Supply Chain Resilience

Most people take for granted that medication prescriptions will be ready at the pharmacy counter and available for pick up when ordered to get themselves on the road to recovery.  The COVID-19 pandemic exposed vulnerabilities and challenges in pharmaceutical supply chains, leading to drug shortages and disruptions. While some aspects of the pandemic have subsided, pharmaceutical supply chains still face challenges.  Missed forecasting, oversales, raw material shortages, and GxP issues continue to be the causative factor of shortages.  In addition, low profit margins for generic medicines and poorly rebuilt on-shore infrastructure has contributed to the issue.  

Creating a resilient pharmaceutical supply chain requires a comprehensive approach that combines technology, data-driven decision-making, strong partnerships, and an innovative and agile regulatory approach. By proactively addressing these challenges and embracing innovative risk management strategies, pharmaceutical companies can better ensure a stable and reliable supply of essential medications for patients.

The World Economic Forum’s report in February 2023 highlighted several factors contributing to the pharmaceutical supply chain shortfall: increased infections, inflation, supply chain disruptions, and regulations.

 Specific issues that have played a role include:

• The sourcing of single-use systems underpins much of the modern manufacturing supply chain for sterile and biologics, and their availability was particularly challenging.
• The reliance on a few markets, such as China and India, who have been successful in providing low-cost manufacturing hubs for critical parts of the pharmaceutical value chain, including intermediates, APIs, and small molecule generics present a risk if disruptions occur in these regions.
• Restrictions applied by some countries on parallel trade (e.g. cross border sale of goods) temporarily have blocked the supply of medicines from one country to another.
• Stockpiling, misallocation, and over prescribing have also played their part by creating uneven demand patterns and depleting available stock.

Whilst emerging therapies are spurring pharmaceutical companies to revisit and strengthen the resilience of their supply chains, most organizations are still stuck in a reactive environment, lacking the expertise, data, and analytics for effective, and proactive supplier risk management. Supply chain organizations need visibility to build resilience.

The time is now for pharma companies to reimagine their supply chain strategies. Companies need to pre-emptively detect risks and proactively act. The ICH Q9 guidance provides the framework to identify, quantify, mitigate, monitor, and review risks. An effective supply-chain risk-management governance mechanism consisting of a cross-functional risk board with participants representing every node of the value chain should periodically review the risks and define additional mitigation actions should improve the resilience and agility of the supply chain.

Pharma leaders must move beyond traditional business-continuity planning levers such as building inventory, dual sourcing, and moving production in-house. Initiatives such as those below reflect a more forward-thinking approach to supply chain management.

• Accelerating the qualification approach for new suppliers by decreasing vendor approval time and looking for earlier compliance and regulatory robustness indicators.
• Leveraging smart, flexible filings minimizes regulatory authority oversight and enables versatility and adaptability during disruptions. ICH Q12 directs the use of Post-Approval Change management protocols to allow for predictability regarding future changes, such as the addition of alternate suppliers that may impact Established Conditions (ECs).
• Investment in and development of suppliers to improve relationships and enhance visibility, planning, and capability, including adopting emerging information technology strategies.
• Leverage influence collectively through industry forums to boost resiliency. For instance, industry partnerships with peer companies present unique opportunities to share best practices through collaboration and developing industry best practices.
• Evaluate the options for reducing and reusing certain commodities in the process.

Aligning the pharmaceutical industry’s and governments’ goals to protect patient health is crucial. By pursuing innovative approaches and investing in robust supplier risk management programs, both sectors can contribute to a more resilient pharmaceutical supply base, resulting in a reliable supply of medications, and benefiting patient health and well-being for the long term.