Digital Supply Chain in the Pharmaceutical Industry

The pharmaceutical industry is no stranger to the adoption of disruptive technologies in areas such as genomic analysis, big data analytics, or in the patient engagement and commercialization aspects of their business. However, pharma has been much more cautious in the application of new digital technologies to operations such as manufacturing and supply chain.

This reluctance may be due to a few reasons, foremost among them is the fact that pharmaceutical manufacturing and operations are heavily regulated. For example, every change that a company makes to manufacturing process must be documented and validated. This can be time-consuming and expensive for companies which must be carefully weigh the effort of change against the potential benefits. This mindset tends to breed caution when considering the application of changes to operational or production processes.

The industry may also have been a victim of their own past success. The biopharmaceutical industry has traditionally been a high margin business due, in large part, to high volume, patent-protected drugs from the blockbuster era. This has resulted in an industry focused on developing new products and maximizing their production rather than driving operational efficiency and lower costs.

Industry trends such as payers demanding lower costs, the decline in R&D productivity, and double-digit growth rates in emerging markets, are driving the need for more efficient supply chains. These trends will make supply chains more complex due to the resulting increase in the number of products (SKUs) and having to deal with the growing risk of counterfeit drugs. Rising price pressures and increasing demand volatility will drive the quest for lower operational costs, increasing the need for flexible and agile supply chains. Fully integrated supply chains will arise to deliver high visibility and control across their ecosystem of trading partners.

The future of Pharmaceutical Operations is a digital future.

Companies are already beginning to provide digitized products and services to accompany and differentiate their drugs. New business models will emerge based on vertically and horizontally integrated operations and value chains. Data analysis and the ability to act on that information will soon be a core competency of drug companies. Digital transformation and the application of advanced technologies such as big data analytics, the Internet of Things (IoT), machine learning, or emerging technologies such as blockchain will be a key element in achieving this vision.

An example of this is 3D printing, also known as additive manufacturing, which has already made inroads into the medical device industry for manufacturing simple items such as finger splints and high-risk devices like biocompatible implants. This has now spread to the drug industry as evidenced by a group at the University of Glasgow that has devised a method for 3D printing pharmaceuticals. In fact, in 2015 the FDA approved the first 3D-printed drug for treating epileptic seizures.

Think of a world where a pharmacy could 3D print the drugs you need, on site, sidestepping the current complex drug supply chain.

3D printing may even open the possibility of being able to print your prescriptions at home. Imagine the impact of that on the supply chain and future pharma business models.

Pharmaceutical companies beginning their journey into the digital transformation of their supply chains should start by looking across the technology landscape to identify opportunities for applying technology in their environment. Understanding the potential of technology will lead to defining a digital strategy based on the prioritization of these opportunities. Once they’ve prioritized, the next step is to take the plunge and launch pilots in smaller environments, learning from failures and scaling the successful ones.

Effectively leveraging digital technology can transform the future of the pharma industry. The key to life sciences companies surviving and thriving in tomorrow’s healthcare ecosystem may well rest upon a successful digital transformation of their supply chain network.