6 Ways to Manage Pharma Supply Chain Risks

The pharmaceutical supply chain today runs on a complex web of raw materials, manufacturers, regulatory compliance and logistics.

While this network ensures that life-saving medicines reach markets worldwide, it also creates latent risks that can disrupt even the most meticulously planned operations.

Understanding and mitigating these risks is paramount for pharmaceutical companies to enable them to deliver results for customers and shareholders.

Pharma supply chain risks include the following unique challenges:

• Specialized Products: Delicate drugs with stringent temperature and handling requirements need unwavering focus on control and precision at every point of the supply chain — from sourcing to manufacturing to logistics.

• Global Interdependence: Complex pharmaceutical supply chains create dependencies susceptible to global fluctuations and unforeseen disruptions.

• Rising Costs: Inflation drives up the cost of everything — from raw materials and energy to transportation and labor. Strict regulations often prevent pharma companies from passing these cost increases on to customers, particularly in healthcare systems with price controls. This can create a dangerous squeeze, forcing companies to strike a balance between absorbing inflated costs, compromising quality or limiting supply.

• Regulatory Labyrinth: Ever-evolving regulations require meticulous adherence. Complying with them without expert guidance can result in costly delays, product recalls and even legal repercussions.

• Counterfeiting Threat: Counterfeit medicines infiltrate legitimate channels, posing a constant threat to public health and brand reputation.

• R&D Pipeline: According to industry group PhRMA, the average time to bring a new medicine to market is 10-15 years. This process requires significant investment from pharma companies and external disruptions can delay or derail the clinical trial process.

In addition to these challenges, potential disruptions that add to pharma supply chain risks include:

• Supply Volatility: Resource scarcity, trade disputes or natural disasters can trigger shocks, creating missing ingredients and idle production lines. Robust forecasting and alternative sourcing strategies thus become essential for weathering these storms.

• Manufacturing Disruptions: From natural disasters halting operations to cyberattacks compromising critical systems, any hiccup in manufacturing can trigger cascading delays and shortages. Investing in redundancy, preventative maintenance and agile production strategies is crucial for minimizing disruptions and ensuring uninterrupted flow.

• Logistical Logjams: Port congestion, transportation delays and temperature-controlled challenges can transform swift delivery into frustrating stagnation. Optimizing shipping routes, deploying real-time tracking and building collaborative partnerships with logistics providers is vital for ensuring medicines reach patients on time and in optimal condition.

• Data Shadows: Lack of real-time visibility into inventory levels, shipment locations and potential risks leaves pharma companies vulnerable to disruptions. Implementing robust data analytics platforms, like the ones found in modern AI-powered supply chain solutions, and fostering information sharing across the supply chain is essential for illuminating hidden vulnerabilities and proactively mitigating risks.

Also read: How GEP Helped A Pharma Giant Transform R&ED Procurement Infrastructure and Reduce Drug Development Time

Approaches to Mitigate Pharma Supply Chain Risks

• End-to-end Inventory Visibility: Obtain comprehensive visibility into inventories, along with short- and long-term forecasts, supplier information and delivery status through modern supply chain management software. Real-time data into materials and inventory offers pharma companies the ability to respond to potential disruptions and mitigate risks.

• Predictive Insights: Leverage advanced data analytics powered by AI-first systems to address potential disruptions before they materialize. Such insights enable companies to anticipate supply shocks, equipment failures or logistical logjams before they occur, enabling proactive mitigation strategies and ensuring uninterrupted product flow.

• Collaborative Network: Forge strong partnerships with suppliers, distributors and regulatory bodies. Create a robust risk mitigation network, enabling information sharing, building redundancies and creating early warning systems. This collaborative approach strengthens the entire pharmaceutical ecosystem.

• Third-party Risk Assessment: Proactively identify and manage third-party risks to mitigate vulnerabilities and ensure continuity. Track and monitor progress of risk mitigation initiatives through dashboards and establish robust governance and reporting processes to ensure continuity in the event of a supply chain disruption.

• Strategic Cost Management: Develop a strategic cost management program to help identify and take out costs across direct materials, SG&A and R&D. Doing so can free up working capital that can drive growth.

• Mergers & Acquisitions: Accelerate innovation through strategic M&A activity. M&As are critical to growth in the pharma sector, and having a strategy in place can improve product innovation and allow companies to expand and tap into new revenue streams to maximize profitability.

Conclusion

Through a proactive approach built on clear risk identification, data-driven insights and collaborative networks, pharma companies can plug their supply chain vulnerabilities and build resilience and agility. Pharma supply chain risk mitigation is vital to ensuring uninterrupted access to life-saving medicines for patients worldwide.

Mitigate your pharma supply chain risks with GEP.