Hackers. Hurricanes. Geographically diverse components. Geographically concentrated manufacturing. Conflicting compliance cultures. These are just a few of the forces that challenge the delicate behavior and continuity of a pharmaceutical supply chain. A supply chain is the life-blood of any organization that provides goods or services. But a pharma’s supply chain bears a uniquely critical responsibility: to deliver necessary, sometimes life-sustaining, medical devices and drugs to patients. When other businesses fail to provide anticipated commodities, they risk loss of revenue, customers, market share, and reputation. The disruption of a pharma’s supply chain literally threatens lives.
For full-spectrum resiliency and risk mitigation, pharma companies must assess threats throughout its entire supply chain. One minor disruption at any stage could ignite a firestorm of damage that spreads throughout the pipeline.
Let’s look at some challenges within a pharma supply chain:
Challenges in the Chain
- Complex Components
Technology has awarded the pharma industry the power to string their value chain across the globe – from research to design, manufacturing to marketing and distribution. And many of these components incorporate third-party subcontractors, imposing a great oversight and management challenge. And should one link fail, it’s difficult to quickly jump to another. Pharma industry insiders note that cultivating a new relationship with a subcontractor can take upwards of two years.1
- Lack of Collaboration
Largely, pharma still falls behind many other industries when it comes to supply chain management collaboration and sharing of valuable data, focusing instead on commercial and marketing efforts. Unlike other sectors, such as retail, that deliver straight from the manufacturer to distribution centers, many pharma supply chains can include a wholesaler step, which inserts additional forecasting and logistical challenges. A resilient pharma supply chain and sound enterprise decisions call for universal collaboration and coordination. Fortunately, some pharma executives may be ready to dive deeper into supply chain flow and processes collaboration, according to a recent ECR/McKinsey survey.2
- Lack of Visibility
A close cousin to lack of collaboration is pharma’s need for better transparency in a product’s life journey. Regulators, hospitals, and pharmacies surprisingly lack background information on the drugs they distribute to patients. A surprising reality considering the plethora of data they obtain on the patients who consume the drugs. There are too many information holes between a product’s origins and its final destination. This can result in low-quality or contaminated products with no means to track root causes.
• Manufacturer Regional Concentration
Puerto Rico produces close to 10 percent of all drugs consumed by U.S. citizens. When Hurricane Maria devastated the island nation, it also crippled pharma supply chains and production of a substantial number of vital drugs. While such concentration can ease coordination efforts, it also elicits significant risks.
- New Products
Advancing technology and consumer demand of more personalized care is broadening pharma’s product base. With these new innovations comes the need for new manufacturing and distribution processes that require even greater attention and coordination for challenges, such as new material sourcing, purity levels, and delicate ingredient life-spans.
- Transportation Management
Temperature requirements, sterile environments, product tracking, deadlines, etc. Many pharma products necessitate a high degree of oversight and coordination due to long-distant and multiple transportation events that can include journey over sea, air, rail, and road. Product hijacking between destinations stands as constant threat, particularly for new high-advanced medical devices and medicines come aboard.
- Inventory Control
Many new products, such as tissue and gene-based therapies, will put even greater pressure on an already challenging balancing act that exists between supply and demand. Commodities with strict and brief expiration and temperature conditions can invite massive waste and revenue loss if inventory estimations are not handled with precision: too much stock on hand and it expires before consumption; too little, and needy patients go without.
- Cyber Threats
In our digital world with a plethora of medical and communication devices connected via the porous internet, pharma and its patients have never before been so vulnerable. Pharma’s out-of-date software and manufacturing systems, greater use of IoT (Internet of Things) equipment, mass-scale patient data collection and data analysis, and collection of restricted intellectual property (IP), cultivate a vast landscape of vulnerabilities.
The coveted IP and volumes of patient data make pharma a shiner, more-sought-after prize for a vast assortment of dark actors - from the average hacker looking to sell the information for profit, to competitors hoping to beat a market race, to foreign espionage players gunning for political or other strategic gains. A breach within the supply could inject a legion of threats, impacting not only patients, but quite literally the world, such if sensitive data regarding an infectious disease or deadly toxins fell into malicious hands.
Not only must pharma companies comply with strict regulatory mandates for product safety, but also, labor laws, tax codes, and environmental regulations pertaining to hazardous waste disposal. All pharma companies importing products into the U.S. must adhere to U.S. compliance standards, regardless of their host country. Recently, the FDA has issued an abundance of letters to foreign pharma manufacturers, warning them to comply with U.S. Good Manufacturing Practices. Failing to do so jeopardizes the product, the patient, and enterprise reputation.
Securing the Chain
Consumers want more personalized and convenient healthcare and communication, requiring greater innovation, faster product development, and ultimately a more efficient supply chain. Yet, new innovations – both in product development and business processes – present fresh threats and challenges to a pharma’s supply chain resiliency. Companies must conduct thorough risk assessments as part of a comprehensive business continuity plan to address risks and weaknesses. And they should also develop actionable incident management plans to mitigate loss and damage when the unthinkable becomes the inescapable.
For more great industry info, check out our free tip sheet:
1. Threats to Pharmaceutical Supply Chains, Public-Private Analytic Exchange Program, 2018
2. Unlocking the Value of Chain Collaboration, Pharmaceutical Manufacturing, 2016
Written by Angie Longacre
As a writer for Assurance Software, Angie devotes her craft to promoting business continuity and disaster recovery awareness, and trumpeting Assurance Software’s invaluable benefits for both. When she’s not commanding the keyboard, you can find her outside for a run, searching for her next antique treasure, or lost in a good book.