Pharmaceutical

Managing Pharmaceutical Discounts, Rebates Chargebacks

Managing Pharmaceutical Discounts, Rebates and Chargebacks

Managing Pharmaceutical Discounts, Rebates and Chargebacks 700 500 Xcelpros Team

Introduction

The way pharmaceutical firms price their drugs and administer rebates and discounts, has put the industry in a potential governmental spotlight.

Key topics likely to be investigated include:

  • How discounts are set
  • How drug makers establish and monitor rebates
  • How pharma firms report their pricing details

Background

Around the world, pharmaceutical manufacturers are under increased pressure from governments and the public to reduce consumer drug prices. In some cases, the amount consumers pay for medicines has skyrocketed. One example cited by Endocrine.org is the cost of an insulin dose rising from $170 in 1987 to more than $1,400.

A 2019 Time magazine article attributes rising consumer drug costs to a complex drug supply chain. Pricing is set by a combination of pharmaceutical manufacturers, pharmacy benefit managers (PBMs) who serve as middlemen, and insurers.

Typically pharmaceutical companies set a non-discounted “list” or base price for each product. Many pharmaceutical companies offer discount coupons and rebates. Depending on a consumer’s health insurance coverage though, some patients may be forced to pay the undiscounted list price for specific medications.

According to Time, manufacturers provide discounts based on the drug and the buyer. Typically these discounts are in the form of rebates negotiated with individual PBMs. The PBM gets paid for its efforts to reduce the amount the manufacturer charges. The final price—which may or may not include any rebates or discounts—is then passed to the insurance companies, who in turn pass the pricing on to consumers.

In addition to negotiating pharma rebates, PBMs also wield power by determining where a particular drug appears on an insurance company’s hierarchy, Time states. These middlemen can make a given drug the most discounted, and therefore most prescribed, medication. They can also exclude it, forcing patients who want or need it to pay more.

Prescription drug price negotiations often happen behind closed doors, leaving patients and physicians out of the discussion despite the impact drug pricing has on the health and treatment of patients,” The American Medical Association (AMA) stated in a 2019 online article on how prescription drug prices are determined.

Raising the price of prescription medicines forces patients with limited funds to skip doses, split pills or abandon treatment, the AMA states. All of these actions, plus growing demands for prescription drug price reforms, are causing the U.S. government to further examine medicine prices.

Figure: 1Percentage of Revenue Spent on R &D

Importance of change management in erp implementation

Governmental Scrutiny

Federal government agencies such as the Department of Health and Human Services (DHHS) are paying extremely close attention to how much consumers actually pay. Agencies want to know if the actual prices reflect the research and development (R&D) and other costs of creating and manufacturing new products. Or are consumer prices a way for an unscrupulous company to use its hot new medication as a way to boost profits and stock prices?

The Biden Administration froze drug price reforms started by the previous administration pending further review. One reason for reviewing these proposals is the fear of higher insurance premiums, an online article by Joshua Cohen in Forbes states.

Cohen suggests that the Biden Administration may require health insurers “disclose current list prices and historical net prices for prescription drugs and provide patients with personalized estimates of cost sharing.

Figure: 2Amount of Revenue Spent on R &D

Amount of Revenue Spent on R &D

Setting Discounts

One way pharma companies can protect their integrity is by using Enterprise Resource Planning (ERP) software such as Microsoft’s Dynamics 365. ERP software allows pharmaceutical manufacturers to set various discounts and rules for each price break. For example, one rule in Dynamics 365 Commerce asks, “is a coupon required to obtain a discount?” A slider lets authorized users select Yes or No. When this feature is active, the discount only appears when a coupon or bar code is provided. This section also has “All discounts” and “Pricing and discounts management” workspaces, letting companies create customized discounts.

ERP software works by creating a series of properties for simple pharmaceutical discounts and quantity price breaks. For example quantity tiers must be reached independently for each line or product.

Microsoft Dynamics 365 Commerce lets companies select between four types of discounts: “Discount,” “Quantity,” “Mix and match” and “Threshold.”

Users also have the option to determine which discounts compete on a transaction. Values are “Exclusive,” “Best price” and “Compound” with “Exclusive” always being calculated first.

Individual products or product variants can be selected along with categories, units of measure and many other variables. Other options include setting up sales lines and invoice discounts.

When there are issues with drug quality, the “Quality management” section establishes rules for pharmaceutical chargebacks.

Managing Rebates

Microsoft’s Dynamics 365 Supply Chain includes a “Rebate management module” with an important feature for pharmaceutical companies. “The setup on this page is shared across all legal entities and can be modified by users who have the appropriate security permissions,” Microsoft states.

This module makes it easy to create contracts, deals and agreements with customers and vendors. It lets firms calculate and keep track of rebates, deductions and royalties. The information is stored in a central location for easy review.

Rebates can be created for customers or vendors. The function also allows inputting notes about a specific deal. For example, a pharmaceutical rebate may be given to one company instead of another. A note can explain the reason like a long-standing business relationship.

Since pharmaceutical rebates appear to be a likely focus of government action, documenting a firm’s rebates makes it easier to show what is taking place.

Reporting

With transparency being a likely focus of governmental action on drug pricing, investigators may ask to see pricing reports. ERP programs like Dynamics 365 have a number of powerful reporting features. A Report Wizard lets users select from a series of previously created reports and update them. Tables and charts can be included.

A big part of Dynamics 365 Supply Chain is tracking the status of each rebate for reporting and inquiry purposes. Reports can be linked to web pages, static files and dynamic Office-based files that read data from a Dynamics 365 database. Reports are filtered using SQL or FetchXML queries depending on the software in use.

Summary

Consumer drug pricing is becoming a hot topic in Washington, D.C. Pharma manufacturers are likely to face increased scrutiny on how they set pricing. ERP programs like Microsoft’s Dynamics 365 let firms set and track rules for discounts and rebates, as well as generate all necessary reports.

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Strategies to Implement Digital Processes in the Pharmaceutical industry

Strategies to Implement Digital Processes in the Pharmaceutical industry 700 500 Xcelpros Team

ERP software provides a cradle to the grave system of tracing an entire supply chain.

Digitizing the pharmaceutical industry supply chain pays benefits to the companies, executives and employees. How? By allowing companies to be more efficient, resilient and responsive to rapidly changing customer requests and regulatory demands. This digitization allows for:

  • Near real-time tracking of raw materials.
  • Accurate raw materials inventory tracking.
  • Updated details quality control.
  • Batch tracking from production to final delivery.

Companies benefit from greater efficiency and better resource allocation. Better resource allocations means employees can be performing more meaningful work.

Key Advantages

Accountability is one of the key advantages of using enterprise resource planning (ERP) software. When a company inputs data for supply chain topics such as inventories of raw materials, quality control test results, warehouse storage temperatures and government recall notices, it has the company’s core data at its fingertips. Chief financial officers (CFOs) and chief technical officers (CTOs) can track any product from its raw materials source through development, testing, production and distribution.

