Globalization of the Pharma Supply Chain

The globalization of raw materials was a major trend before the pandemic. Susan Beardslee is the principal analyst for freight transportation and logistics at ABI Research. She explains how much of the pharma supply chain relied upon raw materials from China. This allowed for wide supply risk even before Coronavirus (COVID-19).

Christina Smolke (CEO of Antheia) says that globalization in MHRA approved warehousing UK is reaching even further.

She says that pharma supply chains have become increasingly globalized over the past 20 years. “Many steps in drug manufacturing and distribution occur in different places. For example, a medicinal crop could be grown and harvested in Australia and then processed in India to make a final drug in Germany. The drug is then distributed to pharmacies and hospitals in the United States.

Globalized supply chains can be a boon for patients and increase access to essential medicines. They have helped to build a stronger global medical infrastructure. But, this shift towards global supply chains has also led to dependence on foreign suppliers. This can sometimes lead to problems for countries in times of drug shortages. This is exactly what happened in the U.S.A., where it now relies heavily upon foreign suppliers for active ingredients in many of its most important medicines (80% API manufacturers are located outside the U.S.),” Smolke adds.

Antheia

Globalization brought about a shift to just-in-time inventory (JIT) to reduce costs. JIT inventory focuses on sourcing raw material directly and coordinating production schedules to eliminate the excess product. Jennifer Bisceglie is the CEO and founder of Intros. She explains that although this strategy is effective in driving down costs it can also be prone to failure if there are any disruptions. Global trade also presents significant instability.

Bisceglie says serialization was rampant even before COVID-19, which helped to ensure medication safety and counter counterfeiting.

She says that technology to monitor the integrity and transport temperature ranges in shipping (to ensure drug efficacy) was becoming a critical component of the vaccine’s development. Data traceability was also a top priority. The pharma supply chain moved data online to allow everyone to see the information they needed to make better and faster decisions. The digitization imperative has been accelerated by the pandemic. It is also driving a strong trend towards supply chain risk management and monitoring, all in the pursuit of operational resilience.

Other outside factors also disrupted the supply chain for pharma.

Baber Farooq is senior vice president of product strategy for SAP Procurement Solutions. Since the introduction of COVID-19, there has been a greater focus on nearshore manufacturing in many industries. Digitalization is allowing for more cross-border services. As companies evaluate their supply chain solvency, they are making investments in digital transformation and automatization more urgent.

COVID-19 has also increased the emphasis on pricing policing.

Tingling Dai, an associate professor at Johns Hopkins Carey Business School, says that the industry was under immense pressure before the pandemic to fix its pricing errors and link its business results with public health. “Personalized medicine was also a key trend that drove much energy. There was also pressure to adopt AI and data analysis more often.

The industry’s demand prediction was another aspect that pharmaceutical companies couldn’t control, even before the pandemic. Chris Hale is the CEO of Countable. While it may seem odd for a sector that relies on prescriptions and daily medication to have problems with demand planning, care providers and manufacturers are still puzzled by this issue.

Hale says that “a surprising number” of patients don’t follow prescriptions, don’t re-fill them as per plan, or don’t take the prescribed medications according to their programs. These factors can add noise to the demand signals and send false signals up the supply chain to distributors and manufacturers, affecting their ability to forecast and distribute throughout the supply chain. Previously, understanding patient behavior was considered impossible. However, new integrated platform technologies make this possible.