Pascal Degen, Vice President of Global Supply Chain Management at Bachem, explains the challenges faced by the pharmaceutical supply chain in uncertain economic and geopolitical circumstances.
SUPPLY CHAIN RESILIENCE
In an interconnected economy, industries operating on an international scale are increasingly vulnerable to supply chain disruption.
Global events can have a profound impact on all industries, with the pharmaceutical sector particularly at risk due to its extensive and international supply chain.
From chemicals to active pharmaceutical ingredient (API) manufacturing, formulation, packaging, and drug delivery, there is potential for disruption at any stage along the supply chain – such as personnel, materials, service, and equipment shortages.
In recent years, several geopolitical, economic, and environmental global events have placed significant strain on the supply chain. From the blockage of the Suez Canal to the conflict in Ukraine and the trade war between China and the US, the pharmaceutical industry has been severely impacted.
The COVID-19 pandemic, in particular, reinforced how such events can bring the pharmaceutical supply chain under strain, with the need for a robust and flexible supply chain contingency plan against an unpredictable geopolitical climate becoming prevalent.
During the pandemic, the pharmaceutical industry faced disruptions at manufacturing sites caused by various events, such as explosions, unplanned revisions, and natural disasters.
These incidents were additional strains during an already challenging time, exacerbated by political instability in Southeast Asia further destabilising the supply chain.
API MANUFACTURERS IN THE SUPPLY CHAIN
The pharmaceutical supply chain is extensive and involves many players, with ample opportunity for stumbling blocks along the way.
APIs – the primary components that give drugs their therapeutic effect – play a vital part in the pharmaceutical supply chain, meaning disruptions to the production and supply of APIs can have severe ramifications for the availability of essential medications to those in need.
The demand for chemically synthesised peptides has surged recently, largely due to the expansion of peptide applications from niche to mainstream diseases.
In addition, clinical trials favouring chemical synthesis and the emergence of more convenient administration methods beyond injections, such as nasal or oral formulations, have also contributed.
This increased demand necessitates a larger supply of materials – a trend that has been on the rise in recent years.
Presently, there are more than 80 approved peptides and 18 approved oligonucleotides made possible due to a tried and tested robust supply chain.
FROM MATERIALS TO MEDICATION
At API manufacturing companies such as Bachem, a leading specialist in the production of peptides and oligonucleotide API alongside contract development and manufacturing, the supply chain begins at the API level, where upstream chemicals are sourced internationally.
These chemicals are essential in the synthesis required to initiate the manufacture of peptide and oligonucleotide APIs.
Next, the product is either distributed directly to the customer or to a formulation site, where ingredients from across the globe are combined to produce the final medication or finished dose product.
The product is then packaged using globally sourced materials such as aluminium and plastics. This process takes place as near as possible to the market or is consolidated, depending on the organisation’s structure.
MAINTAINING CONSISTENCY AMIDST UNCERTAINTY
To plan against threats in the global pharmaceutical supply chain, companies have implemented various strategies to guarantee a robust supply chain, ultimately ensuring medications reach the users that need them. Key steps include:
- Maintaining strategic stock levels.
- Validating transportation routes.
- Dealing with secondary and tertiary suppliers for key starting materials.
Crucially, an effective supply chain requires resilience across every facet of the pharmaceutical supply chain, whether ecological, societal, organisational, or psychological. This demands adaptability in pressured situations, despite ambiguity or adversity, to turn weaknesses in a company’s supply chain into a strength. Resilience can be underpinned by four pillars:
- Visibility – Understanding your position, anticipating future events, and strategising accordingly is crucial. Full visibility encompasses not just your processes, people, and technology, but also extends to your suppliers and their suppliers, as well as the origin of materials from service providers. This comprehensive visibility is vital for operational efficiency. As such, Bachem has implemented three main elements to ensure visibility is maintained:
a. Risk management – Allows identification and management of risks through an annual deep-dive risk analysis from a demand, supply, and manufacturing perspective.
b. Business continuity management – Prepares teams mentally and logistically for ‘what if’ scenarios, including safety stock levels, transportation route validation, and dealing with secondary and tertiary suppliers for key starting materials.
c. Stringent emergency management system – To respond effectively to incidents. - Flexibility – Crucial for swift and effective responses to disruption. Not being limited to organisational agility, flexibility also includes the adaptability and intuition of employees. Personnel must be versatile in adopting new methods, recognising issues, and integrating problem-solving skills into their daily routines.
Flexibility in thought processes and technology is equally important to maintain resilience in a dynamic environment, which must be initiated from a top-down perspective. Flexibility can often be achieved through a lean management philosophy, which can be implemented across the organisation. - Collaboration – Provides a framework for an organisational structure whilst extending beyond internal operations to encompass external partnerships. However, it must begin within the company fostering a shared language and understanding to facilitate cooperation.
Leadership plays a pivotal role in establishing a structure that promotes a cooperative approach. This common understanding of language, work content, and market objectives is the cornerstone of global alignment, enabling people and organisations to evolve together. - Control – Maintaining oversight of processes and personnel is essential for predicting and managing potential outcomes. These components collectively enhance the ability to manage risks and capitalise on disruptive elements. With agility, a disruptive factor can be transformed into an opportunity.
Many companies put processes and key performance indicators (KPIs) in place to measure their status in order to provide alerts when a system is becoming unstable. Global enterprise resource planning (ERP) systems can facilitate this control across internal and international networks.
Effective control procedures will also involve weekly and monthly measurements to maintain accurate data, helping to continuously improve performance and maintain timely visibility and control over the supply chain, allowing companies to take appropriate measures.
DELIVERING ON COMMITMENTS TO CUSTOMER AND PATIENT
In summary, it’s essential to underscore the importance of supply chain resilience in today’s interconnected world.
Understanding your business and its risks, fostering transparency, and integrating supply chain risk management into your governance and leadership tools are all critical components of this.
Global events can pose significant challenges to the supply of APIs, and thus, the continuity of drug supply. Any disruption can have significant downstream effects, and it is the duty of pharmaceutical companies to ensure their supply chains are robust enough to continue supply in the face of disruption.
Manufacturers must implement robust strategies to minimise these risks and secure the continuous production and supply of APIs.
This necessitates a specialist understanding of the nuance of the global pharmaceutical supply chain and the ability to adapt to an unstable global landscape.
By doing so, manufacturers can fulfil their commitment to ensuring drug supply and making sure patients’ medications are continually accessible.
