The following is a Supply Chain Matters guest blog posting contributed by by EcoVadis CEO and co-founder Pierre-Francois Thaler.
Personalization is driving change in almost every industry, even pharmaceuticals.
Personalized medicine is poised to disrupt the future of drug manufacturing, bringing with it challenges that go beyond the walls of labs and hospitals. As a means of definition, the industry defines personalized medicines as targeted drugs that leverage genomics to move beyond one-size-fits-all drugs to those that are prescribed for individualized care. Distribution processes that have remained relatively static for years are now being upended by breakthroughs that allow for customizable treatments for individual patients based on a variety of biological factors.
For suppliers, this spells complexity: they must now simultaneously create many different medications at once for a few people versus mass manufacturing a few generic drugs for many.
While this is a meaningful breakthrough for the medical community, it presents a challenge to pharmaceutical and drug supply chain leaders. To meet the complexity associated with the manufacturing and distribution of personalized medicine, the industry must first address the structural supply chain reforms that will be needed in this new era of treatment.
As healthcare journalist Martin Barrow stated,
“Present pharmaceutical supply chains are simply not that flexible. Big pharma is global. The supply chains feature plants around the world, located on different continents from the compounds being used to create the drugs. Add to this the complexity of global distribution networks and we start to see that the logistical transformation needed to speed up this latticework of sources and suppliers will pose a huge challenge.”
In his commentary, Barrow further cites Richard Archer, chairman of the Engineering and Physical Sciences Research Council Centre for Innovative Manufacturing in Regenerative Medicine as warning that: “most of the existing manufacturing facilities and supply chain will be obsolete within the decade.”
In a more complex supply chain, there will naturally be operational and financial risks as a result of the potential loss of transparency such as payment delays and lack of inventory visibility. The pharma industry is susceptible to special risks associated with medicine, including but not limited to:
- Waste management – Ensuring that all parties are responsibly disposing of potentially harmful chemicals
- Counterfeiting – Eliminating the creation and distribution of knockoff pharmaceuticals
- Delivery to customer – Safeguarding against prescriptions falling into the wrong hands and being sold illicitly
This complexity poses significant problems for supply chain leaders who already have difficulty tracking their suppliers. In a March 2017 EcoVadis survey of 360 global procurement leaders, only 15 percent of organizations said they have complete supply chain visibility the corporate social responsibility and sustainability performance of both tier one and two suppliers, and only six percent reported full visibility into tier three suppliers and beyond. The visibility into tier one suppliers and beyond allows organizations to determine if their suppliers are engaging in fair labor contracts, employee health and working conditions, sustainability performance tracking and ethical sourcing of parts and raw materials.
The need to scale up sustainable procurement programs to increase the depth of supply chain visibility is evident. In the pharmaceutical industry, the risks associated with a lack of visibility will be compounded as personalized medicine necessitates an even more intricate network of supply chain partners, creating a web of manufacturers and distributors that organizations will need to monitor. Companies that see the importance of supplier visibility – one of the top challenges facing procurement leaders across industries today – will be the most prepared for this changing landscape.