Securing the Pharma Supply Chain: Current Challenges and Key Steps

Mar 17, 2017

The pharmaceutical industry is evolving quickly. On one hand, pharmaceutical companies are seeking to reduce R&D costs. On the other hand, thanks to the digital revolution, patients are demanding more personalized care through a multitude of different touch points. And in the middle of it all, compliance requirements are becoming increasingly stringent, while a growing global aging population further burdens supply chains and logistical planning.

In an intricately linked world of researchers, production facilities, logistics providers, care practitioners and patients, it becomes increasingly difficult to balance these various demands without sacrificing speed or security. Depending upon the resources of today, it may become increasingly difficult to keep up with the demands of tomorrow.

The current challenges

More than ever, there is a need for speed. Consumers are demanding more personalized and high-tech care, delivered in-home and when convenient to them. They are requiring direct contact with the providers in the care continuum in a way unprecedented in this industry. In turn, life sciences and healthcare companies are seeking to accelerate their speed to market, yet must do so against strict regulatory requirements that often limit rapid technological change.

Cost also remains a huge barrier to achieving rapid change. Drug development alone requires an enormous amount of time and money. According to PwC, the cost of developing a new molecule is anywhere between $75 million to $4 billion. While there is huge pressure on pharma companies to deliver through their R&D budget, recent research suggests that only half of them are adopting the right digital tools to achieve this.

Underpinning all of this is a lack of integration behind many supply chain components. Today’s top drugmakers are huge conglomerates, made up of divisions, facilities and research arms located across multiple geographic regions and operating in complex partner ecosystems. To complicate matters even further, partners may own entire segments of the value chain. Inevitably, data flow is complex and prone to delays. Networks are open to vulnerabilities, and compliance culture is often mismatched.

Patient centricity is a new directive for many life sciences companies. The implications are quite pervasive and influence many of the factors described above. If the industry is to become truly outcome-oriented, then the security of patient data in digital supply chains must be managed in a robust and scalable way. This is equally true in both emerging as well as more advanced economies.

How security can help

In recent years, the sector has adopted a number of strategic moves to improve its efficiency, including outsourcing and partnerships. For example, outsourcing clinical trials has allowed pharma companies to reduce their overhead costs, while collaborating with third-party logistics and distribution providers has allowed them to expand and extend existing supply chains. Such collaboration has reduced costs and improved output. However, it has also opened the door to significant risk.

Cybersecurity has become a huge issue for many companies, and the pharma industry is no exception. Attackers are after all kinds of data, from intellectual property, to private patient health data, to commercially sensitive information. As a result, the digital supply chain is a key target, due to its intimacy with all of the players within the lifecycle. For pharma companies, successfully mitigating this risk demands they protect their entire ecosystem.

The potential ramifications of a breach can be quite damaging. Along with downtime, loss of revenue and loss of consumer trust, human life is ultimately at stake. In addition, a lack of security can result in the spread of counterfeit drugs. This remains a significant issue in many countries. For example, according to the Pharmaceutical Security Institute, the number of worldwide counterfeit drug incidents increased from 196 in 2002, to 2,108 in 2012. Current estimations of the worldwide cost of counterfeit drugs are in the range of $75 billion. In Europe alone, counterfeit drugs cost the pharma industry over €10 billion each year.

New regulations are helping to combat this challenge. From February 2019, all prescription medicines in the EU must come with a security feature allowing drug dispensers such as hospitals, pharmacies or healthcare providers, to verify their authenticity. In the US, the FDA’s Drug Supply Chain Security Act calls for the pharma supply chain to create an “electronic, interoperable system to identify and trace certain specific drugs as they are distributed in the United States”—with compliance expected to be completed by 2023.

While regulations are becoming more onerous, pharma organizations should not see this as a threat. Instead, they should see compliance as a reason to improve integration across the entire pharma supply chain. By ensuring adherence early on, forward-thinking companies will reap significant business value from increasingly optimized networks. Success also requires an inclusive approach to security. Pharma companies must consider weaknesses at all points in their relationships, while remediating their own cybersecurity risks and dependencies.

Ensuring the security of the supply chain is just one way drugmakers can cope with the market challenges facing them today. Safeguarding the security of digital patient data is also a significant priority. Making sure these chains are efficient, responsive and integrated enough to support these journeys is just one step toward this overall aim.

Chain gains: Key steps

However, creating a truly integrated, global supply chain operation is no easy task. There are many critical steps necessary to ensure an agile, responsive and streamlined supply chain.

First, it is important to establish an agreed-upon strategy. This involves demonstrating an understanding of a company’s position in the market, where it wants to go, how to operate within local/regional regulations and how this is likely to affect the operational efficiency of the company’s infrastructure.

Second, there needs to be a strong coalescence around this strategy, which starts from the top and funnels down throughout the organization. The company’s leadership must support the strategy laid out in the previous step, ensure that any regional teams are set up in a way that aligns within that strategy and facilitate providing individuals with the training and tools needed to execute. If any individual office or location is permitted to establish its own process, global integration will fail.

Third, a wholly integrated global supply chain is dependent upon establishing and using common IT systems and technologies. From warehouse management systems to enterprise resource planning (ERP) platforms and from product and location labeling to quarantine procedures, there must be standardized processes used both internally and externally by partners and vendors.

Finally, in the wake of constantly changing market dynamics, industry evolution is unavoidable. When this happens, it is important to not only look at the change happening to the industry, but focus on how one can improve operations to adjust to these oncoming changes. Each enhancement should provide additional avenues for building flexibility into one’s processes, as well as seek out ways to leverage the latest technology tools and services available.

Once enabled, these agile and flexible processes permit life sciences companies to operate more innovatively and, most importantly, deliver more value to the customers they serve—traits paramount for future success.

Jeff R. Livingstone, PhD, is Vice President and Global Head of Life Sciences and Healthcare at Unisys Corporation. He can be reached at [email protected].

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