The World Health Organization estimates that around ten percent of the world's total gross domestic product (GDP) is spent on healthcare. The vast and complex trade network that begins with raw materials and ends with the patient constitutes the global medical supply chain.
Furthermore, global spending on healthcare supplies and medicines has been increasing faster than the global gross domestic product for decades and is expected to continue to rise in the future. The sheer size of healthcare spending means that the global medical supply chain represents a significant—and critical—investment of human effort.
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A global health lifeline
The pharmaceutical supply chain spans the globe: it moves medicines from where they are manufactured to where they are finally dispensed. The feedstocks that represent the basic building blocks of therapeutic compounds may be derived from petroleum products, mineral deposits, or even biological compounds: Lithium may be mined in Chile, refined and transformed into pharmaceutical products in the United States, and packaged and serialized in the countries where they will be prescribed.
The global medical supply chain links a rubber tree in Southeast Asia with a surgeon in Germany. The raw latex for medical gloves may be harvested from rubber plantations in Thailand, the world's largest producer of latex. The largest producers of medical gloves are Malaysia and China. The largest users of medical gloves are the European Union and the United States. Ensuring that this chain operates smoothly and efficiently is essential for patient health.
The supply chain for electronic medical devices follows many of the same paths as other electronic devices. The electronic chips may be made with silicon mined in China, refined in South Korea, etched in Singapore, and finally programmed in the United States. A flood that wipes out chip foundries in southeast Asia can end up increasing the costs of pacemakers on the other side of the globe.
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Unique challenges to the healthcare supply chain
The healthcare supply chain has specific challenges that may not be present in other supply chains. For many products, there is a need to ensure that the products remain sterile from production until use. While a shipment of coffee beans can be exposed to the air without risking the health of a coffee drinker, an intravenous syringe needs to be sealed in its original packaging for its entire journey.
Like all organs for transplant, certain medicines require special "cold chain" handling: Uninterrupted transport at low temperatures to ensure that specialized medicines remain safe and effective. Pharmaceutical cold chain management requires specialized facilities and equipment to generate and maintain cryogenic temperatures for critical vaccines and therapies. From the laboratory where the treatment is produced until it is administered to a patient, temperatures below negative 150° Celsius are often required for the fragile chemicals to remain viable.
For patented medical devices and pharmaceuticals, there may only be a single supplier or a limited number of suppliers. This reduces the supply chain resiliency for that product or treatment, increasing the risk of a drug shortage and making all the inputs upstream of the facility that produces the unique item critically important.
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Advances in supply chain tracking
The rise of digital information technology has created unprecedented opportunities to track products as they travel through the medical supply chain. This supply chain digital transformation has made it possible for medical suppliers, health system administrators, and even doctors and nurses to be able to know for certain the path any given medicine or medical device has taken.
Many governments have begun to require digital tracking of certain medical supplies, including an increasing number of pharmaceutical products. Pharmaceutical serialization track and trace mandates in multiple countries require pharmaceutical producers and suppliers to commission and track a unique serial number for every saleable unit of medicine produced. The aim of these legislative efforts is to reduce or even eliminate opportunities for counterfeiters to contaminate the drug supply with knockoff compounds or completely fake medicines.
As more and more organizations and enterprises come into compliance with track-and-trace regulations, the pharmaceutical segment of the global medical supply chain will have higher supply chain visibility. This will make the work of monitoring the global medical supply chain easier.
FAQs: Why is the global medical supply chain so important?
Why is the global medical supply chain so important?
The global medical supply chain is critically important for many reasons. Other essential elements of human survival like food, water, or shelter can be produced and provided locally. When it comes to the pharmaceutical supply of a region, medicines may be under patent protection and therefore must be imported from abroad, requiring a global network of delivery.
Where does most healthcare spending take place?
The majority of global healthcare spending happens in the European Union and North America. Healthcare spending in China and India is increasing as their economies grow.
Which country exports the most pharmaceuticals?
According to the data provided to the United Nations Statistical Division, the country that exports the highest number of pharmaceuticals, both packaged and unpackaged, is Germany.
Which country imports the most pharmaceuticals?
For packaged medicines, Germany is the highest importer. For unpackaged medicines, Ireland tops the list.
How do organizations manage medical supply chain disruptions?
Supply chain disruptions can be managed through supplier redundancy as well as maintaining large reserves of essential materials. In addition, with increases in supply chain visibility give healthcare organizations longer lead times to manage disruptions.