Supply chain complexity within the Pharmaceuticals industry

on January 8 | in Pharmaceuticals | by | with No Comments

Supply chain management is unique within every industry. The pharmaceuticals sectors follows suit with varied and complex supply chain operations. With a business heavily dictated by consumer security and production affordability, the pharmaceuticals industry regularly operates on a global scale and with many safety mechanisms.

Over the last several decades the pharmaceuticals industry has made increasing changes to its supply chain protocols due. This are regularly attributed to the increasing influence of globalization within the sector, as well as the risks posed to pharmaceutical safety. Such risks impact businesses but more importantly, they impact the patients who rely on the products developed by the industry. Due to the unique attributes and scarcity of drug ingredients, materials are frequently procured from multiple nations. Due to national economic and taxation policies, pharmaceutical companies may elect to manufacture goods in one location, package products in yet another country and distribute and sell finished goods on a global scale.

Globalization has impacted now only how drugs are developed, but where they are distributed to. Emerging markets are projected to drive fifty percent of the industry’s growth by 2014. Many of these emerging markets will require local access sites. The result is a proliferation of plants, products, suppliers, trade channels, customers, demand profiles, and service requirements; further this will necessitate the use of minimal standardization of processes, procedures, and interfaces. All of these factors contribute to a diverse and intricate supply chain model to maximize business success.

The typical pharmaceutical business is far more complex today than in the industry’s heyday. In those times, there were fewer products, more stable demand, and high margins were the benchmark. For drug companies to meet the growing complexity and competition found within the industry today, and the varying demands placed on their operation’s divisions, organizations needed to update supply chain models that supported the strategic priorities. In particular, emphases needed to be placed on increasing dexterity, service, or cost effectiveness of individual business segments.

The drug industry poses a high risk/ high reward environment that are rarely found in other industries. Innovation is vital to market profitability; being first on the market for any new drugs will make the difference in millions, if not billions, of dollars. Further, it is asserted that only one out of every ten thousand discovered compounds actually becomes an approved drug for sale, particularly in the heavily regulated United States market. Because of the rarity of acquiring new patents and products, it is essential that organizations maintain the safety and confidentiality of products. Security in this instance also incorporates the need to thwart corporate espionage.

The daunting espionage challenges facing the industry have become a growing concern internationally. An instance of its prevalence can be exemplified in a 1997 incident, when Bristol-Myers Squibb (BMS) got to experience espionage firsthand. Two naturalized American citizens, Hsu Kai-Lo and Chester Ho, were arrested and pleaded guilty to stealing a certain plant cell culture technology specific to the drug Taxol (pacilitaxel). The threat has become so mainstream, global insurance underwriters, such as Heath Lambert and Samian, have created an entire pharmaceutical related bureaus dedicated to protecting their clients against corporate espionage. In essence, firms and insurers have developed counterintelligence capabilities to prevent the theft of industrial intelligence and to ensure that products have not been tampered with during the production process. These security establishments are not as extensive or cloak-and-dagger as those required for national security concerns; however, these security operations are far more proactive and talent-intensive than what many other business sectors require. These come as a considerable expense not found in other industries, such as retail or tourism, and necessitate the need for increased diligence and security mechanisms during the conduct of business operations.

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