IoT & Supply ChainBusiness NetworkHealthcare & Life Sciences

4 lessons for the pharma supply chain after COVID-19

The emergence of the SARS-CoV-2 virus – and the subsequent global pandemic – triggered fears that the global and extended pharmaceutical supply chain would crumble. In practice, it has proved remarkably resilient with drug shortages kept to a minimum. However, the pandemic has exposed some weaknesses in the supply chain that must be addressed as the world recovers and prepares for what the future holds.

What has been seen as a weakness of the pharma supply chain has actually proven to be one of its strengths. Lead times are regularly four to six months or even longer, ensuring some short-term resilience. However, should disruptions in the manufacturing of raw materials or active pharmaceutical ingredients last for more than two or three months then the trickle-down effect could lead to catastrophic worldwide drug shortages over the coming months.

The situation is even more acute for the global supply of medical products. The worldwide shortage of Personal Protection Equipment (PPE) has demonstrated both the difficulty of meeting demand when the supply chain is under-prepared and the challenges in ramping up production and supply when there is a huge spike in demand.

Here are a few lessons that all pharmaceutical and medical product companies can learn from the COVID-19 pandemic.

Over-reliance on few sources of supply

COVID-19 didn’t expose the pharmaceutical industry’s over-reliance on China and India for raw materials, active pharmaceutical ingredients and, increasingly finished products. Instead, it has brought home what that over-reliance can mean when faced with a global pandemic. For example, the US and Europe may be the two largest active pharmaceutical ingredients manufacturers in the world but China and India combined have a greater market share than either and India is the world’s largest manufacturer of generics.

Any lasting disruption for these markets will have real impacts further down the supply chain. It is hugely instructive to note that this impact doesn’t always come from direct disruption. For example, India temporarily banned the export of some generic drugs as the government was worried about shortages in its domestic market. COVID-19 has demonstrated just how real these supply chain risks are, and the need for pharma companies to, wherever possible, have multiple sources of supply spread across different geographies so they can quickly switch production from highly impacted to lesser impacted territories.

Security of supply is a matter of national importance

The pandemic has woken up regulators and world leaders to the ongoing industry effort in the US and Europe to rebalance the pharmaceutical and medical product supply chains.

In truth, this trend has been underway for some time. Both the US congress and the European Union have debated the issues and had tentatively started to legislate to address the imbalance. Both governing bodies had spoken openly about the need to safeguard the world’s supply of medicines from the vulnerabilities inherent in relying on any one region for a significant proportion of essential raw materials and active pharmaceutical ingredients.

The security of supply for drugs and medical products will be a major political issue and we can expect all governments to continue to develop local capacity and secure local supply.

Supply chain resilience means more complexity

Medical supply chains have been described as ‘uniquely complex’ and have only grown more complex as they have integrated many different types of organizations within them. At a time when other industries are looking to simplify their supply chains, the need to quickly select between suppliers in different markets and regions and expand manufacturing into new territories to satisfy the increasing demand of governments and regulators will add complexity.

Some companies have already begun the process of complexifying their supply chains by recruiting two or three alternate suppliers, while others have begun to integrate their supply chain much more closely with their suppliers and customers.

At the same time, regulations such as the Drug Supply Chain Security Act (DSCSA) place an extra burden on how companies work with partners, distributors and logistics providers. Although we’re seeing some DSCSA exemptions to deal with the COVID-19 emergency, resilience is required to meet track and trace, monitoring and licensing requirements.

To achieve this level of resilience, pharmaceutical companies need to work harder and smarter to deliver full digitization to every part of their supply chain operations.

Business agility requires increased supply chain visibility

COVID-19 has shown the ingenuity and the speed at which companies can move. We’ve seen many instances of pharma companies quickly retooling manufacturing to start producing products that are in high demand. This ability to repurpose capacity provides a model for business agility going forward. However, accelerating product innovation and manufacture requires more than identifying capacity; it also requires engineering, design, production, and distribution resources.

End-to-end visibility across production and supply is essential. This includes real-time production monitoring systems and advanced planning and scheduling tools in manufacturing, as well as the ability to track and trace product –from materials to final product – as it passes along the supply chain. This will require an enterprise platform that connects the company with its suppliers, customers and partners to enable the real-time flow of information and transactions to create flexibility and robustness.

You can learn more about the services that OpenText™ delivers to medical supply chains by visiting our website or visiting our Flexible Supply Chains Digital Zone.

Show More

Ferdi Steinmann

Nearly 25 years of experience in driving strategy & commercialization efforts in Biotech & Pharma with an exclusive focus in Life Sciences (LS) strategic planning and industry marketing efforts for enterprise software solutions. Today I am responsible for the LS global industry strategy development at OpenText. I am energized by strategies that deliver on their promises

Related Posts

Back to top button
Close