Some industry experts characterize the ongoing post-pandemic supply chain disruptions as a case of industrial long COVID. The analogy is appropriate, as global supply chains in all industries are experiencing long-term effects from a complex condition that’s challenging to treat.
We’re all familiar with how the COVID-19 pandemic lockdowns, labor shortages, and transportation challenges disrupted supply chains and logistics. Increased demand for certain drugs and pharmaceutical ingredients exposed additional vulnerabilities in the pharmaceutical supply chain, setting the stage for ongoing disruption.
The pharmaceutical supply chain is complex, lacks end-to-end visibility, and continues to face numerous challenges. This means ongoing drug shortages, which increased by nearly 30% in 2022 in the US, marking a trend that’s expected to continue for years to come. The all-time high frequency of drug shortages raises costs, preventing consumers from filling prescriptions and reducing sales industry-wide.
The seven major factors that continue to disrupt the pharmaceutical supply chain as we head into 2024 include:
- Geopolitical Uncertainty
- Legal and Ethical Considerations
- Economic and Market Dynamics
- Technological Challenges
- Environmental Policy
- Natural Disasters
Geopolitical tensions significantly impact the pharmaceutical supply chain. Major API manufacturers (China and India) are interdependent, with India relying heavily on China. India is currently working to reduce their reliance on China.
Any overreliance on sources from concentrated geographic areas presents challenges in strategic sourcing and management for API manufacturers. Active geopolitical conflicts, like Russia’s invasion of Ukraine and the Israel-Hamas war, further exacerbate existing supply chain vulnerabilities.
These challenges are driving a shift from “just-in-time” to “just-in-case” manufacturing, emphasizing a proactive approach.
Legal and Ethical Considerations
Legal and ethical considerations are paramount in drug production and supply, especially concerning equitable access and distribution.
Ensuring fair access to medicines becomes crucial during crises. The WHO is formulating a global accord on pandemics to prevent future calamities and guarantee equitable medicine access, with deliberations set for 2024. Concurrently, the U.S. Department of Health and Human Services is reinforcing affordable, equitable access to quality healthcare access.
Economic and Market Dynamics
Economic and market dynamics, including inflation, pricing pressures, competition, and profitability, play a pivotal role in the pharmaceutical supply chain.
Inflation escalates healthcare input costs and potential labor shortages. And when input costs and shortages of all types are coupled with rising demand, inflation is sustained. Prolonged economic inflation, in turn, impacts profit margins and leads to supply constraints for certain products.
It’s important to remember that market dynamics are driven by policy. For example, well-intentioned economic incentives and policies may not always align with ensuring a robust and resilient supply chain. While incentives like government subsidies, can significantly influence pharmaceutical enterprises’ low-carbon investments, they don’t necessarily bolster supply chain resilience.
Technological and Innovative Challenges
Pharmaceutical manufacturers are integrating new technologies throughout their processes to ensure a robust supply chain.
Monitoring software, for example, offers real-time product tracking aiding early problem detection potentially avoiding quality issues, scaling challenges, and other disruptions. When paired with tools like AI, blockchain, and other emerging technologies, the resulting tech stack promises more resilient manufacturing processes with fewer interruptions and enhanced quality management.
Despite the widespread availability of numerous game-changing tools, adoption of new technologies remains a barrier. Seamless integration of today’s new technologies and novel therapeutic modalities relies on user acceptance, network connectivity, and the ability to overcome technical challenges.
The COVID-19 pandemic heightened cybersecurity challenges across the pharmaceutical industry, especially within the supply chain. The increased reliance on third-party sources led to a surge in the use of cloud and hybrid-cloud collaborative platforms, which amplified risks.
Ransomware and malware attacks targeting R&D infrastructure for intellectual property theft also intensified. Recognizing cybersecurity as a paramount concern, the industry is now integrating emerging technologies, such as big data and analytics. Additionally, third-party risk assessments are being fortified with advanced cybersecurity measures to ensure robust protection.
Pharmaceutical manufacturers and suppliers are prioritizing sustainability in response to environmental challenges and the impacts of climate change on the supply chain. Adopting sustainable strategies is crucial for the industry to mitigate its environmental footprint, curtail greenhouse gas emissions, conserve natural resources, and address pressing climate concerns.
Companies are progressively embracing eco-friendly manufacturing practices, including leveraging renewable energy, conserving water, and refining production methods to reduce waste.
Natural disasters, such as tornadoes, hurricanes, floods, snowstorms, wildfires, and earthquakes can profoundly disrupt the pharmaceutical supply chain at every level. Even disasters in foreign countries can significantly impact domestic supply.
Other types of large-scale disasters, like power outages or workforce shortages can also slow or curtail manufacturing.
During these events, heightened consumer need elevates product demand while supply diminishes, and external support is often needed.
Navigating the Changing Landscape
The pharmaceutical manufacturing supply chain faces ongoing challenges.
Collaborative strategies involving manufacturers, regulators, and governments are essential. Because demand persists, the industry will ultimately innovate to fill the need. Innovations will focus on:
- Drug availability
- Quality and compliance
- Strategic sourcing and management of APIs
- Partnerships fully aligned with manufacturing objectives.
LGM Pharma’s Unique Approach
LGM Pharma’s unique approach to API sourcing and manufacturer management offers a robust solution to the challenges faced by pharmaceutical manufacturers in the wake of ongoing supply chain disruptions.
- Strategic API Sourcing
We emphasize reducing supply chain costs and risks. With a vast network of prequalified, geographically distributed API manufacturers, we ensure a reliable supply chain. Our in-house CDMO capabilities ensure a seamless transition from R&D to commercialization.
- API Manufacturer Management
LGM Pharma takes the complexity out of vetting and managing API manufacturers with a rigorous qualification process that ensures manufacturers are compliant from day one. This program includes regulatory checks, evaluation of GMP compliant facilities, and ongoing due diligence. Manufacturers are assessed based on expertise, reputation, cost efficiency, and more.
Pharmaceutical manufacturers can ensure a resilient and efficient supply chain and mitigate the risks of disruptions by leveraging our expertise in strategic sourcing and manufacturer management,
What’s your plan for overcoming supply chain disruptions?
Our API sourcing strategies are uniquely positioned to help you overcome supply chain disruption. Contact us to find out more.