The Ultimate Guide to Pharmaceutical Supply Chain
- What is a Pharmaceutical Supply Chain
- How Does a Pharmaceutical Supply Chain Work?
- What is a Pharmaceutical Distribution System?
- How is a Pharmaceutical Supply Chain Different from a Regular Supply Chain?
- What is Pharmaceutical Supply Chain Management?
- What are Major Pharma Supply Chain Challenges?
- What is the Current Pharmaceutical Supply Chain Technology Solution for the Challenges?
- What is a Pharmaceutical Supply Chain Monitoring Solution?
- What is the Difference between Pharmaceutical Supply Chain Monitoring and Pharmaceutical Track and Trace?
- The Evolution of Pharma Supply Chains: From Reactive to Active
- What is the Need for an IoT-Based Pharma Supply Chain Monitoring System?
- Can a Pharmaceutical Monitoring Solution Plug the Gaps in the Current System?
- How to Implement an IoT-Based Pharmaceuticals Supply Chain Monitoring System?
- How to Improve the Pharmaceutical Supply Chain Efficiency?
- What is a Pharmaceutical Value Chain?
What is a Pharmaceutical Supply Chain?
A pharmaceutical supply chain is an array of various events in a pharma company, from manufacturing to distribution to delivering medicines and vaccines to consumers. A pharmaceutical supply chain consists of various processes like drug distribution, inventory management, pharmaceuticals logistics, and supply chain management. Apart from processes, it also involves several entities like manufacturers, suppliers, distributors, pharmaceutical logistics partners, multimodal shippers, and pharmaceuticals retailers.
The pharmaceutical supply chain is ever-present in the pharma industry, which clocked over $1.27 trillion globally in 2020. The pharma supply chain is crucial in the industry's overall success by ensuring that the goods are moved efficiently, on time, and with the highest level of quality. Therefore, the operation of a pharmaceutical supply chain directly impacts the revenue bottom lines of the industry.
It has taken the pharmaceutical companies, governing bodies, and leaders to create the pharma supply chain processes and the network over decades of trial and error. However, there is still a lot of room for improvements, especially in ironing out inefficiencies. Today the pharma supply chain domain is standing on the verge of another upgrade initiated by Industry 4.0.
For providing timely and quality medicine and vaccines to patients, the pharmaceutical supply chain needs to deploy the most advanced upcoming technology solutions. The solutions need to match the speed of disruptions to cater to the overly complex nature of the pharmaceutical supply chain, and visibility has a vital role to play in this scenario.
How Does a Pharmaceutical Supply Chain Work?
The pharmaceutical supply chain works as a symbiosis of different processes and entities. As the supply chain works to deliver value to the end consumers, you come across the following main steps:
Manufacturing: Pharmaceuticals manufacturers produce drugs and vaccines at various locations around the globe depending on the demand from patients. This step also includes procuring chemical ingredients to produce the medicines. The raw ingredients are often transported to the manufacturing location using pharmaceuticals logistics — which are crucial at every step. In addition, manufacturers are also responsible for labeling drugs and vaccines, ensuring pharma quality compliance per governing authorities like FDA (Food and Drug Administration) in the US, the EMA (European Medicines Agency) in Europe, the CDSCO (Central Drugs Standard Control Organization) in India, or the TGA (Therapeutic Goods Administration) in Australia.
Storage: Once the drugs and vaccines are manufactured, they need special storage facilities to maintain the desired quality. It becomes even more vital when dealing with pharmaceutical cold chain-specific medicines and vaccines.
Distribution: The drugs and vaccines are distributed with the help of pharmaceuticals logistics — usually rented by pharma companies or distributors.
Retail: The pharmaceuticals products are then re-stocked at retail locations, from where they are sent to various pharmacies or patients.
Compliance Screenings: The pharmaceuticals industry is subject to several compliance screenings at various nodes in a pharma supply chain. These nodes can be anything from customs screening at ports, airports, or borders. The pharmaceutical compliance screening also helps companies detect sub-par or counterfeit drugs.