When a company implements a fully digital solution, it has the ability to track any single item anywhere under company control. This permits more efficient use of raw materials—they go where they are needed now—and accurate planning for the future.

Raw Materials Purchase Order Workflows

Digitization dramatically speeds the ordering and delivery of purchase orders. With the click of a mouse, a company in the U.S. can send a PO to a supplier in India. The supplier can review the request and compare the materials and quantities requested to what is on hand. If the supplier lacks any of the requested items, it can either order it from a different firm or notify the requesting pharmaceutical plant. Either way, the production facility quickly knows what is coming and when.

Enterprise resource software such as Microsoft Dynamics 365 for Finance gathers information from multiple sources. It combines individual data points—a customer’s request for a new shipment, a salesperson’s request to have the order fulfilled, a stock check to determine if sufficient raw materials are on hand, an order to one or more suppliers for the active pharmaceutical ingredients (APIs)—in one place.

The end result is that instead of making numerous phone calls trying to locate everything, a chief financial officer can ask the question, “Can we fill this customer’s order now? If not, when?”.

Figure: 1Raw material purchase order process

Raw material purchase order process

Digitizing Quality Control Testing

Tracking products is important. So is tracking product quality. When the quality control testing process is digitized, CFOs:

  • Have access to standardized recording and reporting processes
  • Can act proactively instead of reactively
  • Have open lines of communication with different departments
  • See when a process is working and can discontinues those that are not

Digitizing these processes lets companies recognize and resolve quality control issues early in the process. They save money by not producing large quantities of inferior products.

It allows firms to recognize problems on the factory floor, saving the time and expense of shipping defective or poor quality materials—such as medicine stored at the wrong temperature—only to then pay for shipping it back.

Through digitization, quality control inspectors increase the speed of their inspections when they upload information into a centralized database.

Digitization also makes it easier for companies to comply with regulatory requirements. Required records and standards are a few keystrokes or mouse clicks away.

Data collected anywhere from cell phones, tablets and hand-held scanners allows workers to input inventory information. This can include creation dates, batch numbers, temperatures and anything required by company standards or to meet regulatory requirements.

Having digital records makes it easy for company quality assurance teams to create certificates of analysis (COAs). “A COA typically contains the actual results obtained from testing performed as part of quality control of an individual batch,” a report by InSource Solutions states.

When connected to an ERP system such as Microsoft Dynamics 365 Supply Chain Management, companies can:

  • Create quality orders based on trigger points
  • Document test results and then determine if they meet established criteria
  • Maintain nonconforming products to track down the original cause
  • Schedule error correction processes
  • Print a COA showing the test results

Figure: 2Quality control analysis from System Dynamics Supply Chain

Quality control analysis from System Dynamics Supply Chain

Batch and Lot Tracking

ERP programs such as Microsoft System Dynamics 365 Supply Chain Management allows companies to create and track specific production quantities.

For example, if an individual batch is created, the ERP program creates a label with a barcode or QR code on it. The label allows scanners to immediately access information such as the creation location, date and other relevant data. After the production batch is created, individual lot numbers are assigned. Serial numbers are then assigned to individual items.

Workers scan each batch and add its warehouse and location details, such as section, row and bin number. When batches are broken into lots, each scan updates the tracking information providing a clear path from the current location to its creation.

Using these codes, warehouse workers can locate any given batch, lot or individual item from the time of creation through storage and transportation until final delivery.

Lot Traceability

The ability to trace production lots is important not just to ensure that every item goes to the correct destination but to ensure when problems occur, they can be addressed quickly.

For example, a batch of Covid-19 vaccines is given an expiration date. New data arrives indicating that the original expiration is incorrect, prompting a safety recall.

Having digital barcodes on each lot and individual product allows pharmaceutical companies to track the batch and every lot from it. Requests to pull specific lot numbers are sent directly to affected customers only. Those receiving unaffected batches are not notified. Impacted customers can then be given instructions on what to do if they encounter a bad batch.

Digital Signatures

The days of requiring a person to manually sign a form acknowledging receipt of a delivery are long gone. The U.S. Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000 ensures that electronic signatures are legal wherever federal laws apply. When federal law is not applicable, most U.S. states follow the Uniform Electronic Transactions Act (UEFA).

Now considered valid in terms of regulatory compliance are electronic signatures, such as using a stylus and tablet when making or receiving a delivery, and digital signatures. Digital signatures do not require a handwritten acknowledgement but are still considered legal, according to Adobe.

One of the benefits of using electronic signatures in the pharmaceutical industry more than paper versions is providing the proof of delivery. This authorization is readily available to authorized executives anywhere in the world within seconds. When questioned about a delivery, the electronic signatures provide proof of receipt.

Summary

Going digital saves companies time, money and unneeded expenses. Information can be organized more efficiently and is available on demand. ERP programs allow for accurate product tracking of raw materials and finished products, along with the added benefit of things like digital signatures and barcode scanning.

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Trends Influencing the Future of Pharmaceutical Supply Chain Management

Trends Influencing the Future of Pharmaceutical Supply Chain Management 700 500 Xcelpros Team

Introduction

Pharmaceutical supply chains continue to evolve even as the worldwide Covid-19 pandemic shows signs of improvement in some countries (the U.S.) and worsening in others (India). Key trends include:

  • Geographically diverse suppliers
  • Sustainable sources of raw and packaging materials
  • Increasing use of computer technology to help manage companies

How chief financial officers (CFOs) and chief operating officers (COOs) of pharmaceutical companies respond to growing demands while facing labor shortages in areas hard hit by the pandemic largely depends on their ability to obtain raw materials and then manufacture and ship finished products.

Reports in SupplyChain Brain, EazyStock and Manufacturing.Net state that supply chain management trends likely to influence the pharmaceutical supply chains near term include increased use of:

  • Diverse (i.e., multiple) suppliers for improved resilience
  • Sustainable supply chain sources
  • Enterprise Resource Planning (ERP) and pharmaceutical warehouse management software (WMS) to improve management of the overall business, including the supply chain
  • Artificial intelligence (AI) to boost productivity and decrease errors
  • Cloud-based technology to permit scaling small and medium businesses as they grow using mutable
  • Industrial Internet of Things (IIoT) to track products ranging from individual batches to complete orders
  • Robots and other forms of automation to perform labor-intensive tasks
  • Flexible supply and delivery sources permitting personalized shipments
  • Layering technologies to eliminate data silos and create actionable data across technology platforms
  • Blockchain to improve transparency in data sharing using immutable databases Smart contracts that automatically execute when a set of conditions is met

Geographically Diverse Suppliers and the PSC

Having a geographically diverse source of raw materials such as active pharmaceutical ingredients (APIs) becomes important in a world proven so susceptible to pandemics. Companies whose primary suppliers are in India (currently suffering an uptick in coronavirus cases), for example, may find their suppliers are short-handed and unable to fulfill orders. CRB Group states supply chain challenges from rare events also include:

  • Transportation issues and disruptions
  • Adding counterfeit material into the supply chain
  • Site closures
  • Lack of coordination and traceability causing inventory build-ups or shortages

According to GoMarketWise, having a diverse supply chain also provides:

  • Access to innovation outside your organization
  • Flexibility to respond when market conditions change
  • Competitive pricing at local levels
  • Specialization many small to medium businesses (SMBs)

Sustainability in the Pharma Supply Chain

Many organizations across all business sectors are looking at climate-smart supply chain planning because of the effect of climate change on the availability of resources and materials, a report in All Things Supply Chain cites a Harvard Business Review study claiming companies advocating for sustainability grow 5.6 times faster than brands that don’t.

