Overseeing a pharmaceutical supply chain and ensuring its efficiency is a complex and collaborative endeavor. The process commences with sourcing raw materials, including chemicals and ingredients, which are used to manufacture drugs. These drugs undergo stringent quality checks, formulation, packing, labeling, and shipping before reaching the warehouse or distribution center and eventually being delivered to healthcare providers, pharmacies, and hospitals. Managing such a supply chain requires meticulous attention to detail, as it goes beyond ensuring product quality and involves addressing product recalls, compliance issues, and temperature-controlled shipments. Ultimately, the responsibility lies in safeguarding people’s lives.
Any slight delay or mismanagement can have catastrophic consequences, impacting a patient’s health or even leading to loss of life. Additionally, the pharmaceutical supply chain must combat counterfeiting and diversion, necessitating end-to-end visibility and traceability. In response to the challenges exposed during the pandemic, pharmaceutical companies are embracing digital technologies like blockchain, AI (artificial intelligence), as well as the Internet of Things (IoT) to enhance transparency, traceability, and efficiency in their supply chains.
However, the transformation of the pharmaceutical supply chain goes beyond adopting new technologies. In response to geopolitical instability and ongoing supply shocks, pharma companies are shifting away from globalization and moving towards establishing regional hubs. This shift is expected to provide greater flexibility and resilience in delivering medications to patients.
The process of localization in the pharmaceutical supply chain varies depending on which stage is being considered. For instance, companies can relatively easily localize secondary processes like packaging by establishing local Good Manufacturing Practice (GMP)-approved sites or outsourcing to local contract development and manufacturing organizations. On the other hand, localizing earlier stages, such as Active Pharmaceutical Ingredient (API) manufacturing, involves more complexity and investment.
While localization of API manufacturing may increase agility, it might compromise other supply chain metrics like reliability, time to innovate, risk exposure, and overall efficiency. On the contrary, localizing finished goods could improve product supply reliability through increased local stockpiling for distribution. However, the true impact of localization on overall resilience needs to be carefully assessed in comparison to other strategies like joint warehouses, multiple sourcing of raw materials, or expedited regulatory processing timelines.
To successfully build resilience and deliver the desired outcomes to consumers, pharmaceutical companies must work collaboratively and cooperatively with all stakeholders involved in the supply chain.