How to Overcome the Top 4 Pharma Supply Chain Challenges

Pharma supply chain challenges have evolved in recent years, as a result of global events such as the Covid pandemic, shaping a new focus on resilience over service streamlining for organisations in the sector.

For example, in 2020, when the pandemic was in its infancy, an overwhelming 70% of pharmaceutical leaders experienced supply chain vulnerability, with in-full delivery of medicines decreasing by nearly 50% in the first few months of the year. 

Research from McKinsey reveals leaders face a growing need to move away from sole sourcing for cost reduction, towards prioritising supply chain diversity, stability, and reliability to combat continued disruption. 

Establishing a successful medicine supply chain means conserving lessons learned, and recognising the challenges still left ahead for the industry. In this article, I’ll delve into the four, most prominent pharmaceutical supply chain challenges remaining today. 

You can expect to discover:

• The top 4 supply chain challenges facing the sector
• Why businesses are utilising scientific services over traditional insourcing options
• How you can futureproof your supply chain strategy after COVID-19

Tackling the top 4 pharmaceutical supply chain challenges

1. Labour shortages

Rising competition for talent has led to many businesses being unable to scale at the pace needed to meet the requirements of developing projects. During the pandemic, this became particularly clear as workforce shortages led to bottle necks in the manufacturing process, inhibiting the potential of COVID-19 therapies and diagnostics with a shorter lifecycle. 

Some pharma businesses with robust connections into the talent market, had a greater capacity to scale alongside priority projects during COVID-19. However, no matter how effective the recruitment method, most businesses unanimously faced talent shortages, and high levels of competition with other businesses to attract the best talent. 

While many organisations choose contractors to counteract recruitment challenges, there remain key disadvantages that hinder efficacy. Most notably, contractor use inadvertently increases admin and onsite management pressures, while driving greater rates of workforce attrition.

Onsite scientific services are proving a successful alternative for organisations across the pharmaceutical sector. Scientific service businesses embed a fully trained team of lab professionals onsite to deliver the work needed, while proactively managing training, ensuring compliance, continuity and back office support (payroll, HR administration). 

An onsite scientific service business employs staff directly, reducing customer direct FTE headcount outside of AWR or co-employment risks in Europe. This workforce model reduces attrition, cuts direct and indirect costs, increases efficiency and quality of work and helps remove laborious routine core and non-core activities from the internal workforce.

Synergy Scientific Solutions provides an example of this service in action.

During the pandemic, Synergy worked with Cignpost Diagnostics, a COVID-19 screening and onsite testing provider, and rapidly grew an agile rapid response team of 300 experts, despite industry labour shortages. Synergy’s agile approach and capabilities are in part down to its links to the talent sector. Unlike many other organisations, Synergy is embedded within the SRG group and benefits from direct access to the best talent - this enables Synergy to consistently deliver responsive and scalable workforce support. 

2. Sole provider sourcing

While sole sourcing of suppliers has typically been attributed to improved cost efficiency, the pandemic laid bare the vulnerabilities it can create for businesses. Relying on a small group of suppliers without supplier diversification can create critical supply chain vulnerability. 

A larger network of providers across multiple non-environmentally vulnerable geographic regions can improve manufacturing agility, as well as ensure supply chain continuity across times of uncertainty. Strained global supply chain relations over the course of the pandemic highlighted the growing importance of domestic and local manufacture for most countries and has incentivised governments to take action. 

In the U.S, the bipartisan act of Promoting Readiness and Ensuring Proper Active Pharmaceutical Ingredient Reserves of Essential Medicines (PREPARE) was introduced in 2021. The PREPARE act aims to both build an emergency supply of key ingredients, alongside incentivising domestic manufacture to build a more resilient domestic supply chain. 

U.S Senator Bill Cassidy, M.D describes how the act will improve the U.S’ capability to react to future disruptions in an offical press release, “the pandemic has revealed gaping holes and vulnerabilities in our supply chains – perhaps none more critical than our medical supply chain”. He states “there is no reason we should be relying on countries like China or India for nearly 90 percent of these critical pharmaceutical ingredients, when we have talent scientists and manufacturers right here”. 
 
Meanwhile, countries across Europe are following suit. In an agreement between the Austrian government and Novartis’ Sandoz, Austria's government has agreed to contribute €50 million towards Sandoz’s manufacturing upgrades in the country. 

The agreement sees Sandoz committing to penicillin API production in Europe for the next decade and developing facilities across both Austria and Spain over the next 3-5 years.

In Kundl, Austria, Sandoz will develop the last remaining integrated antibiotics production chain outside of Asia. Sandoz will equip its factory with advanced manufacturing technology to produce oral amoxicillin – a key ingredient in the company’s leading penicillin product amoxicillin/clavulanic acid (generic version of Augmentin). 

3. Visibility into supplier risks

Although some risks across the supply chain are unavoidable, leaders should seek to minimise disruption through maximising risk visibility, improving risk management, and investing in advanced manufacturing and AI to boost operational capacity to anticipate and react to disruption. 

A growing number of pharmaceutical organisations are proactively making these investments, including Sanofi. In early 2022, Sanofi announced a new research collaboration with Exscientia, an AI organisation Sanofi has worked with since 2016. Sanofi’s latest collaboration will see a focus on 15 novel small molecule candidates across oncology and immunology. Exscientia’s end-to-end AI driven platform will utilise real patient samples and streamline drug discovery while limiting risks. 

Frank Nestle, Global Head of Research and Chief Scientific Officer at Sanofi describes how, “the application of sophisticated AI and machine learning models will not only shorten drug discovery timelines, but will also help to design higher quality and better targeted medicines for patients”.

Active pharmaceutical ingredient (API) shortages and logistical limitations across the course of the pandemic led to an overall increase in domestic manufacture; enabling more organisations to take greater scrutiny over any vulnerabilities within the supply chain. While many processes still occur on a global scale, international suppliers face growing pressures to boost visibility to remain competitive in an increasingly domestic market, facilitating greater transparency. 

4. Preparation for future disruptions

COVID-19 is not the only unprecedented event to disrupt the pharmaceutical industry. There are multiple sources for potential future disruption, ranging from climate events, to financial crises. McKinsey estimate future disruptions to the pharma industry are likely to drive a loss of 24% of one year’s earnings before interest, tax, depreciation, and amortization every decade.

Among the list, cyberattacks and trade disputes pose the greatest risk of supply chain disruption to the pharmaceutical industry. High levels of international trade, alongside international data flows and increasing levels of digitization drive the frequency of these risks.

Conducting thorough risk analyses of international suppliers, maximising supply chain visibility and building a geographically diverse supplier network are just some preparatory solutions to safeguard against future disruption.

Need help future-proofing your supply chain?

Synergy Lab Services help laboratories strengthen their supply chains and boost their operational agility with flexible teams, and staffing options who are sourced, managed and developed by us. 

Powered by SRG, Synergy’s unique links to the talent market enable responsive, scalable workforce options to suit every project, no matter how big or small.