One area impacted by sustainability is product packaging. A study by Pelican BioThermal quoted in The LoadStar states that 48% of respondents claim to be looking for packaging that is recyclable or can easily enter the waste stream. Larry St. Onge, president of DHL’s global sector, life sciences and healthcare is quoted as saying his customers’ packaging would become a strategic priority in the near future. “This is of utmost priority because 25% of the global 8.3 billion tons of plastic produced originates from packaging and more than 90 countries have imposed bans on single-use plastic.”

“A more sustainable pharmaceutical supply chain (PSC) should be implemented to match future operations and management of the pharmaceutical products across the entire life cycle,” a look at Pharma Industry 4.0 on ScienceDirect states.

Further restricting the adoption of sustainable processes in the PSC are high costs and time consumption, enforcement of regulations, a lack of business incentives, lack of objective benchmarks, poor end-customer awareness and other issues.

Increasing Use of ERP and WMS in Pharma

Pharmaceutical companies are increasing their use of enterprise resource planning (ERP) and warehouse management software (WMS) from companies like Microsoft to improve management of the overall business, including the supply chain. Software add-ons automate many previously manual tasks, such as inventory optimization and shipping solutions, EazyStock states.

A report by Grand View Research states the market size for WMS programs is expected to grow from $3 billion in 2021 to $8.1 billion with a compound annual growth rate (CAGR) of 15.3% from 2021-2028 with a CAGR of more than 17% in WMS software alone. The WMS market was $348.6 million in 2016.

Grand View Research cites healthcare as one of the biggest growth sectors as companies seek to increase product output and meet rising customer demand. “A WMS helps reduce lead time, increase product delivery speed and minimize distribution costs,” Grand View states.

Much of the increased demand for pharmaceutical WMS software is expected to come from small- and mid-sized businesses using it on a cloud-based computing system. WMS software, “is widely used as a tactical tool by businesses to meet the unique customer requirements of their supply chain and distribution channel,” the report indicates.

Figure: 1 Recent Trends in Pharmaceutical Supply Chain

Pharmaceutical Supply Chain Management Trends

Using Robots in Pharma Factories

Robots offer several advantages over human workers in select conditions, a report by TweakYourBiz states. including:

  • Increasing worker safety when assembling implants and drugs containing radioactive or biohazardous compounds
  • Reducing contamination by having robot-only areas
  • Performing repetitive tasks to perfect efficiency, increase productivity and eliminate human error
  • Retooling and refitting a robotic ensemble to perform different tasks
  • Automating high-throughput screening (HTS) for chemical or biological compounds
  • Scanning products to identify potential counterfeits

“Robots provide improved reliability and result in fewer rejects and material waste,” the TWB report concludes.

Smart Contracts and the PSC

Administrative expenses are a significant part of PSC expenses, which add 7% – 8% to the final cost of a pharmaceutical product, a report by Exyte claims. Administrative staff is required to handle invoices and send payments. These processes are automated when using smart contracts that automatically execute using a transactional computing protocol when stated conditions are met.

However, these contracts use blockchain technology to, “verify, validate, capture and enforce agreed-upon terms between multiple parties,” Finextra states.

Summary

As businesses strive to increase their efficiency and performance, increasing diversity in terms of raw materials sources, APIs, using software to help manage operations with robots and other forms of automation on both factory and warehouse floors continue to rank high among emerging pharmaceutical supply chain trends.

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References: Supply chain trends to watch 

Covid-19 Impacts on the Pharmaceutical Supply Chain

Covid-19 Impacts on the Pharmaceutical Supply Chain

Covid-19 Impacts on the Pharmaceutical Supply Chain 700 500 Xcelpros Team

Introduction

While the United States continues to vaccinate and protect its citizens from Covid-19, new variants of the disease continue to pop up around the world. In addition to costing millions of lives (Google states nearly 3.3 million in 220 countries and territories worldwide as of May 7, 2021, which includes 579,000 in the US alone), problems caused by the disease are wreaking havoc with the pharmaceutical supply chain.

Figure: 1Covid-19 Impacts on the companies

Covid-19 Impacts on the companies

Among the short-term effects cited in a July 3, 2020 article on Springer are:

  • Demand changes leading to shortages caused by panic-buying oral home-care medications.
  • Supply shortages of active pharmaceutical ingredients (APIs) and finished products, especially those coming from China and India.
  • Shifting communications and promotions to telecommunication and tele-health, such as 70 – 80 percent drop in visits to physician offices and clinics.
  • Changes in the focus of research and development programs to dealing with Covid-19.

Long-term effects on the pharmaceutical industry cited in the Springer article include:

  • Delayed approvals for non-Covid-related pharmaceutical product, partly caused by the closure or semi-closure of regulatory agencies.
  • Self-sufficiency and lower demand for APIs and finished products made in China and India caused by individual countries and organizations such as the European Union looking at the health needs of its citizens.
  • Slowed growth resulting from economic slow-downs in economies around the globe.
  • Ethical issues caused by poorly researched clinical therapies.
  • Consumption changes of health products by consumers.

By the Numbers

  • A 2-fold increase in investigational treatments in the U.S.
  • 100% – 700% increase in the use of medicines to treat Covid-19 in U.S. hospitals (January-July 2020).
  • 7 million excess prescriptions for hypertension, 6 million for mental health, 5 million for respiratory problems, 4 million for diabetes and 2 million for anxiety in the U.S. alone.
  • 156 clinical trials for Covid-19 in the Middle East and 140 in the EU.
  • 70%-80% reduction in patient visits to doctors’ offices in the EU.
  • 23% of patient interactions in the EU are done online.

Supply Chain Effects

Deloitte produced its “Covid-19 Response for Pharma companies: Respond. Recover. Thrive” report. Among the report’s sections is a look at Supply Chain Management.