The pharmaceutical supply chain is interwoven with these five main elements. The distributors buy pharma products from the manufacturers, which are then sent to various retail locations. Once launched, the most crucial step in the journey of a medicine, or a vaccine, or any other medical product is its delivery to the end consumer — enabled by pharmaceutical logistics partners. To ensure that all the entities seamlessly work together, pharma supply chain leaders need to learn and understand innovative technologies that enable companies to keep up with disruptions.
What is a Pharmaceutical Distribution System?
Drug distributors are an essential part of the pharmaceutical distribution system, responsible for getting the medicines to the patients on time, with high quality, and transparently. According to a Deloitte study, 92% of pharma sales in the US (United States) are managed and enabled by pharmaceutical distributors. It makes them an essential element in the pharmaceutical supply chain, and a drug distribution system becomes crucial.
The pharmaceutical distribution system holds the following responsibilities:
Ensuring steady medicine and vaccine flow: An ideal drug distribution system calibrates the supply according to varying patient demands. This includes filling all the last-minute demand gaps and anticipating an imminent spike in consumption.
Taking ownership of pharmaceuticals products: Apart from being an intermediary between pharmaceuticals manufacturers and pharmacies, the medicine distribution system also takes legal ownership of the drugs and vaccines.
Amplifying value in the pharmaceuticals ecosystem: Ideal drug distribution systems deliver operational efficiency to the overall supply chain, reducing capital and operating expenses.
The pharmaceutical distribution systems continue to evolve and play their part in the larger supply chain context. In the current scenario, the role of clean data and the timely knowledge of disruptive pharmaceutical events is becoming pivotal in an efficient pharmaceutical distribution system. It contributes to the larger universe of pharmaceutical supply chain management.
How is a Pharmaceutical Supply Chain Different from a Regular Supply Chain?
There is a substantial difference between a pharmaceutical supply chain and a regular supply chain. For starters, the pharmaceutical supply chain is comparatively more complex than a regular supply chain. The pharma supply chain directly impacts human lives and is subject to strict compliance norms put in place by the government.
The pharmaceutical supply chain is also responsible for the safe and timely distribution of generics, prescription drugs, OTC (Over-the-Counter) medicines, biologics, and many other things, each with special handling and storage specifications and risks.
Once it leaves the warehouse, a pharmaceutical product comes across many different objectives and constraints that make the supply chain process complex. Pharmaceutical supply chains have to deal with multiple stakeholders. It is not just the manufacturers and distributors but also government agencies, hospitals, and clinics, medical research organizations. A regular supply chain, on the other hand, has much simpler norms.
When considering a pharmaceutical cold chain, the complexity and expenditure rise exponentially compared to a regular supply chain. The pharma cold chain has the element of strict temperature control — mandated by the authorities — to maintain the quality of the drugs and vaccines. Temperature sensitive vaccines, medicines, or biologics degrade if pharma companies do not have proper cold chain visibility. It can compromise the quality compliance aspect of the pharma supply chain leading to health risks to patients.
The compliance aspect in a pharma supply chain dictates the fact of how its management is carried out. In a regular supply chain, the operations are much more relaxed as the risk of product spoilage and temperature control is not involved.
The complexity further escalates as one also has to deal with healthcare management organizations, insurance companies, etc. All this makes the job of a pharma supply chain or cold chain logistics professional even more challenging. Pharmaceutical supply chain management is much more challenging than managing a regular supply chain.
What is Pharmaceutical Supply Chain Management?
Coined by Keith Oliver in 1982, supply chain management came to popularity after he mentioned it in a Financial Times interview. In the pharmaceutical industry context, supply chain management orchestrates pharma events in an efficient and agile manner. The top five functions of pharmaceutical supply chain management are:
Planning: Involves laying out an overall strategy for the pharmaceutical supply chain.
Sourcing: Procuring raw materials, pharmaceutical logistics partners, storage units, etc.
Producing: Manufacturing drugs and vaccines.
Delivering: Delivering the products to the patients.
Returning: Bringing back, disposing of spoilt pharmaceuticals products, or re-routing products to new markets that have additional demand.
