Optimising SCM for Delivery of Vital Drugs and Vaccines
Published on : Friday 04-06-2021
There are numerous pharma supply chain companies and startups that are impacting the pharmaceutical industry.
In today’s connected world, supply chain management promises the effective process of planning, implementation, and controlling of the operations of the supply chain. Integrated planning and performance of processes is vital to improve the flow of materials, data and capital. Supply chain management involves everyone participating in maintaining the supply chain. It makes it possible to get the products that people use every day better, faster, and cheaper. In the pharmaceutical industry, supply chain management helps make better use of assets and resources to smooth the delivery of vital drugs and vaccines, generate profits, improve shareholder value, and positively respond to customer demand.
Effective supply chain management transforms a pharmaceutical operation’s bottom line. It becomes pivotal especially when it comes to critical ingredients and medicines, and temperature-sensitive items like Covid-19 vaccines. In the current situation, as the Covid-19 pandemic hit the world, it brought the pharmaceutical supply chain to the forefront.
According to Chris Orban, VP of data science at Trimble Transportation, “Prior to Covid, the pharma supply chain wasn't really exposed to the non-logistics/pharma world. Drugs were produced, got to their final destination and distributed. A major product launch was still a big deal, and carriers had protocols and security requirements to follow, but it didn't receive the sort of scrutiny that has appeared during Covid-19. As with many other areas of our world, Covid-19 has shown both the vulnerability of our way of life and the power of our supply chain to succeed and deliver when it could have failed.”
Role of SCM in pharma industry
Supply chain management in the pharmaceutical industry in developing and developed countries varies in terms of their organisation, financing, function, and ideal characteristics of the best performing supply chains. Supply chain management costs are higher in India than in other areas of the world, amounting to 13% of India’s GDP. A successful supply chain management strategy can help lower expenses and bolster sales for an organisation.
The pharmaceutical supply chain has its own set of challenges. It includes supply chain visibility, drug counterfeiting, cold-chain shipping, and rising prescription drug prices, which can significantly intensify out-of-pocket costs for patients.
Indian pharmaceutical companies spend one-third of their revenue from supply chain management activities mainly due to inherently poor transportation infrastructure. The general business problem is that many Indian healthcare organisations spend a large amount of money on supply chain management issues. Conversely, the specific business problem is that some healthcare business leaders lack knowledge of strategies to lessen the high costs associated with SCM.
Major drug manufacturers typically dedicate a portion of their capital to the R&D of new drug therapies while generic drug manufacturers do not do so. Generic drug manufacturers are focused on manufacturing generic compounds that compete directly with the originally patented version of the drug product once the respective patent has expired.
How does the pharmaceutical supply chain work?
With the increasing demand and supply of drugs and vaccines, the pharmaceutical industry is evolving quickly. The evolution and acceptance of costlier, more condition-sensitive medications and drug therapies, the growing, incongruent range of product types and therapies that have shorter product life cycles and other factors have produced new complexities for a pharma supply chain. The Covid-19 crisis has emphasised the significance of pharma supply chains in meeting the demand for leading-edge products.
Many factors exist that are pushing the pharma industry towards a new paradigm, leading to the need for a distinct and effective supply chain model. For example, the ways that medicines are analysed, approved and monitored continues to evolve. The advent of new technologies has enabled greater efficiency in manufacturing and distribution operations, accelerating the interface to the patient.
Major components of the pharmaceutical supply chain include manufacturers, wholesale distributors, pharmacies and Pharmacy Benefit Managers.
According to an Avalere report, the pharma supply chain follows five steps to make sure that drug inventory is readily available for distribution to providers and patients. These include pharmaceuticals originating in manufacturing sites; transfer to wholesale distributors; stock at retail, mail-order, and other types of pharmacies; subject to price negotiations and processed through quality and utilisation management screens by pharmacy benefit management companies and dispensed by pharmacies; and ultimately delivered to and used by patients.
Pharma supply chain disruption during Covid-19
The Covid-19 pandemic has severely impacted the global supply chain, leading to massive disruption in resource and revenue management. Supply chain management continues to grapple with the effects and implications of the pandemic. This is mainly due to lack of clarity, deficiency of comprehensive supply chain restructuring, and arbitrary resource allotment.
In the pharmaceutical industry, among the problems for supply chains during this pandemic are the limitations and impact of the crisis on two of the largest global producers of active pharmaceutical ingredients (APIs) and generics: China and India. J. P. Duffy, a Reed Smith Partner, suggested how pharma can limit the impact on the supply chain. Duffy presented two suggestions; first, every company should review their contracts. And second, the company is to look at the indemnity provisions, which require a party to compensate another company for a loss suffered in which they have some role or in which they have accepted some form of legal responsibility.
Covid-19 demonstrates the ability and the speed at which companies can stimulate. There are numerous pharma supply chain companies and startups that are impacting the pharmaceutical industry. BetterSense, a Dutch-based startup, develops solutions to control and monitor pharma cold chains. Its sensor networks glean and monitor geo-position, transit damages, and shelf life deterioration of medical shipments. Blockchain Firm, a supply chain management software provider, provides smart digital ledger solutions to manage vendors and suppliers of pharma companies.
The onslaught of the Covid-19 pandemic has triggered fear across the world. The global pharmaceutical supply chain has significantly been affected by this crisis. In this context, the industry needs a better overview and coordination of demand and capacity and a network to solve problems effectively.