Charting the Future: Navigating Pharmaceutical Supply Chain Challenges through Digitization

Picture this: you’re diagnosed with lung cancer, and you find out your hospital as well as hospitals in the surrounding area are facing critical shortages of the lifesaving medications needed for your chemotherapy. Now, they need to administer a rationed amount of the drug, far less than what you require, and hope that it can suffice. According to the American Society of Health-System Pharmacists, “about 1 in 3 hospitals say they’ve either skipped, delayed or prescribed less medication to patients than was needed because of supply gaps”(Drug Shortages…).

Shortages are just one of the many problems that can result from bottlenecks and issues within the supply chain. The COVID-19 pandemic exposed numerous weaknesses within the supply chain systems, with only one clear solution: digitization. The pharmaceutical industry has been slower than other industries to fully digitize supply chain operations in a show of caution and due to heavier regulations, but this caution is becoming an increasing obstacle. As the pharma industry faces growing challenges — including supply chain complexity, counterfeiting, and rigid parameters for maintaining drug integrity, among others (Gaining an Edge…) — digitization can help the pharmaceutical supply chain avoid losses and ensure patient safety. Exploring areas of opportunities for digitization within the pharmaceutical supply chain to address some of these pressing issues will be the focus of this article.

The pharmaceutical supply chain covers the end to end cycle of a medication from production to delivery and encompasses manufacturers, distributors, pharmacies, physicians, and more—all with the goal of supplying medications on time and in adherence to quality and safety standards. Here is a simplified overview of the traditional pharmaceutical supply chain:

1. Drug Development: through Research and Development (R&D) and clinical trials, new medications are developed by scientists.
2. Manufacturing: Ingredients are synthesized into drugs, following rigorous industry standards and set parameters for each drug (such as temperature or incubation time).
3. Packaging and Distribution: These drugs are then packaged as pills, tablets, syringes, etc. They receive labels and then are distributed either to wholesalers or directly to pharmacies.They can be transported via road, air, rail, and maritime shipments. During this time, it is critical the medications remain in safe and high quality condition - many of them have high standards to maintain to preserve the efficacy of the active ingredients.
4. Pharmacy Dispensing: Pharmacists then receive the drug shipments and dispense them to patients accordingly.
5. Patient Receipt: The final step, as patients get access to these medications and take them under the guidance of a healthcare professional to achieve desired health outcomes.
   

However, the current state of the pharmaceutical supply chain faces many challenges, including but not limited to:

1. Counterfeit Drugs: Counterfeiting poses a significant threat to patient safety and company brand integrity. A counterfeit medication/drug is a medication or pharmaceutical item that is produced and sold with the intent of deceptively representing its origin, authenticity, or effectiveness. It might include incorrect amounts of active components or none, could undergo improper processing in the body (such as inadequate absorption), may consist of undisclosed ingredients, potentially harmful, not listed on the label, or might be provided with misleading or counterfeit packaging and labeling (Pathak, Ranjana, et al). They often infiltrate the supply chain at various points and can be difficult to control.
   
2. Cold Chain Losses: In order to preserve the quality and effectiveness of medications, many medications have extremely specific temperature parameters that must be maintained throughout the supply chain (From Bottlenecks…). These medications are often shipped by sea or air freight using active (energy/battery powered) and passive (insulating materials, refrigerants or phase-change materials) cooling solutions. Cold chain compliance is a regulatory requirement from the start to the end of the end to end supply chain cycle and, if broken, leads to economic damage or worse, patients’ health could be at risk. Issues more frequently occur during the last stage of the supply chain – the last mile delivery. At this step, cold chain medicines are transported in less well temperature-controlled environments and temperature fluctuations might happen. According to the IQVIA Institute for Human Data Science, the pharmaceutical industry loses approximately $35 billion annually due to temperature-controlled cold chain logistics failures (Pharma’s Frozen Assets…) Discarding expensive medications that are no longer safe is a severe loss for pharmaceutical companies.
   
   
3. Supply Chain Disruptions: From the unprecedented global COVID-19 pandemic to unforeseen natural disasters, geopolitical tensions to inaccurate planning and forecasting, supply chain disruptions refer to often uncontrollable and unpredictable elements that lead to bottlenecks, shortages, and delays in the delivery of drugs.
   

In order to mitigate some of these challenges, implementing digitization measures within the supply chain through the technologies listed below is a key recommendation for pharmaceutical companies:

1. Blockchain Technology: Blockchain is an immutable ledger that facilitates the process of recording transactions and tracking assets in a business network (What is…) and across the supply chain. Immutable refers to the inability to alter the information— by recording transactional information using blockchain, it significantly reduces the risk of tampering which can lead to counterfeit drugs and a lack of regulatory compliance.
   