Different companies have different ideas to accomplish supply chain management duties; it also varies from one industry to another. For pharmaceutical supply chain management, companies also need to take care of additional elements like compliance.
What are Major Pharma Supply Chain Challenges?
In pharmaceutical supply chains, the lack of real-time visibility in the chain makes up for many friction points that keep enterprises from realizing their full potential. These friction points have a more considerable negative impact on the overall revenue bottom lines when compounded. Let us have a look at the three major pharmaceuticals supply chain challenges.
The pharma supply chain deals with many lifesaving drugs. For this reason, pharmaceutical supply chain leaders must create their pharma cold chain operations around compliance.
Pharmaceutical cold chain handling is worlds apart from a typical supply chain. Research from IQVIA Institute for Human Data Science has estimated the losses by pharma companies to about $35 billion.
In pharma cold chain monitoring, there are many layers than just having a passive datalogger report — it falls short in painting an accurate picture. If pharmaceutical supply chain leaders do not act on time, disruption can go beyond compliance issues. It can lead to pharma supply chain challenges in the drug distribution system as well due to the rejection of goods.
Lately, pharma supply chains have been deploying active or passive data loggers for precise information about cold chains' conditions. But these are not enough to prevent compliance issues cascading into pharmaceutical supply chain disruptions. They are:
Disruptions arising from compliance: Incorrect shipping is responsible for a massive chunk of global vaccine supply degradation resulting in pharma supply chain challenges. The burden of reshipping suitable quality goods — in case of product shortage due to damage or spoilage — falls on the pharmaceutical company or the distributors.
Difficulty in zeroing on disruptions: The sheer size of a large-scale pharmaceutical supply chain makes it difficult to pinpoint specific events — related to time, location, or cause. Periodic audits are time-consuming and expensive exercises, which can only happen a few times a year.
Overspending: Ensuring product availability in case of damaged or non-compliant goods, pharmaceutical leaders must plan for last-minute fulfillment orders. Hiring backup forwarders to fill these gaps leads to overspending in packaging, labor, and transportation.
Dealing with demand-supply fluctuations on cue because of the nature of the pharmaceutical supply chain domain. Failing to cater to demand-supply changes effectively can give your competitors an advantage.
The pharmaceutical industry experiences unavailability of products because to expiration, transportation delays, overstocking — so that a particular product is never out of stock — leading to a
high working capital expenditure. In addition, issue, such as recalls, product spoilage, damage, theft, and loss, requires you to:
Optimize and improve the competitiveness of your supply chain.
Consider overstocking for edging out the competition.
Create and practice strict compliance norms.
The above three problems lead to the following demand-supply fluctuations-related pharma supply chain challenges:
Expiring products: Overstocking is unavoidable to cater to demand-supply fluctuations and give rise to product expiration. Therefore, pharmaceutical supply chains must aim to maximize stock availability by optimizing the stock.
Tackling the bullwhip effect: Lacking precise data on the product demand increases the chances of overstocking as the pharma product moves upstream in the supply chain. Due to the bullwhip effect, the forecast efficiency decreases as we move upwards in a pharma supply chain.
FIFO Management Difficulties: The unavailability of clean inventory data and forecast insights makes it hard to optimize the pharmaceutical inventory.
On-Time but NOT in Full: Partial delivery to patients in the pharmaceutical industry is as good as no delivery. Pharma teams need to promptly ship the remaining stock to meet the tight SLAs (Service Level Agreements). It leads to increased spending on the same number of products that go with pharmaceutical logistics, adding to the pharma supply chain challenges.
Part-load Damage Might Lead to Complete Load Rejection: Part-load can mean unnecessary wastage of the remaining good packages and added expense from a new JIT (Just in Time) full-load and on-time consignment.
How Can Data Driven Supply Chains Help You Maximize ROI?
Drug Theft and Counterfeiting
Drug theft and counterfeiting are some of the most serious pharma supply chain challenges that the pharmaceutical industry faces. In the current times, pharmaceutical supply chain leaders come across three main problems:
Drug identification: It is quite difficult to differentiate real medicine from fake ones, especially without a laboratory.
