The last issue of Pharmaceutical Engineering Magazine features a very interesting article about Supply Chain Management. The author, Andrew D. Skibo, gives his view on the most complete changes of the pharma industry that we are about to witness. For those of you who haven’t read it, we have here summarized what we think are the 5 most important takeaways.
🔀 Industry shift
One of the most predominant change, D. Skibo claims, is that the industry is turning “from primary care to specialty products and personalized medicine, and from large-scale production of low-value small molecules to low-volume, high-value biologics”, implying a need for a different risk model that requires deep scientific, clinical, and business expertise. In the event of a supply shortage, the effects on patient health could be severe and should be avoided at all costs. There is also a need for a more agile and flexible supply chain, since potential demand tend to be uncertain and approval times can accelerate dramatically.
🚨 Disrupted marketplace
Historically, pharmaceutical companies have structured their supply chains to work optimally in one traditional marketplace. With the transition from primary care to specialty products, they suddenly have to perform well in two very different marketplaces which of course puts the companies on trial. They must be able to navigate through complicated decision making regarding e.g. different risk models, distribution network size and inventory management and lead time.
🧠 Need for a diverse set of skills
The various challenges that this industry shift generates calls for people who have the experience and skills required to solve these complex problems. As D. Skibo states, “With expansions in large-scale biologics drug substance facilities already underway, we estimate the industry will need as many as 30,000 highly skilled Employees.” To manage this, new recruits need to be innovative thinkers and they should be able to handle a diverse set of diverse disciplines, such as mechanical engineering, software programming, chemical engineering and biochemical engineering.
🕐 Decreased speed to market
Traditionally, when handling primary products, companies place purchase order for an API they’ll need in 18-24 months. When it comes to specialty care products, you build plants for products that are only in Phase I trials which means you need as much as five to six years to plan for a product that is not even close to be released as a finished product for many years. This of course requires extensive planning and forecasting.
⚖ The ability to balance risks and costs (pharma is not sneakers)
With a more complex supply chain, managing risks becomes a challenging task. D. Skibo draws parallels between keeping track of interconnecting nodes in the supply chain and playing nine-dimensional chess – “We must imagine moving a piece to see how it will affect the movement of product many steps later. We must evaluate scenarios in which something unforeseen could affect other parts of the supply chain […]”. He also highlights the fact that the risk profile and tolerance differ a lot from that in the manufacture industry or compared to someone who manufactures sneakers. Well, we definitely agree on that point.