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    Features

    The Pharma Supply Chain

    Overcoming the challenges of today’s global pharma supply chain.

    The Pharma Supply Chain
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    Rich Quelch, Global Head of Marketing, Origin05.07.19
    The globalization of drug supply and the advent of game-changing technologies are reshaping the pharmaceutical industry, for better and for worse.

    In the face of such disruption, now is not the time for pharma to sit back and be swept along; we’ve reached a tipping point where a shake-up of knowledge, infrastructure and foresight is needed to stay ahead of the curve and deliver the next generation of pharma products.

    However, many organizations in the pharmaceutical industry remain stuck in the past, relying on outdated supply chain networks which risk slowing the delivery of innovative new drugs to patients. A radical overhaul of the global pharma supply chain is long overdue in order to uphold transparency, monitoring, accountability and the quality of medicines. Not to mention protect patient safety and support people to live healthier for longer.

    To facilitate the new pharmaceutical landscape and truly deliver on the promise of Pharma 4.0, stakeholders across the supply chain need to take a breath, think carefully and act together.

    The factors forcing change
    The pharmaceutical industry is experiencing numerous stress factors which are growing year-on-year. Therefore, in order to address inefficiencies and overcome the challenges presented by today’s supply chain, it’s important to think long-term about how the factors forcing change are combining and intensifying. Below is a brief overview of just some of them:

    New product types
    A new wave of medicines, most notably biologic drugs and gene therapies, are replacing traditional “generic” medicines and throwing up huge challenges for manufacturing and distribution networks.

    Biologics and biosimilars are, as the name suggests, of biologic origin and hence are highly sensitive to environmental changes and susceptible to contamination. As such, biological medicines require cold-chain shipping whereby variations in heat are minimized to ensure cells remain viable. They also typically have much shorter product life-cycles than their predecessors so need to be transported and delivered to patients quickly.

    Patient outcomes
    A paradigm shift is occurring in healthcare systems around the world, changing the focus from delivering interventions to delivering health outcomes. Essentially, this incentivizes the sector to facilitate better quality of life for patients, making healthcare systems more sustainable by identifying and discontinuing interventions which don’t deliver results.

    The transition to value-based healthcare is still in its infancy but it’s here to stay. System-wide changes can be immensely challenging but the goal to achieve better health outcomes and a more sustainable system is within reach.

    Demographic shifts
    According to the World Economic Forum, the number of U.S. citizens aged over 65 is projected to jump from 46 million today to over 98 million by 2060, or nearly 24 percent of the total population.

    The U.S. isn’t alone. Many nations worldwide are experiencing an aging population as a result of the big “Baby Boomer” generation hitting their later years and improved life expectancy from advancements in medicine and healthcare.

    As the population continues to age and grow, so will the prevalence of chronic diseases such as diabetes, cardiovascular disease and cancer. This demographic shift is placing increasing pressure on health and social care systems.

    Counterfeit and falsified medicine
    Pharmaceuticals is one of the largest industries in the world. Consequently, it falls prey to one of the largest criminal markets believed to be worth over $200 billion per year.
    Governments, drug manufacturers and health professionals are under increasing pressure to protect patients from the growing risk of falsified medicine and develop innovative new tamper-proof technologies to eliminate dangerous fake drugs from circulation.

    Emerging markets
    The pharmaceutical market is becoming an increasingly global market as demand grows from developing regions and BRIC economies (Brazil, Russia, India and China).

    Within these countries, governments are increasingly committed to improving healthcare access and outcomes, employment and personal incomes are growing, and so-called “lifestyle” diseases such as certain types of cancer and Type 2 diabetes are becoming more prevalent, significantly widening the customer base for pharma products.

    To fully unlock the potential of emerging countries, pharmaceutical manufacturers need to invest in and implement truly global manufacturing and distribution networks.

    Environmental legislation
    At such scale, the environmental pollution caused by human and veterinary pharmaceutical products is an emerging problem, with regulators across the world imposing stricter environmental controls on carbon emissions and plastic and water waste.

    Consolidating the supply chain
    While efforts and ingenuity are ramping up in drug innovation, forecasting and inventory management, untapped opportunities remain in the outbound supply chain, from packaging to final delivery.

    Linking the laboratory to the marketplace, the supply chain deserves the same focus and investment given to the discovery, development and marketing of pharma products. Yet inefficiencies and bottlenecks remain, largely hidden behind the closed doors of warehouses which can be hugely damaging to profits and a company’s reputation with customers.

    At the heart of transforming the supply chain is the application of lean principles. This essentially means using less human effort, less inventory, less space and less time to produce high-quality products. It also means working as efficiently and economically as possible while being highly responsive to customer demand.

    However, becoming “leaner” requires more than merely using the terminology or plugging in a new technical tool. Rather, it requires a fundamental rewiring of operation and management systems, from the executive suite to the factory floor.

