Rich Quelch, Global Head of Marketing, Origin discusses the implications of an inefficient supply chain.
The pharmaceutical industry is one of the most essential, fast-paced and regulated industries that exists. Therefore, the absence of an efficient and fit-for-purpose supply chain will have wide-reaching implications for profitability, drug quality, innovation and ultimately, health outcomes.
Pharma has relied on outdated and overly-complex supply chain networks for too long. To support people to live healthier and longer lives around the world, a radical overhaul of the supply chain is needed to streamline processes, drive efficiency and uphold quality.
So, where and how does the current system fall short and what are the priorities for future proofing it?
A supply chain that’s fit for purpose today and tomorrow is one that’s not just reactive, but proactive. It will anticipate and accommodate current and future trends, driving forces and challenges.
There are many stress factors (both positive and negative) forcing the pharma industry to adapt while continuing to develop new and quality medicines at affordable prices.
These stress factors are intensifying every year and combining to present a real challenge, particularly for supply chain management. Here is a brief overview of just some of them:
Environmental pressures: regulators are imposing stricter environmental controls across the design, manufacture and transportation of pharma products to help curb carbon emissions and reduce plastic and water waste.
A new wave of medicines: complex biologic drugs and gene therapies are becoming increasingly popular but throw up huge challenges for manufacturing and distribution networks due to their sensitivity and short life-cycle.
Demographic shifts: populations around the world are ageing and so is the prevalence of associated chronic diseases associated such as diabetes, cardiovascular disease, cancer and dementia.
Falsification: the criminal market for falsified medicine is worth over $200 billion per year, making the protection of medicine quality and safety a priority, including the development of tamper-proof packaging technologies.
Demand from emerging markets: to unlock the potential of developing regions such as the BRIC economies (Brazil, Russia, India and China), pharma needs to invest in and implement truly global supply chains.
A smarter strategy
It has been the status quo for many years for pharma businesses to allocate huge resources and investment towards the development of innovative new drugs and delivery systems.
However, this is often at the expense of the supply chain. Even those with annual revenues in the billions don’t currently have full insight into their supply chain.
While efforts and ingenuity are ramping up in drug innovation, forecasting and inventory management, untapped opportunities remain, from packaging to final delivery.
Linking the laboratory to the marketplace, the supply chain deserves the same focus and investment given to drug discovery, development and marketing. Yet inefficiencies and bottlenecks remain.
To capitalise on both traditional and emerging commercial opportunities in the market, pharma companies must adapt to the changing demands of new technologies, the next generation of medicines and growing global demand.
Investing in an efficient supply chain minimises the time from product conception to reaching patients. In turn, it not only reduces the cost of managing external suppliers but also sees companies reap the benefits of winning the race to market with complaint and quality products.
Under one roof
A traditional stumbling block for big pharma is managing an expensive and inefficient supply chain, with hundreds of international suppliers delivering products to strict specifications and tight deadlines.
Each supplier brings expert knowledge to the table, but the challenge can be in tying these services up into a fine-tuned chain.
Overcoming the disconnect between suppliers in pharma could see companies adopt a more agile approach by bringing the supply chain under one roof. This offers a host of benefits including, but not limited to: reduced risks and overheads, greater innovation, increased speed to market, assurance of supply and compliance, tighter quality control and local availability via regional distribution sites on a global scale.
In addition to many commercial benefits, there are huge social and environmental gains. Now, more than ever, these two considerations matter as part of the sales and approvals process.
For example, working with a hybrid partner, pharma companies can design or redesign their product’s primary and secondary packaging to support compliance and make it easier (and cheaper) to transport, while simultaneously reducing the amount of materials used overall or facilitate a switch to more eco-friendly alternatives.
Meeting the demands of Pharma 4.0
As with virtually all drivers of business growth, supply chain management should be data-led. Businesses able to harness big data to inform supply chain decisions can accelerate processes, highlight inefficiencies and ensure a safer and more refined strategy.
Modern pharma firms have access to vast data banks, but many don’t have the structures or knowledge in place to maximise its value. Pharma companies need to think of digital not as a series of individual tools but as a means of transformation, requiring technology and people.
To be part of Pharma 4.0, leveraging data insights is key. One way of achieving this is shifting operations from enterprise resource planning software to the cloud, allowing for all organisations to connect to a shared system regardless of their own IT infrastructure; a virtual supply chain.
Pharma operations executives can leverage big data, external and internal indicators, and machine learning algorithms to better forecast demand, and automatically identify and mitigate supply risks. In manufacturing, analytical models can accurately predict and respond to critical events in real-time, such as deviations, quality issues or machine failures, to increase efficiency and reduce down-time.
In transportation, perennial encryption technology is becoming more sophisticated and affordable but remains a largely untapped innovation. Smart tracking systems built into primary and secondary packaging allow organisations to log and manage events which occur across a products lifespan remotely and in real-time.
This is invaluable information for anti-tampering strategies, allowing companies to locate and interrogate a product anywhere in the supply chain. For example, the geographical location of a product and the route it took can all be captured and stored, thus revealing any unauthorised journey routes or interventions.