency plans to deal with them," advises Kohn, who suggests that safeguarding the business with distributors means more than asking them to sign a letter that warranties they will be Year 2000 compliant. "Safeguarding your business means proactively working with your top three distributors, which may represent 80 percent of your direct sales, to ensure that mitigation strategies and contingency plans are created for all the linkages between you and each key distributor." . . .

SOURCE Computer Sciences Corporation

CONTACT: Lisa Meyer of Computer Sciences Corporation, 973-243-7735,; or Jill Gabbe or Jeff Jackson of Gabbe & Gabbe, 212-220-4444

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