The evolution of Pharmaceutical supply chain

The evolution of Pharmaceutical supply chain

The pharmaceutical industry is facing many challenges caused by an aging population, the increasing cost of healthcare, pressure from governments to lower the price of drugs, barriers to entry in emerging markets, wider adoption of generic drugs, increased costs of R&D and decreased number of approved drugs. These are just some of the many challenges creating pressure on the profit margin of pharmaceutical firms.

According to a recent survey conducted in 2015, only 39% of pharmaceutical respondents see the supply chain as an equally important part of business success like R&D, sales and marketing. In comparison, 68% of FMCG/CPG respondents understand the importance of supply chain management.

To survive and succeed in this cut-throat competitive age pharmaceutical players need to acknowledge the vital role of supply chain management and focus on improving their supply chain processes.

Common complexities faced by Pharmaceutical industry

Common complexities faced by pharmaceutical industry are: poor inventory management, lack of coordination, human resource dependency, ineffective order management, assumption based forecasting, expiration, warehouse management and shipment invisibility. In nutshell lack of coordination in the global pharmaceutical delivery supply chains is the root problem affecting all other issues.

So what’s next?

Earlier, the aim of supply chains was to meet regulatory requirements and avoid stock-outs, even if that meant keeping high levels of stock and then writing-off a significant amount of expired inventory. In order to avoid such losses and ensure their revenue and profit growth, pharmaceutical companies have to transform and reinvent their supply chain. Some changes are already in progress. For example, efficiency is being increased through rationalization and outsourcing of non-core activities.

The future pharmaceutical supply chain will have to be redesigned to compete with low priced generic drugs, handle higher complexity of new sales channels, and take advantage of higher margins for critical drugs with low demand. Currently, operational capabilities and efficient cost management are the critical skills needed to succeed. These below mentioned five strategic steps can enable pharmaceutical companies to develop them:

  • Accurate demand planning
  • Optimum inventory management
  • Agile order management system
  • Effective distribution management
  • Real time and accurate business metrics

Almost all of the above mentioned strategic steps can be implemented significantly faster and much more cost effectively by adopting advanced supply chain management solution. Inspite of its multiple modules an advanced supply chain management solution comes with many add-ons like web based solution with cloud mobility and SAAS allow to customize it as per your specific need and its ability to integrate with any legacy ERP system will produce real time insights from every corner of the business will help strategy creators in effective strategy building.

An agile supply chain management solution functions extend to all pharmaceutical supply chain interdependencies. This unified approach integrates manufacturers, researchers, distributors, software systems, consultants and channel supply partners to meet emerging customer expectations. It anticipates, understands and addresses regulatory expectations and best practices, ensuring product integrity in every phase of the pharmaceutical supply chain. With 24/7 online data access, clients can monitor inventory and tracking information in real time for total transparency.