Key risks in procurement cited by Deloitte are:

  • Quality checks of received materials. Mitigation measures include increasing warehouse space for quarantining shipments from China.
  • Shortages of raw materials, APIs and solvents due to dependency, inadequate materials to complete BOMS/batch size processing. Mitigate by boosting stocks of critical inventory, evaluating alternate sourcing of impacted materials and using government support policies when looking at investments in production plants.
  • Shutdowns of vendor plants. Mitigate by identifying shutdowns from remote (i.e., Asian) sources and pressure test supply chains for various scenarios.

Key risks for planning include:

  • Expiration of materials and monitoring for reassessments and quality certificates. Mitigate by submitting studies to the FDA with the longest agreeable expiration date.
  • Shutdowns of contract manufacturers. Mitigate though communication regarding their ability to deliver products.
  • Quality control checks at contract manufacturers or traded goods for contamination issues. Mitigate by having quality control personnel on-site and thoroughly sanitizing all in-bound products, employees and equipment.
  • Contamination after final packaging. Mitigate by disinfecting shipments before delivery and providing photographic proof.

Logistics and transportation risks cited by Deloitte include:

  • Non-availability of local transportation to move raw materials and finished goods. Mitigate by locating alternate partners and getting approval to move essential drugs should a lockdown occur.
  • Contamination issues from transport vehicles. Mitigate by disinfecting all vehicles, planning to store temperature-sensitive products and arranging warehouse space.

Export risks are:

  • Contractual compliance. Mitigate by ensuring the person(s) collecting the order is aware of any regulatory restrictions.
  • Contractual terms with domestic and export customers. Mitigate by seeking advice from insurance brokers and engaging early with clients to determine what could work if supply chain challenges or personnel issues occur.

Continuing Effects

Disposable components for single use systems are being shunted to Covid programs at the expense of other critical programs. This is one of the continuing effects on the supply chain cited by Contract Pharma in its Covid-19 Impact Report.

Kay Schmidt of Catalent said finding vaccines and target therapies for Covid-19 has boosted demand for its services. The increased demand “has led to greater collaboration and innovation between partners, regulators and throughout supply chains to meet key milestones” plus internal and external management, planning and communication to ensure resource allocation for multiple programs.

James Rogers of Sterling said, “The impact of the global pandemic has exposed the fragility of the pharmaceutical supply chain.” He predicts that supply chain resilience and reliability will be given the same importance as price when developing future supply strategies.

Danita Broyles of U.S. Pharmacopeia is quoted by Contract Pharma as saying, “The decrease in on-site inspections has the potential to increase quality risks to the global supply chain,” adding pressure to manufacturers and suppliers to ensure the quality of their products.

Ben Wylie of ChargePoint Technology said that, “many governments are now pushing the industry to rethink its model to safeguard drug production.” He cited a program in India to reduce reliance on China for critical drugs and APIs.

Covid-19’s Impact on Regulatory Practices

Covid-19 will have an ongoing impact on regulations in the areas of clinical study trial design, clinical trial study development and post-clinical trial regulatory submissions, Dr. Ronan Brown of IQVIA wrote in an article on European Pharmaceutical Review.

Among the changes forced on drug makers is a more decentralized approach to collecting patient information and rapid access to regulators, Dr. Brown said. This includes pre-investigational new drug meetings with the FDA now granted in less than 30 days. The FDA has also taken steps to accelerate the review and start of new studies. Flagging potential obstacles and safety concerns during these early meetings lets pharmaceutical companies move faster into human trials, he explained.

Decentralized clinical trials, which he expects will ultimately cost about the same as the traditional versions, will offer greater diversity in terms of patient cohorts along with increased mobility and convenience.

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Moving from Batch to Continuous Manufacturing in the Pharmaceutical industry

Moving from Batch to Continuous Manufacturing in the Pharmaceutical industry 700 500 Xcelpros Team

At a Glance

  • The pharmaceutical and life sciences sectors have relied on conventional batch manufacturing methods as a trusted model for production requirements. For faster, more dynamic manufacturing, pharma companies like CDMOs are turning to continuous manufacturing.
  • While continuous manufacturing offers more flexibility and agility, there are a number of practical and financial aspects that pharma companies need to take into consideration while making the partial or complete transition.
  • Transitioning from batch manufacturing to continuous manufacturing requires pharma companies to be equipped with the right tools and technologies. For many, partnering with experts to seamlessly drive the transition and ensure employees are well-trained is essential.

For years, CDMOs have made do with solutions focused on batch manufacturing. Fast forward to today, however, and the world is changing rapidly, with newer more efficient technologies being introduced for more dynamic process management. While the pharma sector might seem hesitant to let go of batch manufacturing, more and more companies are slowly transitioning to continuous manufacturing.

The global pharmaceutical continuous manufacturing market is predicted to grow with a CAGR of 8.2% over the forecast period of 2018-2024.– Researchandmarkets.com

With a growing number of benefits, including shorter production cycles, no equipment-stop requirements, and reduced risk for things like manual errors; continuous manufacturing is being viewed as the next big step in pharmaceutical manufacturing. In addition to the benefits, however, businesses need to expect any financial, practical, and behavioral hurdles that might arise.

This article aims to highlight these hurdles for organizations comparing batch vs. continuous manufacturing in order to gauge respective pros and cons.

Continuous Manufacturing and Its Impact on the Pharma industry

Continuous manufacturing is a highly streamlined ecosystem where multiple stages and discreet testing across various facilities are not required. For pharma companies, this can mean avoiding excessive downtime or closures of production units in the event of a faulty batch, saving manufacturers thousands of dollars previously dedicated to these types of tasks.

Figure: 1Batch Manufacturing vs. Continuous Manufacturing

continuous manufacturing vs batch production

Continuous manufacturing is more flexible and dynamic in nature, allowing manufacturers to introduce changes with ease and efficiency. In comparison, batch manufacturing in the pharmaceutical industry has always been highly restrictive in nature. Continuous manufacturing enables pharma companies to lower their carbon footprint, reducing any harmful emissions released into the environment and does not require the longer ‘hold times’ familiar to batch manufacturing, where between every stage materials need to be tested for quality. The transportation and storage of these samples (which are often in bulk) require both high costs and a planned holding time. These hold-ups and more can be mostly mitigated with continuous manufacturing. Companies can also significantly reduce the manufacturing lifecycle, including time to market for a drug. The single production line model found in continuous manufacturing works well to save time, leverage process flexibility, and enhance resource utilization.

3 Hurdles Implementing Continuous Manufacturing

With so many apparent benefits, it’s still a question of why the pharma industry hasn’t gone all out when it comes to continuous manufacturing. The answer lies in understanding the hurdles involved in implementing continuous manufacturing. Listed below are 3 common hurdles to consider when moving to continuous manufacturing.

