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Pharmaceutical Industry Supply Chain

As a result of economic globalization and increased outsourcing, supply chains have grown more complex in recent years. And with the added impact of extreme weather events, climate change, geopolitical tensions, and a global pandemic, the potential for disruption in supply chains is greater. The supply chain of the pharmaceutical industry is particularly large and complex, and the need for innovation in the pharma value chain is greater than ever before.

That is why pharma companies large and small are looking for ways to ensure the stability of pharmaceutical industry supply chains—and looking to digital technology that can help them build resilience, agility, and patient-centricity into supply chain planning and execution.

Find out how pharma and healthcare organizations are building resilience and agility in the aftermath of COVID-19. Download the IDC Whitepaper: Solving the Pharma Supply Chain Struggle.

A brief outline of the pharmaceutical industry supply chain

The supply chain of the pharmaceutical industry has traditionally been one of the most complex and least connected supply chains in the U.S. It starts with the initial sourcing of raw materials from approved suppliers, flows through the manufacturing and packaging of pharmaceutical products, and ends with the delivery of approved medications to dispensers and consumers. It includes globally dispersed parties involved in the sourcing, production, storage, transport, and distribution of medications.

The pharmaceutical industry's supply chain encompasses a variety of stakeholders including the manufacturing companies that research, develop, and produce the products; the wholesalers that distribute products to dispensers, which includes retail pharmacies and non-retail dispensers such as hospitals, clinics, and long-term care facilities; the pharmacies that provide approved medicines to patients; and the consumers that purchase and use them. It also includes organizations and entities that never handle pharmaceutical products but have a significant influence on the supply chain. This includes payers such as health insurance companies and financial intermediaries such as pharmacy benefit managers (PBMs) who negotiate the price of medications with manufacturers on behalf of payers.

Learn about how building a more agile, resilient supply chain can better prepare your company to respond to large-scale disruption. Download the eBook: What You Must Know to Survive a Supply Chain Crisis—5 Priorities from 4 Industry Experts.

Top challenges facing the pharmaceutical industry supply chain

The pharmaceutical industry supply chain is plagued by challenges, or unique characteristics and trends in the pharma value chain that make drug supply management difficult. These include disconnected IT systems and a lack of visibility, agility, and resilience. The pharmaceutical industry supply chain is also beset by a continued reliance on time-consuming manual and paper-based processes.

In order to overcome these challenges and increase pharmaceutical supply chain optimization, progressive organizations in the healthcare sector are turning to innovative digital tools and technology. They are investing in technologies like cloud-based supply chain networks and multienterprise work management software to streamline, automate, and enhance pharma supply chain management.

Building resilience into the pharmaceutical industry supply chain

Drug manufacturers, retail pharmacies, and other partners in the pharmaceutical industry supply chain can now leverage a wide variety of innovative tools and technologies to make their value chains more efficient, responsive, and secure. They can use IoT sensors to track and monitor the flow of products, safeguard the cold chain, and ensure on-time delivery. They can use data analytics to turn their sensor data into actionable insights and use digital supply network technology to monitor demand signals, predict shortage risks, optimize inventory management, and improve supply chain forecasting accuracy. They can use pharmaceutical supply chain solutions to streamline supply chain operations and take a more sophisticated approach to supply chain management.

Using digital supply networks and multienterprise work management tools, pharma companies can break down data silos and facilitate constant communication and coordinated workflows across the pharmaceutical industry supply chain. With TraceLink's Digital Supply Network, which was designed specifically for the healthcare sector, firms can significantly improve visibility across the end-to-end pharma supply chain. Trading partners can share information and insights to improve efficiencies, avoid disruptions and delays, and ensure that medicines are delivered on time and in full. They can collaborate more effectively, working together to create a highly integrated, efficient, and resilient pharmaceutical industry supply chain.

Developing patient-centric pharmaceutical industry supply chains

With TraceLink's digital supply network, pharmaceutical manufacturers, health systems, and other stakeholders in the pharmaceutical industry supply chain get the granular end-to-end supply chain visibility and collaborative tools they need to create patient-centric supply chains. Healthcare providers are increasingly shifting away from a one-size-fits-all approach in favor of personalized medicines, including next-generation cell and gene therapies, to improve patient outcomes. Entities across the pharmaceutical industry supply chain can use the digital supply network to share data across systems in real time via the cloud, monitor demand, and adjust supply chain response to meet the needs of patients. They can coordinate their efforts to better mitigate unforeseen delays, prevent stockouts and shortages, and improve the availability and quality of medicines.

On-demand webinar: The Only Comprehensive Analysis of the Pharmaceutical Supply Chain During the Pandemic

Pharmaceutical Industry Supply Chain FAQs

What is the pharmaceutical industry supply chain?

The "pharmaceutical industry supply chain" refers to the confluence of activities and entities involved in manufacturing and delivering pharmaceutical products to consumers. It includes the manufacturers that develop and produce the products; the approved suppliers from whom they source their raw materials; the wholesale distributors who purchase and distribute products to dispensers; the dispensers, or retail pharmacies and non-retail dispensers, who provide the products to consumers; and the consumers who purchase and use the products. Other parties in the pharmaceutical industry supply chain include contract organizations to which manufacturing, packaging, and other services are outsourced, payers such as health insurers, and financial intermediaries such as pharmacy benefit managers.

How can the pharmaceutical industry supply chain be made more resilient?

A truly resilient supply chain requires that all trading partners be able to seamlessly share information and insights, collaborate closely, and coordinate their efforts in anticipating change and adapting to unforeseen circumstances. The best way to foster cooperation and collaboration across the supply chain is through the use of digital networking technology and multienterprise work management software.

What are the major weaknesses in the pharmaceutical industry supply chain?

Vulnerabilities that impact the supply chain include its globally distributed, disconnected, and fragmented nature, a lack of redundancy and diversity in suppliers, and a lack of visibility that makes it difficult to respond to unexpected or sudden changes in demand.

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