PharmExec Blog

Report Reveals Global Supply Chain Fears

A new report published by Axendia is calling for better collaboration with suppliers, distributors, shippers, and regulators.

Global pharmaceutical outsourcing has become increasingly prevalent, but is creating a complex and risky supply chain environment that has pharmaceutical and life sciences executives on high alert, according to a new study co-sponsored by PwC and published last week by Axendia, a life science and healthcare analyst firm. The report reveals that 50 percent of pharmaceutical and life sciences executives said they see raw materials sourced outside of the US as the greatest vulnerability to the supply chain, and 61 percent view contaminated or nonconforming raw materials as the top threat in the next five years.

According to the report, Achieving Global Supply Chain Visibility, Control & Collaboration in Life Sciences: Business Imperative, Regulatory Necessity, the emerging economies of China, India, Mexico, and Brazil are becoming the most attractive places in which to sell medicines. In the drive to lower costs, these countries also are playing a more prominent role in the manufacturing and sourcing process. Yet, outsourcing drug development to manufacturers in developing nations carries significant operational risks.  Moreover, it is more difficult to manufacture and distribute biologics, which are more sensitive to the elements, than chemical entities.

Against this backdrop, Axendia’s survey of 112 industry executives from pharmaceuticals, medical devices, and biotechnology companies around the globe found:

• 94 percent said global product sales outside of the US will be increasing in the next few years, while 78 percent said global sourcing outside of the US will be increasing, followed by 76 percent who said their global manufacturing outside of the US will be increasing.

• Threats that were considered limited or small-scale as few as 10 years ago, such as drug counterfeiting and illegal product diversions, are becoming major concerns, with 44 percent and 35 percent of industry executives, respectively, citing them as business risks in the next five years.

• Nearly 60 percent of industry executives said they are concerned about the willingness of suppliers to provide information to address regulatory requirements, and 44 percent are concerned about their distributors’ willingness to provide information required to meet these requirements.

• The availability of track and trace technology to enable the industry to gain better control over the supply chain exists today.

However, industry executives identified four hurdles to implementing such technology: cost, difficulty of implementation, lack of industry standards, and lack of regulatory requirement and guidance.

According to the report, all of these forces are driving the industry to develop a supply chain that is more extended, globally dispersed, and virtual. However, the ability to control the safety, efficacy, and effectiveness of products will continue to be a challenge until the industry implements systems that can provide real-time global visibility into the supply chain, including practices and information from suppliers, distributors, shippers, and contract manufacturers.

“In order to meet the demands of globalization, the pharmaceutical supply chain will need to become much more flexible, with different manufacturing routes and distribution channels for different kinds of products,” said Wynn Bailey, Pharmaceutical and Life Sciences Advisory Services Partner, PwC.

To access the report, click here.

This entry was posted in Biotech, Emerging Markets, Global, Supply Chain and tagged , , , , . Bookmark the permalink. Trackbacks are closed, but you can post a comment.

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