1.InfrastructureContinuous manufacturing is typically considered a more advanced business model, often requiring changes in infrastructure across different functional areas. The IT framework of pharma companies and CDMO’s needs to be able to support an agile, flexible manufacturing model. Many pharmaceutical companies are still apprehensive to transition to continuous production as it usually entails a major infrastructure overhaul.

2.Regulatory IssuesPharma manufacturing is highly sensitive in terms of quality checks and regulatory approvals. After working with batch manufacturing for decades, a transition to continuous manufacturing means applying for newer approvals and altering quality check-points. For current product lines, pharma companies already have all their approvals in place for the production lines and quality check methods. Getting approvals for newer methods and production lines, like those found in continuous manufacturing, can be a costly and intimidating process.

3.Behavioural ResistanceCompared to other industries such as automotive or even chemical, the pharma sector has always been rather conventional in its approach towards newer methods and technologies. Implementing drastic changes has always been met with resistance as it can lead to numerous major shifts in processes, work methods, and operations. Employees need to be properly trained and made aware of possible hurdles when it comes to adopting a new process. For Pharma companies, this is best handled by letting change cascade from upper management, on down.

The Right Path for the Pharma Industry

With so much impact and so many possible benefits, the application of continuous manufacturing will continue to rise for businesses in the pharma sector. Going forward, precision medicine, personalized care, and agile transformation will continue to be of utmost importance for CDMOs and pharma giants. While these goals and more can be met by embracing continuous manufacturing, in order to achieve these targets, pharma companies will need to be willing to make necessary changes to their infrastructure in order to make a smoother transition to continuous production.

Key Takeaways

  • The pharmaceutical industry can take advantage of numerous benefits and opportunities with continuous manufacturing vs older batch manufacturing processes.
  • While continuous manufacturing is on the rise in the pharma sector, companies need to plan appropriately to ensure a smooth implementation/ transition.
  • Pharma companies need to be open to changes in infrastructure and mindset to take full advantage of a continuous manufacturing model.

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Pharmaceutical Inventory Management: Challenges and Solutions

Pharmaceutical Inventory Management: Challenges and Solutions 700 500 Xcelpros Team

Introduction

In the pharmaceutical industry, the task of keeping track of inventory is a critical process where large investments can either make or break a company. There are so many different things to consider that have a significant impact on an organization’s bottom line.

When it comes to pharmaceutical inventory management there are a certain questions that need to be answered for full accountability, including

  • What products or raw materials do we have in inventory?
  • Where is it being stored – both physical location and in the production process
  • Does the physical inventory on hand match what each department is supposed to have?
  • Are there any discrepancies?
  • Are any raw materials or products either approaching, at, or past their expiration dates?

If just a few of these questions are left unanswered, the damages to a company can quickly begin to pile up. This can result in a loss of revenue, fines, or worse, risk to human life. Understanding exactly what issues could arise, and how, is the best first step to approaching inventory management in the pharmaceutical industry.

Understanding common causes

With rapidly rising costs for things like materials, transportation, and fines associated with non-compliance, understanding the most common causes of the issues plaguing the industry, and more, is critical to the operations and success of organizations in the pharmaceutical industry.

This lets businesses plan more carefully to be able to successfully manage their inventories down to the smallest detail. Some of the most widely seen causes of pharmaceutical inventory management errors include

  1. 1.Human error resulting in misinformation being entered into an organization’s enterprise resource planning (ERP) system.
  2. 2. Improper or incorrect storage of finished goods or raw materials.
  3. 3. Waste and/or shrinkage (i.e., theft) resulting in incorrect inventory counts and undocumented loss of revenue.
  4. 4. Errors caused by incorrect measurements or from using inaccurate equipment.
  5. 5. Discrepancies between ordered, shipped and the received quantities.
  6. 6. Failures to properly account for expired, damaged or destroyed items including raw materials and finished goods.

Inventory Management Systems

Efficient, accurate inventory management is critical because it controls the amounts of raw materials, work in progress and finished products available at any given time. More companies are taking advantage of today’s modern solutions to achieve a number of functional benefits along with enhanced visibility of their inventory levels. These new systems all support three major goals, including

  1. 1.Making sure there are enough raw materials to meet current and anticipated demand.
  2. 2.Using working capital on other needs, such as replacing outdated equipment, opposed to buying or storing additional inventory.
  3. 3.Balancing the above goals while allowing the company to make a profit.

Along with achieving these goals, these systems let business perform much of the following

Tracking Production Lots

Unlike other industries that track raw materials and finished products by part numbers, many existing pharmaceutical factories tend to produce medicines and other drugs in lots.

The lot method uses various machines to create various lot and batch sizes of a particular drug or product in common increments such as gallons or pounds. Each lot should then be marked with a pedigree serial number as required by the US FDA Safety and Innovation Act (FDASIA). All drugs distributed by wholesalers, repackagers or distributors must have a pedigree serial number for tracking purposes.

The manual and electronic (ePedigree) versions allow for tracking individual drug production lots from start to sale. Lot numbers let healthcare providers know if a particular batch of product:

  • Is ready for sale
  • Is expired
  • Is part of a recall

Lots have codes unique to each batch, making it easy to learn when problems occur. For example, if Batch A is perfect but Batch B has a problem, the manufacturer can use lot codes to narrow down where the problem occurred and correct it.

Pharmaceutical Lot tracking and the Supply Chain

Lot tracking increases supply chain integrity by tracing the pedigree of each batch of drugs manufactured.-2014 article by Lowry

Figure: 1Pharmaceutical Drugs Management Life Cycle

Banner: Pharmaceutical Drug Management Life Cycle

Specific to pharmaceuticals, lot tracking ensures tracing of each ingredient, dosage units, product family, national drug code (NDC) number, strength, schedules and other information for each batch. Lot numbers permit tracing throughout the production, processing and distribution processes.

Each lot is given an expiration date that determines its shelf life. This lot can be tracked through the supply chain to determine:

  • When it was made
  • Where the lot is at any given moment such as production shipping or a storage warehouse
  • Which customers received it
  • When the customers received their shipment of a specific lot

Typically, batches nearing their expiration date undergo a quality control test. The quality control lab either extends the expiration date or scraps the batch.

The Drug Supply Chain Security Act (DSCSA) plus the FDA and Drug Enforcement Agency (DEA) are constantly updating regulations related to lot and batch labeling.

Enhanced Tracking Methods

A stand-alone inventory management system, or the more robust ERP offerings in products such as Microsoft Dynamics 365 – Supply Chain, uses lot or batch numbers in the pharmaceutical industry, and/or product codes for internal tracking. Many wholesalers use the FDA-assigned NDC number, which is unique to a specific product. These systems can also track products by brand, brand description, strength and dosage as required by the DSCSA and for suspicious order monitoring.

