“In the pharmaceutical supply chain, the margin for error is razor-thin,” writes Ryan Wiggin at ABI Research. That margin becomes even thinner in areas like cold-chain pharmaceuticals, which must be maintained at a consistent temperature throughout their journey.
New technologies make it easier to track and address supply chain disruptions at certain points in the process. Because pharmaceutical supply chains are highly complex, however, pharma companies must use a range of tools and strategies to prevent, mitigate and address potential disruptions — many of which are outside pharmaceutical organizations’ direct control.
The State of Pharma Supply Chains
Supply chain disruptions have existed as long as supply chains have. War, natural disasters and other events all impact the flow of goods and materials from one source to another.
Yet the rate of disruptions in the pharmaceutical supply chain has increased in recent years, says Michael Zimmerman, a partner at management consulting firm Kearney. Supply chain disruptions are happening more often. Many of these disruptions have national or global impacts.
Overall awareness of pharma supply chain disruptions is also higher due to the public’s greater access to information through the internet. The combination of more frequent disruptions and faster information spread means that pharma companies, pharmacists, payers, providers and patients are all hyper-aware of both disruptions and their impacts.
The COVID-19 pandemic made supply chains more vulnerable to disruption. In a 2020 study by International Data Corporation, 70 percent of pharmaceutical industry respondents said that their own supply chain was experiencing major disruption due to the pandemic. Respondents identified drug shortages, cost increases and reduced delivery performance among the consequences of these disruptions, writes Simon Ellis in an IDC white paper.
The biggest impact of pharmaceutical supply chain shortages is on patients. As shortages crop up in various areas of the supply chain, they echo downstream, often appearing as shortages in life-saving drug therapies.
As supply chain shortages have resulted in medication shortages worldwide, “we are becoming increasingly concerned about medicine supply issues and the very serious impact this is having on both community pharmacy teams and their patients,” says Mike Dent, director of pharmacy funding at the UK’s Pharmaceutical Services Negotiating Committee.
Three Supply Chain Issues That Affect Fulfillment
Supply chains may be disrupted by a wide range of issues. Some factors are within the direct control of supply chain participants; others are the result of decisions by outside actors or by impersonal forces such as catastrophic weather events.
Three of the largest current threats to supply chains include climate change, perishability of materials and security issues, including cybersecurity.
“Pharmaceutical supply chains are extremely vulnerable to the effects of climate change,” writes the Tanner Pharma Group. Climate change’s effects on pharmaceutical operations and the pharma supply chain include:
- Unpredictable temperature changes, which can affect cold chain pharmaceuticals.
- Damage to roads, rail lines and other shipping routes from extreme weather events.
- Impacts on population health from climate and weather events that change the demand for certain pharmaceutical products.
- Rising numbers of climate refugees who must work out how to obtain necessary medications in a new, unfamiliar environment — where their insurance may not cover what they need to access their medication.
Other factors related to climate change (e.g., food supply instability and the rise of new environmental threats such as mold, insect-borne diseases and poor air quality) can also change where, when, how and how much of a pharmaceutical product is demanded, writes Forrest.
Temperature-sensitive biopharma products are at a higher risk of loss or damage during their trip through the supply chain.
According to the IQVIA Institute for Human Data Science, failures in temperature-controlled logistics cost the biopharmaceutical industry $35 billion each year. Losses of products, clinical trial samples and data, replacement costs, and wasted logistics and analysis costs all contribute to this total, notes Pelican BioThermal in its 2019 Biopharma Cold-Chain Logistics Survey.
Cold-chain pharmaceutical losses are often connected to lack of data about the conditions in which a product is stored or transported. “Cold chain companies need to know real-time information about the condition, timing and location of their products, raw materials, and subcomponents” to deal with perishability challenges effectively, writes David Parker at supply chain operations platform Parkour SC.
Security breaches, including cyber attacks, can disrupt pharmaceutical supply chains. These attacks can do millions of dollars’ worth of damage to those that experience them. In September 2020, for instance, U.S. hospital chain Universal Health Services suffered a ransomware attack that affected more than 400 locations — disrupting the hospital’s ability to distribute needed medications to patients, writes NBC News journalist Kevin Collier.
“We had to hand-label every medication,” one Universal Health Services nurse told Collier.
Cybersecurity breaches anywhere in the supply chain can lead to disruption of every step downstream. Some breaches, such as those of logistics companies, can cause multiple disruptions. A logistics company that handles deliveries of both raw materials and finished drugs, for instance, may find it can fulfill neither obligation after a security breach.
To address these and other challenges, pharma companies need to deploy effective tools. Digital tracking and data analysis tools can provide the information companies need to spot potential shortages and respond accordingly.
Tools and Strategies for Addressing Supply Chain Challenges
“The implementation of technology means the pharma industry can futureproof its supply chains to better serve the needs of companies, healthcare providers, and the public at large,” writes Kinaxis’s Allen Jacques in an article for European Pharmaceutical Manufacturer.
Jacques identifies several ways in which technology can be deployed to prevent, mitigate or fix supply chain challenges. These include:
- Using data analytics to boost visibility, allowing supply chain participants to spot problems more quickly.
- Improving the planning process around factors like manufacturing problems, raw materials and components shortages, and compliance demands.
Better data provides a better understanding of supply chains, allowing for better decision-making. “Improved tracking methods and supply chain robustness would help identify delays in the the delivery process, which can be addressed so the goods can get to the provider faster and more efficiently,” says Riccardo Butta, president of Stevanato Group, Americas.
Improved tracking, in turn, can be supported by a Pharma 4.0 approach, says Nicola Gardner at ThermoFisher Scientific. “Pharma 4.0 moves to real-time monitoring, using connected systems to enable a truly agile continuous manufacturing system,” Gardner writes. Instead of checking on a product only at the end of its process, Pharma 4.0 continuously monitors and updates processes as necessary. When calibrated correctly, the result is a more consistent product.
The same principle can be applied to pharma supply chains.
Rather than responding only when something goes wrong, continuous monitoring and awareness can help pharma companies, logistics groups and other participants understand what may pose a threat and step in earlier. The result is a better flow through the manufacturing and distribution process, allowing for high-quality medications to reach the patients who need them at exactly the right time and place.
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