Pharmaceutical Supply Chain Management: Challenges and How to Mitigate Them

Introduction

When running a pharma business, manufacturing is not the only deliverable. It requires a systematic approach to source, manufacture, store, ship and distribute it in the hands of their end users, and it is done under the umbrella of supply chain management. It is the responsibility of supply chain management to coordinate with all stakeholders and align their deliverables with the business strategies & targets.

Supply chain management in the pharma industry ensures the product’s efficacy, quality and fulfills patient’s requirements at the right place and right time. For this to happen, pharma manufacturers must invest in modern and pharma-centric supply chain practices and quality & safety.

Despite recognition by the pharma industry and the allocation of dedicated resources, the supply chain in the pharma industry is full of challenges. The critical nature of pharma products and regulatory requirements make it challenging to implement effective supply chain management policies for the benefit of both manufacturers and patients.

Pharma Supply Chain management and its importance

Pharma supply chain management is the coordinated activities of all entities from start to the finish, i.e. from R&D to final finished transportation, in a timely, effective and accurate manner. It enhances collaboration between different stages of the product life cycle and helps to fulfil business requirements for a pharma manufacturer.

Supply chain management for pharma is critical for several reasons.

● Timely delivery of raw materials for manufacturing and finished drugs to end users by using process visibility at each stage.

● Effectively managing supply chain disruptions using stand - by techniques, such as alternative sources, multiple routes and production planning.

● Maintaining high quality and safety standards for the product at each stage by deploying quality enhancement resources, such as environment control and product monitoring

● Reducing the cost of the final finished product by implementing cost-effective measures, such as controlling wastage and utilizing latest manufacturing technologies

Challenges to pharma supply chain management

Let’s discuss some challenges faced by pharma supply chain management.

Lack of Visibility

The product quality and efficacy depend on the raw material being sourced for each step, and pharma manufacturers must ensure the quality of the items being sourced. Although pharma manufacturers test and verify the material specification upon material delivery, they often find it difficult to verify supplier-side practices, such as

● What are the transportation conditions, specifically if the raw material is temperature-sensitive

● Their source of raw materials, manufacturing compatibility and compliance requirements

● Manufacturing resources and conditions.

These visibility issues make the product manufacturer vulnerable to supply chain disruptions, quality compromise and lack of real-time data, which ultimately is reflected in product quality, efficiency and productivity.

Regulatory Compliance

Regulatory compliance is an important aspect of the pharma industry and must be implemented for every business operation. Regulatory compliance is also required for supply chain management to allow them to sell and market drug products in their area of jurisdiction.  

Regulatory compliance for the supply chain becomes more critical because raw materials are often sourced from different regions of jurisdiction that have varying requirements and regulations. Pharma drug manufacturers must comply with each regional market regulations from which they procure raw materials.

The varying compliance requirements force the drug manufacturer to keep up to date with the relevant regulatory regulations, such as documentation and procedures. It enables them to continuously supply of raw materials, prevent fines, material confiscation and restrictions.

Counterfeit products

Pharma products are often the target of counterfeiting, especially in regions there is not strict regulatory control. The counterfeit products produce an attractive profit level, and their authenticity cannot be verified. This is especially advancing in those regions where there is no or less accountability and persons associated with counterfeit products are left to continue this business. For patients, it is an obvious loss that can threaten their lives

Counterfeit raw materials and other intermediaries can pose risks to a pharma business's reputation and can cause financial and market loss. Counterfeit products can hamper the pharma product's effectiveness, quality, and safety, which will be reflected in the organization's market share and customer trust. If not acted swiftly, the regulatory body will assume the counterfeited products to the original manufacturer and impose restrictions and fines on the pharma manufacturer.

Temperature-sensitive supply chain

Temperature-sensitive products are increasingly becoming part of the pharma industry, which require controlled temperatures during their manufacturing and throughout their storage & transportation. In the manufacturing sites, pharma manufacturers often manage to control temperature, but it becomes critical during the transportation stage. A slight deviation from acceptable limits during transportation changes the product's properties and its therapeutic effects.