The Global Trade Item Number (GTIN) is a 12-digit number used with a barcode for tracking purposes in the US and Canada. It is also known as a universal product code (UPC). The first 6-9 digits are the company prefix. The next digits reflect the product while the last digit is a check digit based on a calculation of the first 11 digits. An European Article Number (EAN) is similar to a GTN except it has 13 digits. EANs are used everywhere in the world except in the US and Canada.

Modern Inventory Management Systems

An pharmaceutical inventory management system that works with accounting, such as Microsoft System Dynamics 365 – Supply Chain, allows pharmaceutical companies to track, manage and organize inventory levels plus order, sales and deliveries.

The purpose of inventory management software is to maintain an optimal inventory level, track goods during transport between locations, receive new items, manage pharmaceutical warehouse processes such as picking, packing, and shipping, prevent product obsolescence and spoilage, and ensure your products are never out of stock.-Microsoft

Other advantages of using an inventory management system include

  • Inventory optimization
  • Product identification and tracking
  • Asset tracking
  • Reorder point determination

Inventory Management in ERP Systems

When included from the beginning as part of an ERP system, Inventory Management provides a number of additional benefits, such as

  • Direct integration into a company’s Supply Chain Management operations
  • Tracking of individual lots and batches using barcodes
  • Insights from real-time tracking using a cloud-based system, visible on mobile devices at any time
  • Artificial Intelligence (AI) recommendations for determining optimal inventory levels
  • Quicker, easier software updates for cloud-based systems compared to standard on-premise programs

Final Thoughts

The adoption of modern inventory management systems helps businesses reduce the likelihood of having either too little or too much in terms of raw materials or finished goods. For the pharmaceutical industry, inventory management is critical, offering accurate, continuous tracking of batches and lots. This ensures the company meets stringent federal and state regulations and helps ensure that only current—not expired—products are available to customers. To achieve the best results, businesses need to understand the issues and perform enough research to determine how beneficial adopting a modern inventory management system would be.

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Role of technology in optimizing the pharmaceutical supply chain banner

The Role of Technology in Optimizing the Pharmaceutical Supply Chain

The Role of Technology in Optimizing the Pharmaceutical Supply Chain 700 500 Xcelpros Team

Introduction

The pharmaceutical industry is a rapidly growing industry with strict regulatory requirements. The COVID-19 pandemic has put immense pressure on these companies to meet the changing demands of the market. Meeting these high demands while adhering to requirements can be one of the biggest challenges for these firms. With more and more industries going fully digital, technology is helping these companies overcome challenges as they arise to stay in business. Let’s find out how!

Tech in Pharma Supply Chain infographic

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Why Pharmaceutical Manufacturers Should Choose Microsoft Dynamics

Why Pharmaceutical Manufacturers Should Choose Microsoft Dynamics 365 Finance and Supply Chain

Why Pharmaceutical Manufacturers Should Choose Microsoft Dynamics 365 Finance and Supply Chain 700 500 Xcelpros Team

Introduction

For businesses in the pharmaceutical industry, there’s a constant need to manage different challenges such as ever-changing regulations, severe production environment difficulties and complex equipment that can be difficult to maintain. Any equipment downtime could result in production losses and affect drug quality in the value chain, denting the brand image.

When it comes to pharmaceutical manufacturing, production schedules are incredibly demanding, especially when machinery is constantly under operation. These businesses work hard to ensure maximum availability of their assets in order to achieve production efficiency. This requires equipment to perform at full capacity with no downtime to create a competitive production environment.

Organizations in this industry looking to maximize their efficiency need to understand a few key points that help present a clear picture of the current state of plant equipment and manufacturing in general.

  • Poor equipment maintenance strategies can reduce a plant’s overall productive capacity by 5 to 20 percent.
  • Unplanned downtime is costing industrial manufacturers an estimated $50 billion each year.
  • Around three-quarters of all the plant equipment in manufacturing is more than 20 years old, which says a lot about the quantum of obsolete equipment and a significant cause of production downtime!.

Understanding equipment downtime, reliability and availability

For manufacturers in the pharmaceutical industry, having fully functional equipment is of utmost importance and means their business can operate normally. Understanding things like downtime, reliability and availability can be just as important if not more.

Scheduled Downtime is important for changeovers, cleaning, tool changes, early shutdowns, personal breaks, or any unplanned events that may occur, such as breakdowns or any repairs that can affect the core business. Equipment reliability is related to the health of equipment and how optimally it performs a task while considering attributes like quality and performance, and equipment availability is the actual time that a machine or system is available for production as a percent of total planned production time.

These are undoubtedly some of the biggest concerns for pharmaceutical manufacturers, but they’re not the only things that these businesses are required to deal with, such as

  • Increased downtime: This can lead to Supply chain disconnects, lower production, missed deadlines and increased penalties.
  • Spiking maintenance costs: This usually results in businesses reducing maintenance which can lead to complete failures, severely impacting revenue and operations.
  • Production dips: Usually caused by gaps in asset or equipment availability, this can halt production and affect the company’s revenue.
  • Equipment repair: Without a preventative maintenance plan, businesses are required to perform repairs as needed. This leads to uncertainty when it comes to the status of equipment and prolonged downtimes.
  • Equipment replacement: Upkeep is always cheaper than replacement. When equipment isn’t properly maintained replacement costs can easily end up exceeding the total costs of having a basic maintenance plan on board.
  • Drug quality of lower standards: Unreliable or under-maintained equipment can unknowingly produce lower quality products leading to fines, penalties and costly recalls.
  • Drug safety risks: As equipment ages it becomes easier for contamination to occur, which could lead to additional damages.
  • Loss of reputation: Missed deadlines, poor quality and unsafe products can have a severe impact on revenue and brand recognition.

Figure: 1Factors Leading to Poor Equipment Maintenance

Poor Equipment Maintenance In Pharma industry

A big reason this all matters stems from the U.S. Food and Drug Administration’s (FDA’s) decision to include equipment maintenance as one of the risk-based preventive measures in Current Good Manufacturing Practices (cGMP). With the USDA considering equipment maintenance as a key function of cGMP, it easily becomes one of the most critical factors for pharmaceutical manufacturers’ compliance and will be subject to even greater scrutiny.

Microsoft Dynamics 365 has been a game-changer for the pharmaceutical industry

More and more organizations are better able to control their machinery and minimize “time-to-insight” with Microsoft Dynamics 365 capabilities designed to help businesses gain total control of their data, offering integrated analytics and workflows. Microsoft dynamics for pharmaceutical companies lets businesses speed up the movement of goods, eliminate waste due to costly shelf-life expirations and returns, and improve production efficiency across their entire line. Microsoft Dynamics for pharmaceutical gives companies the ability to achieve the following:

1.Ensuring centralized Quality Control (QC) and regulatory support Organizations can use integrated quality controls and lot traceability to link raw materials through each operation of the production process. This helps accelerate and simplify compliance with regulatory agencies such as the U.S. Federal Drug Administration (FDA).

