Global supply chain disruptions have reached unprecedented levels in the pharmaceutical industry, with a recent GlobalData survey revealing that industry executives identify supply chain challenges as the trend expected to have the greatest impact over the next 12 months. The disruption since the Covid-19 pandemic has been particularly severe, compounded by geopolitical turbulence that has reinforced existing problems.
According to GlobalData, global supply chain disruptions have become both worse and more frequent over the past decade. These challenges are creating significant pressure on pharmaceutical companies as they navigate regulatory complexities, demand forecasting difficulties, and an influx of novel therapies that require specialized handling and distribution.
Regulatory and Operational Complexities
The pharmaceutical industry faces mounting regulatory complexity due to geopolitical tensions and divergent regulations between countries. Brexit has led to differing regulations between the UK and EU, complicating the transport of pharmaceutical materials across borders. In the US, White House announcements regarding "most-favoured-nation" drug pricing, alongside drug price constraints in the Inflation Reduction Act, are squeezing manufacturer profit margins.
Biopharmaceutical products, particularly cell and gene therapies, often have strict requirements for storage conditions, necessitating robust cold-chain logistics. These therapies are not only time-sensitive but many also require ultra-cold storage solutions, posing significant challenges for maintaining supply chain integrity.
The industry also faces a shortage of qualified personnel, which can impact the ability to scale production and maintain quality control. This shortage is particularly acute in specialized areas such as cell therapy administration, where a highly skilled workforce is essential.
AI and Machine Learning as Game Changers
AI's role is proving pivotal in addressing these challenges. By automating supply chain tasks, intelligent automation systems can monitor inventory levels in real time, manage suppliers and optimize product sourcing. Machine learning tools can analyze vast datasets to improve clinical and commercial supply chains across various metrics, including costs and time.
AI-driven predictive analytics can create optimization plans and schedules, helping organizations anticipate issues before they arise. AI tools can detect anomalies in data, enabling proactive adjustments in supply chain operations to minimize disruptions and maintain compliance with regulatory standards.
A particularly promising application is in drug supply forecasting for clinical trials. Getting forecasting wrong can result in either overproduction or critical shortages at trial sites. AI tools can analyze real-time enrollment and patient dropout rates, and combined with historical data from similar trials, generate precise demand forecasts to significantly lower costs and reduce wastage.
Digital Business Networks and Collaboration
Following other industries like high-tech and consumer goods, pharmaceutical companies are focusing on connecting and collaborating using digital business networks. A digital business network serves as the foundation of a multi-enterprise supply chain, connecting all outside supply chain partners electronically via the cloud.
Unlike the old model of creating point-to-point connections, this creates a true, multi-tier network that connects all partners and allows them to work in sync. This enables both end-to-end visibility and the collaboration needed to support business interactions among different actors.
Advanced Demand Sensing and Quality Control
The most innovative pharmaceutical companies are capturing vast amounts of demand-related information, feeding it into sophisticated demand sensing solutions to better predict true demand. This includes going all the way to point-of-sale data or even using signals like weather forecasts or flu trends via social media.
For quality control, pharmaceutical companies need to ensure end-to-end traceability as external parties like contract manufacturing organizations are increasingly involved. This requires connecting to CMO manufacturing execution systems to capture relevant data at all stages of production, providing granular factory transaction visibility to track material flows, lot genealogy, processing steps and associated parameters.
Technology Solutions and Implementation
SAP's Intelligent Clinical Supply Management and Cell and Gene Therapy Orchestration solutions provide life science companies with tools to optimize supply chains. SAP Intelligent Clinical Supply Management simplifies clinical supply management by offering real-time insights, end-to-end visibility and improved collaboration, integrating clinical trial parameters directly into supply chain planning.
The benefits of implementing these advanced supply chain strategies include up-to-date, end-to-end supply chain visibility creating "one version of the truth" shared across all partners, full quality control of CMOs as required for traceability and serialization, higher on-shelf availability generally with lower inventories, and through smarter channel allocations, better margins and ultimately higher market share.
As the pharmaceutical industry continues to evolve, companies that embrace AI and digital transformation technologies are positioning themselves to lead in operational excellence and innovation, creating more agile supply chains that can respond quickly to market fluctuations and regulatory requirements.
