Pharmaceutical Supply Chain Management: Fundamentals and Best Practices

The pharmaceutical supply chain controls a company's reach and reputation. Companies invest heavily in developing and maintaining robust supply chains to deliver their products on time. However, creating successful, flexible, and robust pharmaceutical supply chains requires certain fundamentals. Delve into this blog to learn about the essentials of supply chain management, gain insights into best practices, and understand potential challenges. Lastly, we have answered some frequently asked questions. Read the blog till the end to learn more!

Fundamentals of supply chain management

The fundamental components of pharmaceutical supply chain management are as follows:

Raw material suppliers

Raw material suppliers are the first and foremost component because, without raw materials, manufacturing is impossible. Raw material suppliers determine the amount of goods that can be manufactured. Consequently, companies must maintain a docket of suppliers and excellent relations with each other.

Manufacturers

Manufacturers include the R&D and production departments responsible for ideating and manufacturing the product. They hold an essential role in pharmaceutical supply chains because there would be no new products without them.

Wholesalers and distributors

Wholesalers and distributors connect pharmaceutical manufacturers to patients or healthcare providers. They act as middlemen and often manage the logistics and distribution of products within a specific region. They usually have extensive freight and logistic networks, allowing them to distribute products promptly.

Pharmacies and healthcare providers

These are the points of sale for pharmaceutical companies because these are the points at which the patient purchases the product. Pharmacies dispense the medication to patients, and healthcare providers prescribe them, resulting in sales. Both of these also perform quality checks to determine the efficacy of products, and upon this, the future prescriptions of a product are decided.

All companies must manage all stakeholders appropriately to ensure smooth pharmaceutical supply chain management.

Best practices in supply chain management

Here are some techniques for effective pharmaceutical supply chain management:

Embrace supply chain management technologies.

Digital transformation 4.0 in the pharmaceutical industry revolves around supply chain management technologies. Consequently, pharmaceutical companies should also integrate upcoming technologies such as intelligent inventory management systems, predictive analytics, real-time tracking, and risk management software to mitigate potential supply chain failures.

Understand regulatory requirements.

The pharmaceutical industry is among the most regulated industries in the world. Therefore, when setting up and managing supply chains, it is necessary to ensure they comply with the regulatory requirements of local and international regulatory bodies. Non-compliance can have legal and financial consequences such as product loss, warning letters, fines, and litigation.

Optimise logistics and distribution.

Pharmaceutical companies should invest time and money in making the logistics and distribution of their products more efficient, for example, establishing well-travelled distribution routes, consolidating shipments, and ensuring cold-chain integrity. By optimising logistics and distribution, companies may face fewer supply chain inefficiencies.

Foster relations.

Distributors, suppliers, wholesalers, regulatory authorities and healthcare providers are the company’s backbone because they are responsible for the sale. Therefore, pharmaceutical companies need to foster relations among all key stakeholders. This ensures all appropriate contracts are renewed on time, closing all communication gaps and maintaining mutual trust.

However, despite following the best practices in the supply chain, pharmaceutical companies face several challenges.

Challenges facing supply chain management in pharmaceuticals

Regulatory compliance

One of the biggest challenges in pharmaceutical supply chain management is regulatory compliance. The transportation and storage of medication and pharmaceutical products must comply with strict guidelines implemented by the FDA and EMA. This poses challenges when transporting products across large distances, such as from Asia to Europe. Furthermore, because regulatory guidelines are constantly changing, manufacturers have to update their procedures to stay updated and compliant continually.

Demand and supply fluctuations

The pharmaceutical industry faces product demand for various reasons (e.g., expiration, transportation delays, overstocking, etc.). Consequently, companies must adapt supply chain management to predict the market appropriately. Overproduction can lead to product wastage, which means financial loss, whereas underproduction can create demand issues. Manufacturers need to accumulate appropriate product qualities, which is a thin balance. They use sophisticated technologies to predict demand, but these are not fool-proof, and companies must account for fluctuations.

Counterfeit medication

Between 9% to 41% of medicines sold in low- and middle-income countries are counterfeit. Consequently, companies often have to face legal issues. However, companies must integrate sophisticated supply chain management technologies to combat counterfeits and track all consignments at every step. The integration and maintenance of these technologies are expensive and time-consuming but necessary.

Supply chain inefficiencies

Pharmaceutical companies need to develop solutions for supply chain inefficiencies. Delays or disruptions in transportation can result in medication shortages or stockouts. These can happen due to poor supply chain management, poor infrastructure, inaccurate timelines, poor coordination, etc. Consequently, companies need to use data and predictive analysis for pharmaceutical supply chain management.

Conclusion

Pharmaceutical supply chain management is a crucial task involving many stakeholders and variables. Consequently, even when companies follow the fundamentals and best practices in the supply chain, they can still face stockout, overstocking, and other issues. However, the solution to these challenges is planning. Integration of supply chain management technologies allows companies to track all consignments. The data from these supply chain management technologies can be used to predict future demand and manufacture and stock products accordingly. Ultimately, pharmaceutical supply chain management depends heavily on data, and it is ill-advised to make decisions not backed by data.

FAQs

1. Who is involved in the pharmaceutical supply chain?

Raw material manufacturers/sellers, distributors, wholesalers, pharmacies and healthcare providers are involved in the pharmaceutical supply chain.

2. What strategies are followed by pharmaceutical supply chain management?

All companies follow no specific strategy. However, most companies use supply chain management technologies to develop unique strategies to overcome general supply chain problems.

3. Can technology be used for pharmaceutical supply chain management?

Supply chain management technologies such as AI and data-driven analytics can predict demand and adjust supply accordingly. They can also determine potential failures or risks in the supply chains.