2.Managing better inventory more effectively Pull inventory in sequence, employing “best before” management, and enabling customer service to ship lots that arrive with the correct amount of shelf life remaining. Employ either first expiry/first-out (FEFO) or first-in/first-out (FIFO) calculations for inventory reservations, picking, reducing inventory and eliminating waste.

3.Conducting extensive audit trails Incorporate electronic signature functionality into existing business processes, providing complete visibility into batch production and audit trails.

4.Meeting GMP requirements Manage electronic quarantines, quarantine release by user and material type, printed material control/ obsolete components, lot control/ segregation, lot tracking, and drug and hazardous material reconciliation.

5.Improving production planning Accurately model the processing of costly ingredients to help minimize overruns and underruns. Shelf-life planning helps account for expiration dates during production and distribution.

6.Protecting recipes and formulas Dynamics 365 helps document various ingredients, storage requirements, manufacturing processes, pH values, particle size, and much more – all with the ability to review at any given moment. D365 lets you set security restrictions to ensure that only approved users are able to make changes, further protecting your critical assets.

Final Thoughts

As the pharmaceutical industry continues to evolve and grow, the need to understand and adopt intelligent technologies like Dynamics 365 becomes more and more apparent. Implementing solutions like Microsoft Dynamics 365 for pharmaceutical and other.

Pharmaceutical manufacturing ERP softwares is the best way for companies to maximize their asset availability and track machine reliability, letting them drive towards increased productivity, higher quality products and enhanced safety assurance.

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Making Pharmaceutical Supply Chains More Resilient

Making Pharmaceutical Supply Chains More Resilient

Making Pharmaceutical Supply Chains More Resilient 700 500 Xcelpros Team

At a Glance

Building a resilient supply chain framework for pharmaceutical companies requires:

  • Understanding where the company is now.
  • Creating new business relationships with alternate raw materials suppliers, transportation providers, and other essential third-party businesses.
  • Weighing the benefits of a robust and versatile pharmaceutical value chain versus the impact on working capital.

Introduction

Pandemics, natural disasters, cyber-attacks, political turmoil, and other actions are beyond a company’s control. Any one or combination of them can thoroughly disrupt a smoothly running supply chain.

Critical supply chain areas getting battered by these disruptions include reduced or non-existent access to:

  • Essential precursor chemicals and components
  • Production facilities
  • Vital workers and managers
  • Transportation resources to bring in raw materials and ship out finished products

The unquestionable first requirement to improving supply chain resiliency is having access to accurate data and knowing what to do with the data-driven insights. Data sources such as the Industrial Internet of Things (IIoT) provide real-time information, and applications such as Microsoft Dynamics Supply Chain Management helps users evaluate existing information.

Precursor Chemical Supplies

A 2020 report from Avalere states that U.S. biotech firms making medicines here get their active pharmaceutical ingredients (APIs) from U.S. suppliers – import them or import finished products. These precursor chemicals accounted for $86.5 billion in the U.S. alone during 2019.

One issue U.S. companies are facing is the location of active pharmaceutical ingredient (API) manufacturers. According to the U.S. Food and Drug Administration (FDA), the top four places are:

  1. 1.U.S. – 28% (510 facilities for FDA regulated drugs)
  2. 2.European Union – 26%
  3. 3.India – 18%
  4. 4.China – 13% (230 facilities for FDA regulated drugs)

Figure: Percentage of API Sources in U.S. Dollars

Percentage of API Sources in U.S. Dollars

Figure: API manufacturing facility locations

API manufacturing facility locations

Canada and the rest of the world produce the remaining 20 percent of APIs used in medicines. Also, the FDA report states India, the EU, and the rest of the world have 1048 facilities making FDA-regulated drugs.

Adding to the importance of having resilience in the pharmaceutical supply chain are potential supply chain disruptions caused by using overseas suppliers. These include recalls, such as two from China cited by the FDA within the last six years.

One way to counter a dependency on foreign API supplies is by using advanced technology to produce chemicals and medicines at lower costs, the FDA suggests. Using the continuous manufacturing (CM) process to make finished products instead of producing batches with gaps between steps can be more effective.

Another method of reducing reliance on foreign API suppliers is using advanced technology. Newer methods producing APIs and finished dosage forms (FDF) helps in supply chain management in the pharmaceutical industry. The ability to rapidly respond to changes in demand, using smaller physical footprints that require smaller facilities, helps reduce pharmaceutical manufacturing costs potentially, offsetting overseas production advantages. High tech production methods, such as those in smart factories, also tend to have lower environmental impacts.

Pharmaceutical companies considering boosting their pharmaceutical value chain using this method can get help from the FDA. The FDA has an Emerging Technology Program (ETP) described in “Advancement of Emerging Technology Applications for Pharmaceutical Innovation and Modernization Guidance for Industry.”

The FDA is also working on a framework to develop miniature mobile manufacturing “Pharmacy on Demand” platforms to produce essential drugs at or near the point of care. This method, while requiring capital costs, provides the means of eliminating delivery costs.

Risk Sources

Before making changes to the current supply chain, CFOs should look at four primary sources of risk:

  • Sourcing of APIs and other raw materials risks. Counter risks by locating secondary suppliers and establishing working relationships with them.
  • Staffing and transportation risks. Consider having access to remote workers plus multiple methods of delivering finished products to customers.
  • Inventory risks. Contrast cash flow needs with inventories to be able to withstand short-term disruptions while also accounting for perishability.
  • Distribution risks. Be able to use multiple methods to deliver finished products to customers. Consider outsourcing part of the distribution to withstand problems in that area.

Strategic Questions

Before investing in building a resilient supply chain, CFOs would want to know:

  • How can we obtain the most accurate data on what we currently have? Is investment in IIoT sensors and other technology warranted?
  • What are our priorities based on what we have learned from the current pandemic? Is digitizing our data stream the top priority, or is securing a second or third API source more critical?
  • How do we balance internal conflicts? What will we do if a secondary API source that can deliver in the event of a natural disaster is more expensive than our primary source that cannot provide when we need the raw materials?
  • How do our risks integrate with risks from our third-party partners? How will a disaster impact their ability to supply critical products or services we need?
  • What do we consider a resilient supply chain? How much impact on near-term profitability is acceptable if we ensure that we can continue operations in the event of a significant supply chain disruption?

By the Numbers

$16 trillion (i.e., $16,000,000,000,000): Estimated total cost of the Covid-19 pandemic in the U.S. alone.

$85 billion (i.e., $85,000,000,000) lost by the Nasdaq Biotech Index in the week ending March 6, 2021, its third weekly loss in a row.

