Linking the Pharmaceutical Supply Chain

In a report by the Grand View Research, it was revealed that the European pharmaceutical market value size was valued at US$282.75 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 5.4% from 2021 to 2028. Furthermore, in a recent report issued by EY, the size of the Indian pharmaceutical industry is expected to be US$130 billion by 2030 and US$450 billion by 2047.

"The key growth drivers are likely to be increased healthcare expenditure, R&D investment into innovation and new technologies."

Despite increased overall healthcare expenditure outlook, focus on per capita and overall cost is going to bring the spotlight on more efficient and cost-effective supply chain operations. And to get a deep understanding of it, we spoke to Sanjay Banerjee, Director at 3SC, who has more than two decades of experience in the Pharmaceuticals, MedTech and Healthcare sector.

What are some of the biggest challenges?

Many challenges are industry specific that organizations need to factor in – Regulatory Requirements of the markets that they operate in (especially the developed markets like the US, EU, Japan and even the emerging markets), Post Marketing Surveillance requirements, F(irst)E(xpiry)F(irst)O(ut) in product distribution, IP issues (especially at the nearer to patent expiry) for both organizations with track record of Original Drug Discovery as well as generic players.

In addition to this, there are special requirements such as cold chain for specialized products and vaccines, New Product Introduction challenges. Greater focus on healthcare cost containment has its effect on drug pricing – not just in emerging markets but also in the developed markets.

What is the importance of supply chain management in this sector?

Reduced flexibility in drug pricing arising out of healthcare cost containment focus and increased competitive intensity from generics has its obvious effect on a more efficient and cost-effective supply chain planning and orchestration – from RM/ PM/ Intermediates sourcing and validation to production planning and scheduling to downstream inventory planning and distribution.

Factors like shelf-life, patent expiry, product market registration status add increasing complexity to this sector. Supply chain management has truly become a source of competitive advantage for market leadership.

How can emerging tech lead to transformation?

More accurate forecasting and planning with AI and advanced analytics (especially for new product introduction and managing patent expiry) is a definite source of competitive advantage.

"Digital technology and availability of both market and in-house data enables monitoring and anticipating granular demand – ‘personalized medicine’ will be the buzzword in times to come."

Technology enables greater visibility to product usage and surveillance. Greater visibility through tools like Digital Twin and Digital Control Tower not only make an organization’s supply chain management more responsive to market and customer needs but also enables more proactive anticipation and management of risk possible.

How can a company prepare for a digital transformation?

Preparing for a digital transformation is not just about introducing technology but also introducing a culture of change in an organization especially with respect to its business processes. This is mostly successful through not just on-boarding the necessary technological resources and manpower but also the involvement of leadership in steering change through example.

Having said this, specific to Supply Chain Management and Orchestration, it is important to foster a culture of ‘bottom-up’ and ‘top down’ collaboration especially for processes like forecasting. Organizations should begin with evolving a culture as well as introducing processes and systems for bottom-up data collection and standardization. Investment in an ERP system commensurate with the organization’s size and need cannot but be emphasized. In this respect, it makes eminent sense to invest in flexible and agile packages especially those that are available ‘off-the-shelf’ but that are speedily able to enable customization to one’s needs.

How is 3SC aiming to bridge the gap?

3SC has had a globally successful track record of addressing precisely the above needs of customers in this sector. In addition to this, with new initiatives, it is also trying to help pharma companies improve profitability while bidding for tenders, through usage of machine learning and advance analytics.

Afterall, in this industry, the one thing that matters is the availability of the product at the right time; in some cases, it literally becomes a matter of life & death. Therefore, having a seamless supply chain system is imperative not only for the business itself but also the kind of impact it can have as a result of the domino-effect.