3 Ways to Make Pharma Supply Chains More Resilient
- The pharma industry is facing higher volatility as a result of COVID-19 and supply shortages
- Changing consumer demand is driving greater reliance on contract manufacturing and higher R&D costs
- Transitioning to a digital supply chain enables pharma companies to collaborate with supply networks more effectively and drive value
The development and rollout of COVID-19 vaccines have put the pharmaceutical supply chain front and center since 2020. Firms have sought new ways to collaborate, built new partnerships and solved novel distribution challenges to deliver millions of doses.
Despite the vaccine rollout though, the pharma industry has been facing serious challenges and disruptions: from increased regulation, mergers and acquisitions and changing customer demand in a highly regulated industry.
The result is that the pharma industry, as a whole, is focused on increasing resiliency in its supply chain while maintaining a lean flexibility to pivot amid changing market circumstances.
To meet these priorities, pharma companies must transform their supply chains from siloed networks to an integrated and more collaborative model that provides the centralized, real-time data visibility to connect partners and enable operational efficiencies.
Supply shortages are adding another layer of urgency to this challenge, however.
The U.S. Food and Drug Administration has listed supply shortages for 109 drugs nationally, including medicines for COVID-19, cancer and antibiotics. These shortages are exacerbated by the fact that more than 80% of active pharmaceutical ingredients are manufactured overseas.
While reliance to overseas sourcing may help control production costs, managing pharma supply chains to achieve both efficiency and resilience to disruption is a priority that requires new solutions.
Here are three supply chain challenges where digital transformation can provide a booster shot for resilience:
1. Improving data visibility and quality control through GxP-compliant platforms
Low-cost countries such as China and India supply the vast majority of active pharmaceutical ingredients. But quality control issues still exist, given the differences in regulatory structures.
Digital supply chain platforms that are compliant with GxP guidelines for manufacturing processes can help pharmaceutical makers collect and track supply chain data more accurately to ensure consistent quality in their raw materials and finished products. More accurate track and trace decreases the chance of a costly recall.
2. Lack of collaboration between pharmaceuticals companies and contract manufacturers
The average pharmaceutical company works with 37 different contract manufacturers, according to the Supply Chain Resource Cooperative at North Carolina State University.
With that level of complexity, having a unified, AI-powered platform to store and analyze data in real time can create efficiencies and avoid disruptions from forecast or capacity planning issues.
Tighter collaboration with its contract manufacturers allows a pharma company to orchestrate its supply chain more effectively, reducing bullwhip effect and getting out in front of potential disruptions.
Achieving this goal will require pharma companies not only to implement new technology innovations, but to partner more closely with contract manufacturers and reexamine processes holistically.
3. Delays and impediments to R&D and new product development
Supply shortages and the reallocation of medical resources to drive the response to COVID-19 contributed to delays in clinical trials and vital research and development in the pharmaceutical supply chain.
There is a need in the pharma industry for a robust supply ecosystem to facilitate funding, infrastructure and collaboration for research and new product development.
By filling gaps between partners in the supply network and centralizing data, supply chain and procurement organizations can contribute to making research and approval processes more streamlined and efficient.
Digital transformation enables pharma supply chains to be more flexible and resilient
Complexity in the pharmaceuticals market is only going to increase with consumer demand shifts, integration challenges from increasing M&A activity and reliance on contract manufacturers – all in a tightly regulated, vital industry.
The COVID-19 pandemic exposed vulnerabilities in the pharma supply chain, and the risk of a future pandemic brings into sharp relief the work that is needed to ensure supply chains operate with the resilience and flexibility to handle future disruptions.
Connecting the individual pieces of fragmented pharma supply networks will become increasingly necessary to maintain competitive advantage and drive value in this complex industry.
Learn more about digital transformation of the pharma supply chain in our white paper Digital Essentials for an Agile, Resilient and High-Performing Pharma Supply Chains. Read now.