Tracing: Having mere information about a counterfeiting incident is not enough; tracing the good batch or consignment with the fake drugs is elemental to prevent the medicines from reaching customers.
Locating breaches: In the absence of real-time awareness at a package level, it is difficult to pinpoint the contaminated pharma product(s). For identifying and rectifying the contamination, pharmaceutical companies need to have real-time package-level visibility.
Real-time visibility has a significant role to play in countering these pharma supply chain challenges.
Here’s a Comparison of Three Visibility Technologies that Cater to Drug Counterfeiting
What is the Current Pharmaceutical Supply Chain Technology Solution for the Challenges?
The increasing complexities in the pharmaceutical supply chains require fitting solutions to cater to these challenges. The pharmaceutical data is locked in silos, and individual entities lack steady real-time data streams to adjust to disruptions quickly. Visibility into a pharmaceutical supply chain plays a vital role in understanding the gaps. In the past, pharma companies gained knowledge about a shipment solely from the communications received from various supply chain participants. The practice is better known as pharma track and trace. Let us understand it better.
What is Pharmaceutical Track and Trace?
Pharmaceutical track and trace can be defined as the process of finding out the current and past location(s) of a shipment carrying medicine, vaccine, or pharma products.
Today, many pharmaceutical companies rely on track and trace solutions to have visibility over their shipments. The most popular ways of tracking a pharmaceutical shipment are:
RFID (Radio Frequency Identification) tags
GPS (Global Positioning System) Tracking Devices
Temperature data loggers
The above devices only provide a part of the picture in a track and trace scenario, which are:
Location: Having mere information about the location of the pharmaceutical shipment isn't enough. You still need to have other information, such as the cause for delay, why a shipment stopped, or the duration of route deviation. With track and trace, this is rather difficult.
Condition of shipment: Data loggers can tell you the condition of the shipment, but only when it arrives at the destination or if the ground teams go and retrieve the data from warehouses manually. Moreover, with pharma track and trace, the condition data is shipment-level and lacks package-level granularity.
The next step is to move towards a pharmaceutical supply chain monitoring solution from track and trace, which offers a real-time and accurate picture of a shipment or inventory.
Podcast: Gráinne Lynch, Accenture Shares Serialization & Traceability Challenges in Vaccine Distribution.
What is a Pharmaceutical Supply Chain Monitoring Solution?
It can be defined as having access to useful, actionable insight, which helps plan in time and allows companies to take timely corrective action. Pharma supply chain monitoring solution uses a mix of purpose-built hardware solutions, along with advanced software and data analytics platform. The hardware includes lighter, purpose-built tracking solutions that are much easier to deploy and maintain. These are also termed IoT-based monitoring solutions, powered by advanced prescriptive AI (Artificial Intelligence). These solutions also need to have temperature monitoring features, a high accuracy, and certifications from the regulatory authority — aligning them with strict pharma supply chain needs.
The idea is to have clean, steady real-time data, make sense of data, and use it to make the pharmaceutical supply chain efficient and less susceptible to theft, spoilage, or damage.
Monitoring hardware also needs to have the ability to work as data logging devices when the connectivity is compromised — such as high seas or in flight. The solution must steadily record data to be transmitted to a centralized control tower when the shipment comes back to connectivity. Monitoring offers a verifiable audit trail and brings added control over a pharma supply chain.
What is the Difference between Pharmaceutical Supply Chain Monitoring and Pharmaceutical Track and Trace?
The biggest difference between pharmaceutical supply chain monitoring and pharma track and trace is that the former offers a much clearer picture of the condition of shipment and goods. Track and trace offer only partial information about your shipment, such as location or postmortem data from temperature data loggers.
The three biggest distinctions between the pharma supply chain monitoring and track and trace are:
Real-time, clean data: Pharma supply chain monitoring offers clean real-time data from purpose-built sensors, on the other hand, track and trace gives you postmortem data.
Package-level visibility: With pharmaceutical monitoring you can get granular with package-level visibility, whereas track and trace only offer shipment-level visibility.