Some common challenges in this field include, but are not limited to, the following.

● Temperature uniformity among different stakeholders, such as distributors and retailers. These entities can have different temperature control facilities, that can impact the product properties

● If equipment such as, refrigeration units malfunction, the temperature can deviate from acceptable limits

● Monitoring issues - monitoring is specifically required in a temperature-controlled supply chain, which too can become challenging. Factors such as memory failures, inappropriate data points, connectivity issues, and the selection of the right monitoring solutions can hamper the monitoring process.

Single source dependency

It is common to rely on a single source for raw material procurement due to apparent benefits, such as client-supplier relationship, financial advantage and ease of documentation.

Dependency on a single source can become challenging and severely hamper the supply chain. Challenges, such as

● Trade -war between the sourcing and buyer countries resulting in additional tariffs

● Conflict or natural disaster impacting the supply of raw material

● In-sufficient infrastructure for product transportation, causing delays in material availability

How to mitigate pharma supply chain management challenges.

Let's briefly discuss how the pharma industry can cope with these challenges

Procedures for information flow across different segments & stages

Information gathering and analysis can provide insight across all stages of the pharma supply chain that can be used to detect and solve issues related to the supply chain.

The information flow across various stakeholders also help to effectively plan production schedules in line with market demand and manufacturer’s capacity.

Information flow can include

● Mapping all the involved entities in an entire supply chain, such as suppliers, vendors and subcontractors

● Create an effective system where all relevant parties regularly update records, and must be thoroughly reviewed by the pharma consumer. It must also include data monitoring, such as temperature in the cold chain, where necessary.

● The collected data must be analyzed and translated into meaningful information ,by using digital technologies and advanced analytics

● The pharma manufacturer must have procedures in place to make timely decisions.

Regulatory compliance across the entire supply chain

As discussed earlier in this article, raw materials & other items often come from jurisdictions of different regulatory authorities; it is necessary to maintain compliance for each of them.

Maintaining and collaborating with these regulatory agencies, understanding their requirements & guidelines and then implementing them will help you establish an effective supply chain management system. It is also beneficial to hire external consultants to deal with these issues.

Demand forecasting

Demand forecasting can be used to maintain a balance between demand and supply. The supply chain must focus on the actual demand for the product on- the ground rather than the targets. Anticipated through different mediums, data should be the main focus, when forecasting demand load.

Demand forecasting help pharma manufacturers to solve unexpected disruptions in the supply chain and prevent delays in production & market orders. It also helps to reduce costs related to storage when products are overproduced.

Diversified sourcing

Diversified sourcing is an intelligent method to mitigate risks associated with pharma sourcing.  It enables pharma manufacturers to maintain a pool of suppliers with multi-faceted capabilities, and using them in times of needs

Enabling diversified sourcing helps to solve supplier problems, such as disruption at the supplier end, financial crisis, natural disasters, un-availability and cost-related

Manufacturing preparedness

Improving and enhancing manufacturing capabilities is a method to improve the capabilities of the manufacturer to deliver goods when required. It helps improve productivity, provides edge over competitors, and explores new markets.

Manufacturing can be enhanced in various ways, including but not limited to the following.

● Replacing legacy equipment & machines with latest and high-yield machines

● Using latest manufacturing technologies, such as automation and digital twin to improve manufacturing processes, performance monitoring and fault analysis.

● Lean manufacturing practices to improve efficiency

● Investing on training to enable personnel solve production and process problems

● Developing in - house maintenance and troubleshooting capabilities

In addition to the technical side preparedness, the following is also necessary to deal with supply chain management challenges.

● Ensuring up-to-date regulatory compliance by implementing regulatory guidelines, and maintaining documentation records. It helps to prevent breakdown due to regulatory actions.

● Implementing quality practices by using all available resources to produce quality products. These resources can include well-maintained scientific lab, analytical instruments, methods and facilities