$242 million (i.e., $242,000,000) lost by the Health Care Select Sector SPDR Fund (XLV) in the week ending March 6, 2021, bringing the total loss to date to $1.68 billion

Source: U.S. National Library of Medicine and National Institute of Health

Strategies for Greater Supply Chain Resilience

Figure: 1A roadmap to digital transformation to a resilient supply chain

A roadmap to digital transformation to a resilient supply chain

According to a recent Deloitte article, CFOs can reduce their chain disruptions and improve their supply chain resilience by using these strategies:

  1. 1. Identifying and mitigating their most significant supply chain weaknesses. Questions to consider include: Where are your API manufacturers located? Are there alternative sources able to deliver the required quantities when needed? Are the raw material sources within an acceptable range of the production plants? Identifying these alternative suppliers helps ensure a more continuous input of raw materials.
  2. 2. Prioritizing investments in the supply chain infrastructure to ensure significant delays do not occur when disaster strikes. Technological improvements supporting product storage and movement (e.g., Microsoft Dynamics Supply Chain Management) can make processes more transparent and improve efficiency in financial transactions and information exchanges.
  3. 3. Balancing the supply chain investments with competing company requirements, such as costs and services. Deloitte cites, “managing working capital while restarting operations and rebuilding inventory as one major challenge of a supply chain disruption.”
  4. 4. Creating a playbook to handle the causes of supply chain disruptions.
  5. 5. Implementing the updates from the standpoint of cost, speed, and efficient operation. The Deloitte report states that supply chain leaders should work with CFOs to determine the effects of supply chain changes on their working capital.

Before Making Any Decisions

Before making changes to their current supply chain, CFOs, chief technology officers, and other executives should consider:

  • Evaluating where the current pharmaceutical supply chain stands.
  • Creating a plan or series of methods for sourcing alternate raw materials, workers, and production facilities should any natural or human-made disasters strike.
  • Analyzing the cost versus benefits of making the current pharmaceutical value chain more robust and resilient.

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Challenges of pharmaceutical supply chain banner

Top 8 Challenges of Pharmaceutical Supply Chain

Top 8 Challenges of Pharmaceutical Supply Chain 700 500 Xcelpros Team

At a Glance

  • The Covid-19 pandemic not only came as a health threat, but it also disrupted the world’s socio-economic thread. Industries like pharmaceutical and biotechnology were at the forefront attempting to find solutions.
  • Pharmaceutical industry supply chain challenges that concerned top executives include shortage of raw materials, unprecedented changes in demand pattern, inability to plan lead-times and shortage of labor.
  • The pharmaceutical industry’s supply chain efficiency still has room for improvement and may need some transformative changes to thrive in the new normal.

Pharmaceutical supply chain challenges have been a major cause of concern for the industry throughout 2020. The challenges are still very much prevalent, even as the world moves ahead in the era of the new normal. This pandemic caused a major global socio-economic impact and led to disruption in almost all facets of the industry. Modern companies equipped with the right tools and technologies have been quick to adjust to the changes. Organizations that still functioned on archaic systems were struggling to adapt to the business processes changes brought about by the pandemic. Slow to adapt companies had to put in more effort to understand the needed changes and adapting to the changes without the right technologies in place was daunting.

Figure: 1Major Pharmaceutical Supply Chain Disruptors

Cotributors of  Pharmaceutical Supply Chain Challenges

Added to that was the inability of companies to quickly onboard onto newer applications and get into the rhythm of modern cloud-based solutions. Some of the major issues that surfaced during the pandemic are:

  1. a.The demand for therapeutics and/ or vaccines led to an overdrive of pressure on the industry.
  2. b.The lack of resources and slow global travel have increased pharmaceutical supply chain disruptions.
  3. c.Changes in quality standards have added new tasks to the workforce that were not part of their day-in-the-life and had to adapt to rapidly.
  4. d.Changes in quality testing created adjustments in the test specification and additional steps in testing.
  5. e.Disintegrated systems made it harder for the workforce to stay agile and adjust to the changes that came their way.
  6. f.Inability to manage supply-demand cycles.

70%

of the leaders said that the pharmaceutical supply chain was vulnerable to ongoing problems caused by the continuation of the pandemic and that on-time, in-full delivery of medicines had deteriorated by almost 50 percent within the first few months of the pandemic.

Source: IDC Whitepaper Report

While modern manufacturing companies did rise to the challenges and leveraged solutions such as cloud applications, automation, Artificial Intelligence (AI), Machine Learning, and Big Data to their advantages, many risk-averse pharmaceutical companies are still prone to supply chain challenges due to the lack of right tools in place to make them nimble. Let us look at the top 8 concerns of the pharmaceutical industry supply chain that still are pressing concerns:

1.Unprepared for further disruptions: Different countries worldwide are struggling with second or third waves of the pandemic (and many have reported new mutant strains of the virus). These continuous disruptions have led to major disturbance in the pharmaceutical distribution system.

2.Technological bottlenecks are prevalent: The pharmaceutical industry has been highly apprehensive and traditional in adopting newer technologies. While the last decade has seen major leaps, there are still many bottlenecks in leveraging technologies to their full potential.

3.Shortage of raw material: The inability to plan effectively during the pandemic can cause many hurdles if procuring raw materials. Knowing lead times and accurate inventory quantities without a planning tool can slow you down significantly as you try to extrapolate data and understand your supply schedule.

4.Standard operating procedures and processes: As workforce within the pharmaceutical industry needs to be onsite, proper SOPs need to be set. This would add new processes that warehouse personnel need to be trained on. A lack of the right kind of training tools can add to the burden.

5.Managing cold storage facilities is resource-intensive: Some of the products have to be stored at very low temperatures to ensure that the potency and formulation remain intact. This would need pharmaceutical supply chains equipped with refillable dry ice containers or specialized freezers, both of which are not budget-friendly options.

6.Pharmaceutical safety guidelines and regulations differ across Borders: The pharmaceutical industry has to be very tenacious and alert when adhering to the safety guidelines and regulations. However, pharmaceutical supply chain challenges get magnified as the raw materials and drugs cross borders and these regulations keep on changing.

7.Rapid drug delivery: The historical task of bringing medicines to market is a race against time. Pharmaceutical operations and supply chain management handling need to be as efficient as they come to ensure lesser bottlenecks and plausible errors in these testing times.

8.Lack of integration across processes: When your inventory, manufacturing, labeling operations don’t talk to each other and are manually managed, the error rate will go up and business productivity will go down.

The year 2021 will probably push the pharmaceutical supply chain to its maximum limit yet. However, with the right strategy, technologies, and solutions, the pharmaceutical sector can rise up in these challenging times.

Key Takeaways

  • Pharmaceutical manufacturing and distribution companies are facing a once-in-a-lifetime level of challenge and they need to streamline their operations to ensure the efficiency of supply chains.
  • The pharmaceutical supply chain challenges have been a part of this sector for a long time and companies that are not properly equipped will tend to struggle more than others. This is the right time to transform to be equipped with the right technologies for a better tomorrow.

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