Actionability: Pharma supply chain monitoring enables fast corrective actions, while corrective actions in track and trace are influenced by the speed of data stream.
Other major difference between the two can be listed as follows:
|Pharmaceutical Supply Chain Management||Pharmaceutical Track and Trace|
|Unified visibility across the chain of custody||Visibility efforts are trapped in silos|
|Clear Demand Signal||Delayed demand signal|
|It’s an infrastructure-lite solution||It’s an infrastructure-heavy solution|
The Evolution of Pharma Supply Chains: From Reactive to Active
The pharmaceutical industry is a dynamic entity; it has adapted to changing norms to deliver value for its patients over the years. The industry's rapid evolution means that companies need to upgrade their supply chain to stay competitive constantly.
Technologies and the speed of research for drug and vaccine rollout have made it a must-have for the pharma supply chain to align with the change and make it more efficient. The pharma supply chain has evolved into a digitized, highly consolidated process. But what most pharma companies still lack is a structured data capturing and evaluating process. Having a process like this helps in achieving greater visibility into a pharmaceutical supply chain. But end-to-end visibility is not easy to come by! It can be incredibly difficult to achieve a 360-degree view of your entire pharmaceutical supply chain when your operations are global.
But existing technologies like RFID tags, GPS trackers, or temperature data loggers fail to provide a holistic insight into the condition of the pharma supply chain. Such technologies offer passive data, and pharma supply chain leaders can only strategize for future shipments.
The next upgrade is to look for solutions that enable pharmaceutical players to have actionable insight into shipment and can act in time to minimize shipment delays, theft, or product spoilage. This active approach — enabled by IoT-based solutions — opens many avenues to deliver greater value to the patients by digitizing the pharmaceutical supply chain.
Here’s Roambee’s Answer to Generate Reliably Actionable Visibility at Scale.
What is the Need for an IoT-Based Pharma Supply Chain Monitoring System?
The industry 4.0 upgrade has brought new digitization opportunities for the pharmaceutical supply chain, delivering greater value to consumers and patients. You need IoT-based pharma supply chain monitoring systems to add greater efficiency and agility to your pharmaceutical operations and to meet transport partner SLAs. An ideal on-demand IoT-based monitoring solution will bring you:
- Package-level visibility across all modes of transport, helps you know about stolen goods, improve chances of recovery, and manage package segregation and multimodal shipments.
- Real-time location and condition data that help you make quicker and better decisions and prevent damages that occur due to a lack of timely information.
- Unified visibility across the chain of custody so that you can combat counterfeit drugs, have a clear line of accountability, and most importantly, have access to end-to-end data.
- Ensure proper pharmaceutical cold chain compliance by checking 21 CFR Part 11 data management and NIST (National Institute of Standards and Technology) certifications.
- An accurate demand signal to keep a check on safety stock, which means to have optimum stock availability without incurring more costs that disrupt your working capital and profit margin.
Case Study: COVID-19 Vaccine Maker Improves Cold Chain Monitoring & Teamwork.
Can a Pharmaceutical Monitoring Solution Plug the Gaps in the Current System?
A pharmaceutical supply chain has many more moving parts than a regular supply chain, which creates more chances of error and disruption. The complexity rises even further in a pharmaceutical cold chain — it's more exposed to risk and compliance issues. Even a slight excursion in the temperature of a vaccine or a delay due to additional dwell time at the airport could damage the product.
The wisest way to deal with it is to identify and diffuse such situations before they arise. But how? The IoT-based monitoring solutions are the answer to this problem. It can help you gain a good deal of visibility into your supply chain. The monitoring solution also helps your pharmaceutical company move away from a passive approach to an active approach.
Pharma supply chain monitoring is so much more than the aging track and trace solutions. The former is a solution that would capture complete information in real-time about the location and condition, without relying on anyone in the chain of custody, and transform the visibility data into actionable insight — a true end-to-end pharma supply chain monitoring and early warning system.
A pharma supply chain monitoring solution provides you with real-time, relevant, and actionable data against data loggers that only inform you about a situation post-event. It will act as an early warning system and provide live data and pre-emptive actionability to help reduce losses due to damage. It will give you better demand-supply predictability, wiser crisis management recommendations, and a healthy supply chain and market reputation for your brand.