   
2. IoT (Internet of Things) Sensors: Sensors transmit data on an ongoing basis, which allows for real-time insights to be gleaned across the supply chain. This will allow significantly shorter lead times— days rather than weeks or months. Paired with better planning accuracy, this will reduce stockouts, and ultimately save patients’ lives (Gaining an Edge...) Sensors are capable of tracking data such as location, temperature, process conditions, process time, humidity, and more. IoT sensors can read and report the various codes used on packaging as product moves into the warehouse and through to distribution, which improves inventory accuracy (Using Sensors…) Being able to use this data collected with sensors in tandem with data analytics will allow for the preservation of the integrity of pharmaceutical products, especially those requiring strict temperature control - thereby reducing cold-chain losses. It can also aid in metrics reporting and enhance the overall transparency of the supply chain, aiding in a pharmaceuticals company’s ability to comply with industry regulatory standards.
   
3. Data Analytics: Analytics tools leverage data to optimize supply chain operations. The data from sensors and transactions across the supply chain can help pinpoint buying patterns, areas of risk, delays and timings, and more important data than can be used to improve cost efficiency and save time. Data analytics tools often leverage Artificial Intelligence in order to build predictive models (McLaren). These are incredibly useful in understanding where exactly there may be fluctuations in demand patterns by looking at historical data — crucial to mitigating supply chain disruptions. Large pharmaceutical companies have slowly begun to enhance their data analytics and integration of artificial intelligence. At Pfizer, for example, “AI and automation are helping to reduce cycle times [the amount of time it takes to manufacture start to finish]…the company is also using machine learning to…ensure regulatory compliance.” (Golub, Amitai, et al).
   

In conclusion, the integration of the aforementioned technologies will not only address current challenges, but will allow for an industry-wide strategic shift that is more proactive rather than reactive. Digitizing the pharmacy supply chain will allow for enhanced protection against easily avoidable losses and chain-wide disruptions, ultimately benefiting the companies as much as patients. Predictive data models and hardware technologies will allow for greater accuracy and mitigation of risk, while stronger tracking systems will build resilience and cybersecurity. As pharmaceutical supply chain infrastructure continues to innovate, we come closer to a future where no patient’s life is at risk over preventable logistical challenges.

Works Cited:

“Drug Shortages Causing Hospitals to Skip, Delay or Ration Care, Survey Finds.” NBCNews.Com, NBCUniversal News Group, 10 Aug. 2023, www.nbcnews.com/health/health-news/drug-shortages-causing-hospitals-skip-delay-ration-care-survey-finds-rcna99007.

“From Bottlenecks to Breakthroughs: How Digitization Can Solve Pharma’s Supply Chain Woes.” Moglix Business, 20 Mar. 2024, blog.business.moglix.com/from-bottlenecks-to-breakthroughs-how-digitization-can-solve-pharmas-supply-chain-woes/.

Gaining an Edge in Operations Digitization in Pharma, www.strategyand.pwc.com/gx/en/insights/2016/digitization-in-pharma/digitization-in-pharma.pdf. Accessed 4 May 2024.

Golub, Amitai, et al. “Rewired Pharma Companies Will Win in the Digital Age.” McKinsey & Company, McKinsey & Company, 14 June 2023, www.mckinsey.com/industries/life-sciences/our-insights/rewired-pharma-companies-will-win-in-the-digital-age.

McLaren, Miranda. “Embracing Digitalization in the Pharmaceutical Supply Chain.” Pharmaceutical Technology, 27 Jan. 2023, www.pharmaceutical-technology.com/sponsored/embracing-digitalization-in-the-pharmaceutical-supply-chain/.

Pathak, Ranjana, et al. “Tackling Counterfeit Drugs: The Challenges and Possibilities.” Pharmaceutical Medicine, U.S. National Library of Medicine, July 2023, www.ncbi.nlm.nih.gov/pmc/articles/PMC10184969/.

Pharma’s Frozen Assets - Cold Chain Medicines, www.iqvia.com/-/media/iqvia/pdfs/library/white-papers/iqvia-pharmas-frozen-assets_final.pdf. Accessed 4 May 2024.

“Using Sensors & IOT for Pharmaceutical Manufacturing: ATS.” Advanced Technology Services, www.advancedtech.com/blog/sensors-and-iot-in-pharmaceutical-manufacturing/#:~:text=Logistics%20and%20supply%20chain%3A%20IoT,and%20helps%20meet%20traceability%20requirements. Accessed 3 May 2024.“What Is Blockchain?” IBM, 18 Mar. 2024, www.ibm.com/topics/blockchain.