Visibility and transparency are key to optimum performance, says Allen Jacques, Industry Thought Leader at Kinaxis.
The pharmaceutical industry fared relatively well through the pandemic, with few manufacturing sites being closed due to infections. It may come as some surprise, then, that the sector has recently hit rockier ground. A supply chain shortage has come to light, leaving many patients struggling to access pain relief, oncology medication, antihistamines, hormone replacement therapy, anticlotting agents, and other important drugs.
The ramifications of this supply chain issue could be severe. Already, over half (54%) of UK pharmacists surveyed fear that patients have been put at risk in the past six months due to shortages. With the government now urging hospitals to ration stocks of certain drugs, action must be taken to minimise the impact on end consumers needing medicines.
However, the picture is not all bleak. The pharmaceutical industry is robust enough to heal its supply chains – if it leverages the right tools. By using technology to improve supply chain visibility and transparency, companies can plan for volatility and identify potential disruption before it occurs, thereby restoring consumer wellbeing and trust.
What is fuelling the supply chain shortage?
Supply chain shortages have been a recurring problem over recent months, leaving very few industries unscathed. But for pharma, a number of factors have combined to create a unique challenge. Firstly, demand for hormone replacement therapy has doubled over the last five years – largely due to increased awareness of the menopause – while capacity has failed to keep up. Seasonal demand for certain hay fever medications was similarly left unmet recently, this time due to shortages in stocks of chlorphenamine maleate.
Current trade tensions have only exacerbated the issue. Raw materials and active pharmaceutical ingredients sourced from countries like China can be caught in log jams due to international disputes. Meanwhile, some believe that Brexit has created importation complexity, significantly slowing down the entry of externally sourced drugs.
In some cases, pharma manufacturing sites have had to be closed for periods of time due to non-compliance with regulatory requirements. This was recently seen in the US when Abbott Laboratories shut down its Michigan plant in February. Unsanitary, non-compliant conditions had led to the contamination of Abbott’s baby formula, worsening national shortages of the product. These business interruptions can have substantial and long-lasting downstream effects.
Inevitably, questions of profitability can also come into play. Pharmaceutical companies often prioritise patent protected drugs, where profit margins are high, over drugs with generic competition, where profit margins are much lower. This does little to help tackle shortages of non-patented painkillers, blood pressure pills, and antidepressants.
Technology: an antidote to the supply chain crunch
Of course, some factors – like Brexit and geopolitical trade tensions – are outside of the pharmaceutical industry’s control. But the time has come for companies to focus on what they can control – and they can do this by bolstering the resiliency of their supply chains. Technological solutions have now come to the fore as key enablers of supply chain performance and agility.
The pharma supply chains that are in the best current shape are those that can see and assess events quickly and drive actions to mitigate any ensuing disruption. This involves having consistent visibility and transparency, not only internally but also into suppliers, contract manufacturers, and downstream distribution. While this may initially sound complex, innovations in technology mean that companies can now work from a single platform to intuitively manage, link, align, share, and collaborate with data insights across the supply chain network.
Having this capability allows companies to respond much more quickly to potential disruptions in the pharmaceutical supply chain. For example, the visibility provided by data analytics will help the industry to anticipate and pre-empt changes in consumer demand, so that a targeted, timely response can be put into motion. Technology can also facilitate better planning for factors such as manufacturing problems, late supply of raw materials and components, and compliance issues.
Everybody benefits from greater supply chain visibility, transparency, and resilience. For pharmaceutical companies, the agility to make fast, confident decisions across the entire supply chain will undoubtedly drive business growth and help to protect revenues. But even more importantly, it ensures that end consumers can get the medicines they need, exactly when they need them. With technology, the pharma industry can futureproof its supply chains to better serve the needs of companies, healthcare providers, and the public at large.