Improving Visibility of the Pharma Supply Chain: Best Practices and Technologies

The authors review current industry challenges and trends in managing global supply chains and propose best practices for improving visibility into those networks.
Aug 01, 2011

The age of a US-centric vertically integrated life-sciences industry has, for the most part, come to an end. During the past several years, executives have seen the need to move sourcing and manufacturing overseas in an effort to lower costs. In the process, many companies have recognized the potential of these emerging markets for creating and growing their own product pipelines and reaching new consumers. With these changes, however, come increasing demands on life-sciences manufacturers to manage and control their supply chains, which are now longer and more complex.

Axendia, an industry analyst and strategic consulting firm, recently conducted research on current trends in the life-sciences global supply chain. The study incorporated data from three sources: an advisory council, which provided background and perceptive on key issues; a survey of industry professionals; and individual interviews to review and refine the findings. Our research has shown the need for companies to shed the view of supply chains from a supplier–buyer mentality and to shift to intelligent supply networks that can provide information "on-demand." In this model, collaboration occurs during the entire product life cycle, from the raw-material supplier to the distribution company that delivers the final product safely to the end user. The model also supports the need for industry to view "competitors" as potential allies with whom information can be shared and leveraged to keep products safe and effective while managing costs. Finally, this model supports the need for industry and regulatory bodies to continue to work together to find practical and cost-effective solutions to ensure the quality, safety and efficacy of products.

Based on this research, titled "Achieving Global Supply Chain Visibility, Control & Collaboration in Life Sciences: Business Imperative, Regulatory Necessity," this article reviews current industry challenges and trends in managing global and outsourced supply chains (1). The authors also propose best practices, including the implementation of technologies, for improving visibility and control of life-science product supply chains.

New risks, new demands

Figure 1: Top concerns among industry related to supply-chain threats over next five years.
The pharmaceutical manufacturing industry was built around systems and procedures that focused on using safe and effective raw materials, and on-time and cost-effective processes for manufacturing and packaging. Manufacturers had little visibility of their products once they left their facility. Today, postmanufacturing activities such as counterfeiting, product diversion, and theft have industry executives concerned. More than 60% of Axendia's survey respondents—primarily industry executives—reported that they view counterfeiting as a high or moderate risk, and product diversion as a significant or moderate risk to their supply chains. Forty percent of all respondents that produce life-science products (i.e., pharmaceuticals as well as healthcare products) said that their company's products have been counterfeited or illegally diverted. Along these lines, Axendia survey respondents said they are concerned about the following supply-chain threats occurring during the next five years: counterfeits (44%), the lack of ability to trace products (43%), and product diversion (35%) (see Figure 1).

A recent report by the US Intellectual Property Enforcement Coordinator (IPEC) points to the US government's eagerness to address some of these supply-chain threats (2). The report, for example, recommends modifying the Food, Drug, and Cosmetic Act to require that manufacturers, wholesalers, and distributors implement a track-and-trace system to allow for authentication of products. The report also recommends the creation of a standardized electronic pedigree (ePedigree) using unique identifiers. Finally, the report calls for increased enforcement efforts to guard against the proliferation of counterfeit pharmaceuticals and medical devices. Although FDA has initiatives underway to require serialization of pharmaceuticals, specifically Standardized Numerical Identifiers (SNI) that are based on a serialized National Drug Code (sNDC), the US IPEC report goes further by recommending the implementation of ePedigree. Several states and countries have begun the process of mandating their own track-and-trace, serialization, and ePedigree systems, including California, Turkey, Brazil, and France.

Figure 2: Tracking technologies used by industry. RFID is radiofrequency identification. GPS is global positioning system.
For its part, industry has been and continues to work to address the growing threats of counterfeiting and product diversion by implementing tracking technologies. One- and two-dimensional barcodes are commonly used to track products (see Figure 2). Many companies are implementing track-and-trace systems even before legal requirements are enacted to prevent economic losses, but these systems are not yet in use by everyone in industry as a result of the lack of clear regulatory direction on standardization and other implementation challenges. For example, survey respondents identified the following hurdles: cost of the technology, difficulty of implementing the technology, lack of industry standards about the technology, and lack of regulatory guidance about the technology.

New approaches. While local and national governments work to clarify and harmonize requirements and guidance for supply- chain tracking systems for pharmaceutical products, industry can also take steps to make the best use of current technologies to better manage and control their supply chain. Axendia has identified three key approaches in this regard: increase on-demand visibility; change the view of your company's supply chain to a supply network; and strengthen collaboration.