Why we need an integrated ‘end-to-end’ Pharmaceutical Supply Chain

Pharmaceutical supply chain management has evolved just in line with the advances in basic principles of supply chain through the three phases as; inventory push (1960-1975), customer pull (1975-1990) and the last phase is now focused on managing relationships with customers (1990 to date) [1]. With these advances there has been increased understanding of the need to manage relationships and streamline flow of products, money and information. Of utmost relevance of these flows is information which will determine the flow of products and ultimately the flow of funds.

Pharmaceutical Supply Chain ideally spans all the stages of product flow from determination of quantities to produce, production, distribution to end consumer and flow of money & information back to the pharma company. Additionally, the pharmaceutical supply chain defers from other supply chains because of the strict regulations, reimbursement models, pricing policies, third party logistics, product diversity, difficulty in forecasting needs & a products life-cycle among other constraints. However, with these there still is the need to ensure production meets needs and products get to end consumers (patients) at the right time, in the right quantities and quality to ensure positive outcomes on use. There is therefore a need to improve the efficiency of the pharmaceutical supply chain and I believe that in this next phase, an integrated model would be the answer. This is why?

First, we acknowledge that with efficiency in the system, there are going to be declines in buffer stocks, reduced lead times, increased sales with almost zero stock outs where there is need, and improved customer experience. Considering all the players in the pharmaceutical supply chain have a role and stand to gain with the efficiency, it’s important to augment their functions for ultimate efficiency.

An integrated pharmaceutical supply chain will demand of manufacturers, distributors, retailers, health facilities and healthcare providers to adopt an integrated supply chain information management system (SCIMS). Through such a system, orders are raised from within the system enabling the producers to determine uptake from consumer level based on flow metrics thus can forecast the needs for production. Additionally, with the flow of information, this data can be used as a resource in assessing efficiency which can aid in making financial projections, drawings etc. On this account, Equity Bank[2] is currently in the process of establishing a novel financing mechanism for pharmaceutical inventory backed with evidence of operation and reliability through information streams. This is meant to address the funds flow component which not only affects the retail end of pharmaceutical consumption but is cascaded upwards to the manufacturers who needed money to continue production.

The integration of pharmaceutical supply chains will serve as a mechanism to improve on traceability of products both on the shelves and on transit. Cognizant of the fact that some pharmaceutical products call for special handling, freight and storage conditions, this real-time data can help monitor product integrity and assure patients that at each stage of the pharma supply chain their medicine has been handled appropriately and they will receive the desired product in the right condition.

Globally we are faced with a surge in illicit trade of medicines with influx of counterfeit and sub-standard pharmaceutical products. This majorly is a challenge in the global south[3] with week border controls which is coupled with movement of pharmaceutical products meant for different markets (countries) ending up in other states affecting local territorial sales, product integrity and risks legal action against producers who are not partisan to the whole operation. The ultimate impact is on the patient especially where different environmental conditions had different specifications for storage and handling of the product. This ends up with ineffective product being taken by patients compromising quality of care, risking company reputation and local distributors lose in sales when illicit trade brings in cheaper products into the market. It also contributes to pilferage of products subsidized through aid agencies for special category of states.

An integrated pharmaceutical supply chain in this account provides means of guaranteeing products are being handled by the authorized dealers through the appropriate channels within legal territories and in compliance with local regulatory provisions.

Blind spots in the distribution chain also lead to expiries and stock-outs in special circumstances. This hinders transfer of products from one warehouse/dealer to the next one leading to a compromise on the overall access of pharmaceutical products where they are needed. In certain cases production is initiated to cover for the needs while other products are in storage in alternative sites. These can be addressed through an integrated supply chain with traceability and product transferability features intact.

With the current wave to improve regulation of pharmaceutical products in the region i.e. through the African Medicines Regulatory Harmonization (AMRH), IGAD Medicines Regulatory Harmonization and East African Community – Medicines Regulatory Harmonization frameworks under review and improvement for adoption, an integrated pharmaceutical supply chain will serve the governments with access to data on the pharmaceutical products getting into their countries, simplify process of product registration applications, improve tax collection through legitimate flow of products in the integrated system with no black market dealings. The overall outcome will be an efficient and sustainable pharmaceutical supply chain that serves the needs of governments, manufacturers, healthcare providers and patients.

Different initiatives have been in operation to improve accessibility and availability of essential medicines to resource constrained countries such as PEPFAR, Presidents’ Malaria Initiative, and Global Fund to Fight AIDs, TB and Malaria among others. These have made strides but with them new challenges are being faced and the adoption of an integrated supply chain will guarantee their impact is measurable and accounted for, limited outflows and improved patient outcomes in care. Sustainable development of a nation greatly depends on the health of individuals, let’s do our part to achieve this.

The next phase of pharma is integrated and some companies are already looking into this option such as MERCK under the Access Accelerated Program and Sanofi Genzyme.

Let me know what you think on the comments section about an integrated pharma supply chain.

[1] Information flow in the pharmaceutical supply chain: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4673962/

[2] Equity Group Holding Trade Financing: https://equitygroupholdings.com/ke/borrow/trade-finance

[3]Africa’s drug crisis stimulated by poor policy: https://enactafrica.org/press/press-releases/africas-drugs-crisis-stimulated-by-poor-policy