Pharmaceutical Supply Chain: In Sickness and In Health

Pharmaceutical Supply Chain

The Pharmaceutical Industry has been making huge advancements for the improvement of human lives since the past few decades. The latest strain of coronavirus alongside human impact and economic downfall has caused a host of problems in the global as well as regional pharmaceutical supply chain. In this special feature, we unveil the vulnerabilities of the sector, the efforts to sustain the pharmaceutical supply chain and cushion provided by the government followed by the sectors’ approach and strategies to stand strong during the pandemic.

During such unprecedented times when the nation is struggling to flatten the curve, a rapid increase in the number of cases turning in daily is putting the life sciences companies in a tough spot. However, the pharmaceutical industry is not only under pressure to help identify and avail treatments and vaccines for the virus, but also obligated to maintain supply chains for existing treatments.

Many companies that used to regularly supply critical and life-saving drugs to the world were closed in different countries due to government regulations. With the disruption, the imbalance between demand and supply was brought to the fore and exposed several vulnerabilities of the pharmaceutical industry, whether it was the transportation issues, overdependence on a single supplier or the availability of raw materials.

The world’s reliance on China for their pharmaceutical value chain has always been the elephant in the room. But its
effects were felt only after the outbreak of COVID-19.

V Raju, Senior Vice President-CL-Chemical, Pharma and Food Sector, Avvashya CCI feels that it was about time the vulnerabilities were exposed.

According to him, “Even before the imposition of the lockdowns and the spread of COVID-19 across the world, the severe disruptions in China were having a ripple effect on global trade flows. Most companies across the globe had been working to make their supply chains leaner. The emphasis had been on minimization of costs and “just in time” deliveries. This has led to a reduction of inventory buffers and left no room for adequate buffers or safeguards. The vulnerabilities of this system have been brutally exposed by COVID-19.”

India is one of the biggest suppliers of generic medicines worldwide. However, being dependent on China for its 70% imports of APIs, posed a greater risk in terms of availability of raw inputs.

Vikram Paul, an independent Supply Chain Consultant in the Pharma/Healthcare segment, while speaking on the vulnerabilities of the industry, points out to an immediate need to eliminate bottlenecks and find alternative suppliers.

He said, “There is an immediate need to create a real-time end to end supply chain visibility and to align contingency
plans with all stakeholders and making sure there are no bottlenecks. It is also crucial to identify nearshore manufacturing facilities and suppliers and also identify and communicate with alternative suppliers.”

The outbreak of COVID-19 comes as a wake-up call for pharmaceutical companies to diversify their supply chain geographically and develop their local sourcing units and adopt alternative strategies for reducing dependency in a single supply source.

A Sustainable Pharmaceutical Supply Chain

As the focus has shifted from mitigating supplier issues in specific regions to addressing global supply chain challenges from logistics disruptions to supply delays, it has become imperative for them to prepare for increased disruptions.

  • Green channel clearances Pan India
  • Maximize available capacity to meet demand
  • Change transport routes and modes to emphasize stress
  • Stress on fairness and transparency on transport cost levels
  • Address consumer demand aggressively and with a calibrated view of the demand and supply.

COVID-19 has further led to reprioritisation of the trials of the vaccines, thus making it critical for companies to identify measures to mitigate slowdowns in trial time or success for clinical trials.

To mitigate the vulnerabilities of the pharma industry, it is essential to take fact-based decisions with end-to-end visibility of the supply chain. Building models that take into consideration the inventory levels, demand patterns, and supplier lead times will give a comprehensive view of the operations.

This would also help address the additional logistics impact such as freight cost, export restrictions, freight options, etc.

This is an abridged version of the original story published in the June issue of Logistics Insider magazine. To read the complete unedited story, download the e-copy of the magazine.

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