Pharma Value Chain
The COVID-19 pandemic revealed long-standing weaknesses in the pharma value chain: the growing risk of drug shortages and counterfeit medications, a lack of diversity and redundancy in suppliers, and insufficient transparency across pharma supply chains. But the news isn't all bad. As vulnerabilities in the pharma value chain were revealed and became common knowledge, it served as a wake-up call that has provoked leading organizations in the healthcare sector to reassess their approach to the supply chain. They are now taking steps to build resilience into the supply chains on which they depend. The goal is to ensure continuity of supply and patient safety and to protect their organizations when supply chain disruptions occur. The result? Pharma companies are aiming to enhance agility, flexibility, and resiliency by investing in new digital technology that enables close-knit collaboration with partners across the pharma value chain.
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Activities and stakeholders in the pharma value chain
The pharma value chain refers to the many entities and organizational, operational, and value-adding activities involved in developing and delivering pharmaceutical products to market. Its stakeholders include:
- Pharmaceutical manufacturers that research, develop, and produce drugs.
- Contract development, manufacturing, and packaging organizations to which these services are outsourced.
- Wholesalers that purchase large quantities of and distribute drugs from manufacturers to dispensers.
- Dispensers, or retail pharmacies and non-retail dispensers, that provide drugs to consumers and patients.
- Consumers who use the drugs to treat their illnesses and other health conditions.
In the U.S., the pharma value chain also includes payers such as health insurers and employers and financial intermediaries like pharmacy benefit managers (PBMs) who do not actually handle pharmaceutical products but have a significant influence on the pharmacy supply chain.
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Trends affecting the pharma value chain
There are a few key trends impacting the pharma value chain today. One trend has been a shift to greater use of personalized therapies, also referred to as precision medicine. This includes cell and gene therapies and is leading to increased use of small scale, modular manufacturing facilities. Because these products are time-sensitive and more susceptible to damage and contamination in transport, they are increasing the need for real-time pharma supply chain management.
Another trend in the pharma value chain is growing demand for high-potency active pharmaceutical ingredients (HPAPIs), which are being used to develop more effective treatments for cancer and other conditions. While they represent a niche market, they are impacting the supply chain as a result of their need for special handling and unique considerations in terms of manufacturing facility design, equipment, and procedural controls. And finally, two trends that we are seeing as a result of the pandemic are the global expansion in production capacity for vaccines and greater investment in digital tools used for automation and optimization in the pharmaceutical supply chain.
Building resilience into the pharma value chain
The pandemic led forward-thinking firms to think strategically about building resilience into the pharma value chain to better minimize stockouts and shortages in the future. Some are investing in the reshoring of manufacturing and increasing automation throughout the supply chain. Others are building capacity buffers into their manufacturing facilities and securing multiple backup sources for key materials. Many are leveraging digital tools and technology to increase transparency and trust across the supply chain.
They are using digital supply network technology to share data seamlessly with upstream and downstream trading partners and obtain end-to-end supply chain visibility. This allows them to better predict demand and detect and mitigate emerging risks, unforeseen delays, and potential disruption. The digital supply network also helps foster collaboration, allowing them to work closely with supply partners to proactively manage, optimize, and strengthen pharma value chains.
The patient-centric pharma value chain
The TraceLink digital supply network, which now has over 300,000 members, is connecting and supporting partners across the pharma value chain. Bringing together providers of pharmaceuticals, medical devices, and healthcare services on one platform, the network is helping its member organizations create patient-centric supply chains. It provides them with digital networking technology and multienterprise work management applications that they can use to develop and establish a fully integrated and agile healthcare value chain. They get access to real-time information and actionable insights from across the supply chain, intelligence they can use to adapt to changing market conditions, ensure the availability of critical medicines and treatments, and improve patient outcomes.
Pharma Value Chain FAQs
What is the pharma value chain?
The "pharma value chain" refers to the activities and entities involved in developing and delivering pharmaceutical products to healthcare providers, pharmacies, and consumers. It is made up of three major components: manufacturing, which includes the initial research and development of pharmaceutical products; distribution, or the transport and delivery of pharmaceutical products to dispensers, which includes retail pharmacies and non-retail dispensers such as hospitals and clinics; and dispensing, or the provision of medications to patients and consumers.
How is digitalization transforming the pharma value chain?
Digitalization is making it easier to track and trace pharmaceutical products, combat drug counterfeiting and cargo theft, and monitor and maintain cold chains. Digital tools are being used to streamline and automate supply chain management and increase transparency across the pharma value chain. Digital networking technology and multienterprise work management solutions are being used to foster collaboration and build resilience into healthcare supply chains.
What is an intelligent pharma value chain?
An intelligent pharma value chain is one that is dynamic, tightly integrated, and quickly adaptable to change. It leverages IoT sensors and digital networking technology to integrate data from across the supply chain, and supply chain data analytics to generate actionable insights. These insights can then be used to improve the quality and speed of decision making, orchestrate operational efficiency, and create a highly efficient, connected, and resilient pharma value chain. It also provides supply partners with the end-to-end visibility and intelligence they need to improve demand forecasting accuracy, optimize inventory and logistics management, and prevent or mitigate the impact of delays, disruptions, and other adverse events in the supply chain.