Pharmaceutical SCM distributes medical supplies in the global market and faces various types of issues and challenges like; disrupted SC network, complicated regulatory requirements, and volatile demand. That’s why businesses and companies are putting emphasis on effective pharmaceutical SCM practices. Today, we’ll discuss supply chain management in pharmaceutical industry; its definition; steps involved in the process, risk factors, and managing disruptions.
What is Supply Chain Management in Pharmaceutical Industry?
Supply chain management in pharmaceutical industry starts with the production and manufacturing of medicines and delivering the medical supplies to the end consumers. Some of the main elements and stakeholders involved in pharmaceutical SCM in the US market are as follows;
- Healthcare providers
- Wholesale distributors
- Packaging companies
- Medicine manufacturer
The SCM process in the Parma industry comprises various steps with the objective of making sure to safely deliver the products and goods to the end consumers. For instance, Pharma manufacturers need the approval of the FDA (Food and drug administration) agency; before manufacturing or selling the medicines and drugs to the customers and patients.
Process of SCM in Pharmaceutical Industry – Steps
Some of the main steps involved in supply chain management in the pharmaceutical industry are as follows;
Production & Manufacturing
Manufacturing and production is the first step in the pharmaceutical SCM process, and it comprises developing medicines and drugs in the production units. A study by IFC (International Finance Corporation) said that you could divide industrial-scale production into two stages;
- Primary – manufacturing of active ingredients
- Secondary – converting drugs into products for usage and administration
Whether you are producing OTC (over-the-counter) or POM (prescription-only medicine); pharmaceutical producers employ raw supplies, equipment, technology, and other relevant material for the development of medicines like aerosols, ointments, creams, liquids, capsules, and tablets.
Drug-producing companies send pharmaceutical products to the wholesale distributors. They procure medicines in bulk quantities from the manufacturing companies for storage, and then further distribute them in various healthcare markets locally and globally. According to an estimate by the Common Wealth Fund, the distribution of approximately 92% of prescription drugs is through distribution. The repackagers would repackage the medicines and drugs into smaller quantities before selling them in the mass healthcare market.
Pharmacies are at the end of the SCM network where customers receive the products. The distribution process may be different healthcare markets and the type of pharmacy where you are operating your business. However, it is significant that the pharmacies should deliver the right products to the right customers at the right time; whether it is a healthcare facility, hospital, or the delivery market.
Customers are at the bottom of the SCM process because they receive and consume the prescribed medicines or drugs from hospitals or pharmacies. Or they bury over-the-counter medicine from retailers, department stores, supermarkets, and drugstores.
Packaging is one of the significant steps involved in the pharmaceutical process; it outlines the system, design, and material for labeling, storing, packaging, and distributing the medicines to the next point. The packaging and labeling should be correct and protective and comply with the regulations and standards of the FDA. Effective packaging helps you in the following ways;
- Decreasing medical errors
- Protecting key products
- Following regulations and standards
- Decreasing cost
Risk Factors for SCM in Pharmaceutical Industry
Some of the main risk factors involved in the supply chain in pharmaceutical industry are as follows;
Complicated SC Network
Millions of people rely on the availability of medicine all the time across the world. The SC network develops connections of manufacturers and producers with consumers, doctors, pharmacies, and hospitals.
The latest tech development and therapeutic approach compel manufacturers and producers to distribute products and medicines, and it further amplifies the complexities. However, the introduction of innovative products in various dosages requires a new delivery channel to safely deliver the products to the customers in the distribution.
Various industry standards, regulatory authorities, and government institutions are regulating biotech drugs and medicines throughout the SC network. The counterfeiting of medicines and drugs is the main threat to the Pharma companies. Limited knowledge of regulatory standards and requirements would cause a delay in product delivery; cheap counterfeiting would jeopardize human lives and the company’s brand name and reputation.
There is a great network of packaging, drug suppliers, production, and manufacturing facilities in the Asia-Pacific region. According to an estimate by the FDA, approximately 72% of the US API (active pharmaceutical ingredients) manufacturers are from overseas; the remaining 28% of the API producers are from the local US markets. It shows the high reliance on overseas markets, various geopolitical factors, and weather conditions could cause delays and disrupt the SC network.
Managing SCM Disruption in Pharmaceutical Industry
Let’s discuss how to manage supply chain management disruption in pharmaceutical industry;
Securing Key Supplies
It is significant to regularly analyze the end-to-end SC network for geopolitical, regional, and other types of risk factors. You should predict various types of conceivable and possible scenarios develop the risk reduction plan, and maintain a stock of critical supplies.
Analyzing Partner’s Influence
You should make sure that your suppliers and vendors are complying with the regulatory standards and requirements. If you develop a better risk portfolio, then it allows you to analyze your partners and stakeholders in terms of working conditions, cybersecurity, sustainability, and quality. Developing an action plan that has the capability of monitoring in real-time and transparent suppliers would help you to respond to market changes.
It is significant to ensure the transparency and visibility of your logisticians, distributors, manufacturers, producers, suppliers, and vendors. If you are aware of various types of incidents and their impact on your business, then you should analyze the irregularities of companies in your SC network. However, if you identify any type of negative trend, then you should take action if it is convenient.
Conclusion: Supply Chain Management in Pharmaceutical Industry
After an in-depth study of the supply chain management in pharmaceutical industry; we have realized that SCM plays a critical role in the healthcare industry. If you are learning about SCM in the pharmaceutical and healthcare industry, then you should keep in mind the abovementioned elements, risk factors, and how to manage disruption.
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