The recent COVID-19 pandemic has brought to light the significant role of the pharmaceutical industry and its supply chain in enhancing people's health and well-being. As a result, and in addition to other factors, this industry has witnessed tremendous growth over the past two decades. The worldwide value of pharmaceutical products has grown up to sixfold, from $113 billion in 2000 to $629 billion in 2019, as stated in a report by McKinsey & Company. Let alone in 2022, the global pharmaceutical market was estimated to be around $1.48 trillion, as per a recent report by [Statista](https://www.statista.com/statistics/263102/pharmaceutical-market-worldwide-revenue-since-2001/#:~:text=For 2022%2C the total global,at 1.42 trillion U.S. dollars.).
The pharma industry's supply chain component is critical to function effectively. It is complex and multi-layered, involving several stakeholders, including manufacturers, distributors, logistics service providers, and retailers. The Covid-19 pandemic has highlighted the fragility of the global pharmaceutical supply chain. Disruptions caused in that period have shown the need for pharma companies to take a more resilient and agile approach to supply chain management.
According to a recent report by EY, "Pharma Supply Chains of the Future," greater localisation of supply chains could increase their resilience and reduce the impact of disruptions. To achieve this, pharma companies must embrace digital transformation and adopt real-time monitoring technologies.
The industry faces unique supply chain challenges as it grapples with disruptions to the distribution and safety of its products. Any challenges experienced during the distribution process can significantly affect a company's profits because every shipment, no matter its size, is valuable. More than ever, the supply chain must have greater visibility and deeper levels of insight for all parties involved in the process.
Data collection is not a new concept in supply chain management, but the concern is whether it is accurate. The reliability, real-time tracking, accessibility, readability, and shareability of the data are all critical factors that impact supply chain management decisions.
To make meaningful decisions, stakeholders must understand how to leverage the insights gained from all of the data collected. Ineffective data management can cause serious problems in the supply chain, preventing companies from increasing efficiency, enhancing quality, and lowering prices. Gaining control through using accurate data to gain insights allows for improvement and identification of new valuable opportunities.
Real-time tracking of pharmaceutical shipments speeds up distribution and helps solve frequent problems, such as compliance concerns. Supply chain executives are given the tools they need to solve challenges and gain insights that will help them make proactive decisions regarding operations thanks to customised tracking alerts and real-time data.
The pharmaceutical sector deals with a wide range of items, including prescription pharmaceuticals, over-the-counter medications, and medical equipment. For guaranteeing these medications are constantly accessible to patients in need, strict inventory control is necessary.
In the current context, many pharmaceutical companies employ sophisticated computer systems that monitor their products' movements across the supply chain to maintain inventory levels. It aids them in preventing shortages and the waste of out-of-date goods. To guarantee that raw materials and other necessary components are accessible when needed pharmaceutical companies also maintain strong relationships with their suppliers.
But there is still a chance for unexpected supply chain disruptions, like with the COVID-19 pandemic, which affected the global pharmaceutical supply chain. Companies have put in place backup measures to deal with these delays, including stockpiling essential products and seeking alternate raw material suppliers. Although it can be difficult to forecast supply chain disruptions, businesses should plan cautiously and retain 12 to 26 months (about 2 years) worth of inventory on hand.
Procurement of active pharmaceutical ingredients (APIs) and other raw materials is one of the biggest problems facing the pharmaceutical industry. It is challenging for businesses to guarantee the safety and effectiveness of their goods since many of these substances are supplied from nations with various regulatory frameworks and quality standards.
Additionally, trade restrictions and geopolitical tensions may have an influence on the availability of these essential components. This has prompted proposals for a more varied supply chain and more financial support for the manufacturing of APIs locally.
Numerous stakeholders, including drug manufacturers, suppliers, wholesalers, and retailers, play a role in the complex pharmaceutical supply chain. This is why the industry is heavily regulated and must comply with various regulations, including Good Manufacturing Practice (GMP), Good Distribution Practice (GDP), and Good Clinical Practice (GCP). These regulations aim to ensure product safety, quality, and efficacy; however, it can also introduce complexity and increase costs.
In addition to regulatory compliance, the pharmaceutical industry faces numerous challenges in optimising its supply chain processes. These challenges include: