The Pharma Supply Chain: Reshaping Itself for The New Normal
The onset of the global pandemic in 2020 induced a level of chaos in pharmaceutical supply chains that uprooted traditional landscapes and continues to be felt today, with no end in sight. Add in escalating geopolitical tensions, intensified competition, fluctuating demands and supplies, evolving customer requirements, and relentless regulations (to name a few), and the total sum equals innumerable supply chain disruptions. Each has its different impacts, posing a series of challenges for drug sponsors and manufacturers to surmount.
Supply Chain Changing Dynamics & Disruptions
The Red Sea region plays a critical role in global trade as a chokepoint for the movement of goods through the area. Unfortunately, regional conflicts and tensions tend to lead to shipping disruptions, affecting lead times and freight costs as ships may be rerouted or avoid the area altogether. Geopolitical hotspots in the Middle East, Northern Europe, and Asia can disrupt demand and supply, increasing variability and the need for agility in the pharma industry.
COVID-19 quickly exposed the risks associated with having a heavy dependency on a single geographic source for essential drugs and medical supplies. Disruptions in China had far-reaching consequences for product – and drug availability worldwide. Many manufacturers rely on China’s active pharmaceutical ingredients (APIs) production, raising concerns about potential shortages needed for patients’ medicines. Furthermore, concerns about China’s integrity in clinical trials and their less stringent regulatory requirements also abound.
Mergers and acquisitions are common in the fields of APIs and biologics, causing their own disruptions by changes in leadership, focus, and practices. These transitions pose a risk to the security of confidential data, potentially resulting in another severe disruption.
Consumer demands are also constantly changing, influenced by seasonal variations, market trends, health crises such as COVID-19, and promotional events. This volatility disrupts forecasts, plans, and inventory levels; and can lead to shortages, delaying the availability of needed medicines to patients.
Regulations are vital for ensuring the safety and efficacy of the end product. Yet implementing compliance updates to new regulations takes considerable time and may, in itself, disrupt operational flow. For example, the Drug Supply Chain Security Act passed in the United States in 2013 and gradually implemented through the end of 2023 mandated stringent tracking processes. This requirement necessitated an overhaul of tracking, recording, and reporting systems, consuming significant time and resources.
In light of all of these potential areas for supply chain disruptions, how can a pharma company develop the resilience and prowess to navigate them – relegating them to more of a ripple than a wave? How can a drug manufacturer better forecast the variability in demand and ensure supply continuity to its customers?
Key Strategies for Reshaping Your Pharma Supply Chain
- Make a Shift in Mindset.
We all know by now that the pharmaceutical industry can’t revert to conventional methods and be successful; instead, we must embrace the new normal and recognize it as a catalyst for innovation. This is an opportunity to reinvent supply chain management into a healthier, more agile, and resilient system.
- Take Advantage of Technological Advancements.
Positioning a pharma company to meet and exceed ever-evolving supply chain demands means using advanced planning technologies. These sophisticated algorithms and data analysis tools allow for real-time, data-driven decisions. They’re transformative, providing end-to-end visibility in the supply chain, making proactivity and rapid adjustments to demand and supply volatility easier. This agility helps avoid costly delays, ensuring patients receive their life-saving medication on time.
Procurement process efficiency can be heightened by digitizing operations and leveraging e-bidding platforms. This digital transformation reduces the number of Intermediaries, lowering costs and enabling the benefits of competitive pricing. In addition, digital tools ease collaboration with suppliers and improve communication and transparency, making it easier to be proactive rather than reactive.
Automating sales and operations planning (S&OP) streamlines operations and reduces the error-prone practice of manual data gathering, multiple iterations and analysis. This technological advancement offers real-time visibility into inventory levels and forthcoming supplies, demand forecasts, and production capabilities, enabling more data-driven and faster decision-making. Additionally, the ability to make decisions more quickly can offset disruptions.
AI-powered technologies are making their way into supply chains, promising significant impact. While predictions vary, it’s clear they will support increased visibility across the entire supply chain, leading to greater agility and more informed decision making. Be attentive to this evolution and its possibilities for your business.
Of course, new technologies, while essential, inevitably introduce security risks. Continuous improvement and vigilance in cybersecurity are necessary across all aspects of the supply chain. Cybercriminals are drawn to the siren call of intellectual property, research, and patient information. Therefore, regulations and common sense dictate that all aspects of the pharmaceutical supply chain be routinely (and frequently) checked for vulnerabilities and cybersecurity protocols updated and assiduously followed.
- Relationships, Regulations & Sourcing Practices
Maintaining and cultivating collaborative relationships around the globe supports and strengthens a robust distribution network. This includes strategic “contract tenors and input-linked pricing contract with supplies to ensure cost efficiencies against the backdrop of global inflation,” says Dr. Sundar Narsimhan from Neuland Labs.
Shifting from global to regional supply networks can yield cost savings and reduce dependency on a single supplier, such as those located in China or geopolitical hotspots. Sourcing from qualified in-country sources, particularly for high-volume intermediates and APIs, can be especially effective in reducing disruptions.
Dual-sourcing strategies for critical raw materials are increasingly common within the pharmaceutical industry to mitigate the risks associated with dependency on a sole source.
It’s essential to adhere to all regulations and develop a method for learning about up-coming regulations. Maintaining an unbroken, visible, and traceable chain of custody from the sourcing of raw materials, through the manufacturing process, to wholesale distribution, and shipment to patients is crucial for consumer confidence in their medications and therapies. Additionally, this reduces transit-related uncertainties, resulting in a reduction in the amount of stock needed.
Neuland Labs: Reshaping for a Competitive Edge
We are a leading contract development and manufacturing organization (CDMO) of active pharmaceutical ingredients (APIs) and an end-to-end solution provider for the pharmaceutical industry’s chemistry needs.
In our quest to meet customer needs amid unprecedented upheavals, we have already implemented or are evaluating the strategies outlined above to ensure continued competitiveness in today’s marketplace.
Additional strategies we use to insulate our supply chain from disruption include:
- Addressing potential supply chain risks as far upstream as possible to ensure downstream supply continuity to customers.
- Practicing vigilance on an array of pertinent market signals is necessary to be able to respond quickly to real-time data rather than using historical data to make decisions.
- Maintaining flexible product-agnostic capacities enables Neuland to easily adjust or switch production to meet rapidly changing market demands, helping to keep inventory levels low.
- Creating competitive price proposals using material prices for different scales within the stipulated time.
- Delivering products to large customers such as formulators, innovators, and biologics on-time and on-spec is always the goal as an organization. Our Supply Chain Management (SCM) teams actively seek out changes in requirements, customer preferences, and feedback, allowing for a higher degree of agility within the organization. Change in requirements? No problem. We’re on it.
- As an API provider, we’re well-versed in commercial manufacturing requirements and, therefore, can organize for speed. We achieve this using a grounded planning cycle followed by execution from synthesis to commercial production.
Neuland Labs takes pride in its proactive approach to managing the ongoing volatility in the supply chain. Our SCM department persistently works to create a robust distribution network, demonstrating a commitment to Neuland’s no-compromise attitude and continuous improvement. Accepting the dynamic nature of a global supply chain, we embrace change as a constant, and refuse to become complacent. Our customers are too important to us.
To learn more about how we can help you navigate supply chain challenges and meet your specific needs.