Read: How to Champion Your Pharma Supply Chain Digitization in a Day.
How to Implement an IoT-Based Pharmaceuticals Supply Chain Monitoring System?
IoT-based pharmaceutical supply chain monitoring solutions have the potential to digitize your supply chain operations fully. And, outsourcing the monitoring duties to a company that can successfully aggregate and orchestrate custom-built IoT (Internet of Things) devices, data analytics, and AI capabilities under one roof can bring greater efficiency to your existing system.
Such a solution provider will help you digitize your supply chain and achieve clear visibility, which will bring in actionability.
Once your supply chain is digitized, you will not have to rely on bottom-up, third-party data for your pharma supply chain while being able to act on anomalies before they escalate through real, real-time, and relevant data.
An experienced visibility solution provider has the potential to completely automate and manage your supply chain visibility on your behalf. They will:
- Collect real, real-time, and relevant data — such as location, temperature, and condition —by using IoT-based sensors.
- Manage data through cloud platforms (analytics and AI) and use it for the better management of your supply chain.
- Integrate with your existing internal system and processes, so you do not have to deal with the heavy re-engineering of the process.
- Improve your ability to manage operations — Provide timely alerts and pre-emptive warnings to the right people to eliminate inconsistencies and disruptions owing to dependency on the human element.
Such a visibility expert will handle your pharma supply chain to not have to rely on third party pharmaceutical logistics partners and other data providers where there could be delays or room for data errors.
How to Improve the Pharmaceutical Supply Chain Efficiency?
Having real-time visibility into your pharmaceutical supply chain is crucial in achieving efficiency. It enables you to strategize and execute a much tighter supply chain, where you can stop disruptions before they happen.
There are many options to choose from when it comes to improving the efficiency of the pharmaceutical supply chain with visibility. But the question is choosing a visibility solution that satisfies the challenges of a pharmaceutical supply chain, and how it fits into the larger business goals.
When considering pharmaceutical supply chain monitoring as the ideal solution to cater to the visibility needs of a billion-dollar+ pharma company, the following can be considered:
- Ease of deployment: A pharmaceutical supply chain monitoring solution is an infrastructure-light solution that needs minimum maintenance and upkeep during a shipment's journey. Instead of assigning the monitoring duties to pharmaceuticals logistics partners, you have greater control over sensor deployment at distributor location.
- Superior Data Analytics: Having access to IoT hardware is good, but you need a superior data analytical capability to have a correct picture of your pharma supply chain. Having a software solution that brings you prompt, actionable insights help perfect pharma supply chain processes and minimize theft, compliance issues, spoilage, and drug counterfeiting.
- Unified Dashboard: To make the best of your pharmaceutical supply chain operation, you need to bring the various processes and entities under one umbrella. It includes having knowledge of the cold chain-specific warehouses, pharmaceutical logistics partners, package-level intelligence, knowledge about ETAs.
- Compliance Verifiability: With pharma supply chain monitoring, companies can bring in clearer partner SLA’s compliance verifiability. Any deviations can be quickly brought to notice and rectified accordingly.
Roambee can help you improve your pharma supply chain efficiency. Click to know more.
What is a Pharmaceutical Value Chain?
A pharmaceutical value chain can be described as a collection of progressive steps that deliver value to the end-user, consumers, and pharma companies. The pharma value chain includes processes like research, manufacturing, clinical trials, drug and vaccine rollout, delivery from pharma logistics partners to the patients, and how efficiently they work together.
When a pharmaceutical supply chain realizes its efficiency goals, companies have a much higher chance of delivering value to the end-users and optimize the pharma value chain, while boosting the revenue bottom lines. It is important for pharma supply chain leaders to analyze and consider the best monitoring solution to make the operations efficient for the value chain. Knowing what is happening in your pharmaceutical supply chain from door to door is key in achieving value chain. Therefore, improvements always begin with getting complete and prompt visibility of your drugs and vaccines.