    Historically, pharma companies globally have relied on a network of hundreds of suppliers to manufacture, package and deliver different products to market. It’s still not uncommon for multiple teams to be managing multiple international supplier sites. As a strategy, this is overly complex, largely inefficient and very expensive.

    A pragmatic solution is to simplify the supply chain, bringing it “under one roof”, merging the best of manufacturing, design and innovation, supply chain networking and infrastructure. When doing so, it’s important there are internationally dispersed sales offices, manufacturing cells and storage facilities in strategic locations.

    Consolidating the supply chain brings 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.

    Commercial benefits aside, there are huge social impact and environmental benefits of creating a more efficient supply chain and as the importance of these issues grow, these benefits will only increase. Now, more than ever, environmental management as part of the sales and approvals process matters.

    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. A virtuous circle if you will.

    These cost-saving and efficiency gains will help the industry fulfill its social responsibilities, including the need to both pioneer more sustainable manufacturing processes and produce more effective and safer medicines the entire world can afford.

    Leveraging big data insights
    The amount of data being created every day is phenomenal. In fact, 90 percent of data was generated in the past two years alone.

    However, data is useless on its own. Pharma is one of many industries trying to become smarter in collecting, analyzing and leveraging the power of data to make decision-making faster and more accurate, identify and solve inefficiencies and create new innovative products and services.

    As pharma supply chains become increasingly digitized, larger amounts of big data are being generated which can provide a depth of insight previously unthinkable. However, despite the value of data, many companies—including big pharma—still lack a structured process and the right skillsets and programs to capture, evaluate and leverage it.

    Another roadblock which is proving difficult to overcome is the integration of existing equipment and resources with emerging technologies. Pharma isn’t alone; according to The Hackett Group, the main business threats reported by companies globally all directly relate to the transition from industrial-age to digital-era operating models.

    Inflexible IT infrastructure can be a major barrier to digitization, particularly making old and new systems interoperable. Pharma 4.0 demands the gap between the digital and physical is closed, allowing for a 365-degree view of business operations. In a global supply chain, this can be difficult to achieve.

    A major trend in global pharma is shifting operations from enterprise resource planning software to the cloud, allowing for any organizations in the supply chain to connect to a shared system regardless of their own IT infrastructure; a virtual supply chain if you will, making it easier (and cheaper) to achieve faster and more prosperous collaborations via data sharing.

    Cloud adoption also has the additional benefit of being more secure. The pharmaceutical industry is a prime target for cybercriminals and the damage can be far-reaching. A recent example is the Merck ransomware attack in 2017, whereby the pharma giant experienced worldwide disruption to its operations, jeopardizing the progress of new drug development and hitting its annual revenues and reputation hard.

    Intelligent cloud software uses machine learning to provide risk-based conditional access based on the user, location (geo-location or IP address), device and application with a single sign-on, avoiding any unnecessary disruption. This means any authorized personnel can access the network wherever they are, or indeed be blocked if their behavior is deemed unusual or high-risk.

    Real-time threat detection is also offered by cloud software, making threat detection and response much quicker. As the cyber threat landscape constantly evolves and techniques become more sophisticated, this is a highly valuable asset and something already over-burdened IT teams simply wouldn’t have the resources to do alone.

    As part of Pharma 4.0, there’s also a real opportunity for pharma manufacturers to work with packaging and supply chain management companies to develop innovative new digital-first solutions. For example, perennial encryption technology is becoming more sophisticated and affordable but remains a largely untapped innovation.

    Smart tracking systems, in particular, are becoming increasingly popular, built into primary and secondary packaging to allow organizations to log and manage events or raise queries that 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 to arrive there can all be captured and stored, thus revealing any unauthorized journey routes or interventions.

    Such developments in end-to-end traceability are giving organizations a much deeper understanding of their operations than has ever been possible. It’s vital pharma companies have the technologies and processes in place to analyze and leverage big data to increase efficiencies and streamline the supply chain.

    However, it’s fair to say up until this point there has been a far greater focus on discovering, developing and marketing new medicines than on creating the supply chain of the future to deliver these products to patients quickly, efficiently and safely. Even those with annual revenues in the billions don’t currently have full insight into their supply chain from end-to-end.

    In the face of many disruptive forces re-shaping the pharma industry, there needs to be a two-way street where information is being used to inform the downstream flow of products. AI is already transforming pharmaceutical supply chains, making intelligent decisions and recommendations for optimal actions. Companies which adopt these technologies in the early stages will blaze the trail in the pharmaceutical space for years to come and those who don’t, risk being left behind.


    Rich Quelch is an experienced global marketer within the healthcare and pharmaceutical sector. He has led the development of the Origin brand, positioning it as a world-leading supplier of innovative and ground-breaking pharmaceutical packaging devices.
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