Companies Struggle to Improve Healthcare Industry Supply Chain

More than 50 percent of executives at leading companies in the global pharmaceutical, biotechnology, medical device and consumer healthcare industries say their companies fail to respond quickly enough to pandemics and other emergencies because of lapses in their supply chain. This and other key findings are revealed in a new study by IBM that surveyed top supply chain executives to examine how well they are doing at planning, logistics, procurement and coordination throughout the life cycle of their products.

Titled “The Smarter Supply Chain of the Future: Life Sciences Edition,” the global study also revealed that tracking every step of how drugs are manufactured and distributed is a key priority for more than 70 percent of companies. Yet, while the industry is far ahead of most others when it comes to supply chain planning with suppliers, the study indicates the industry falls far behind on collaborating with customers on demand planning, forecasting and replenishment—all critical steps to rapidly responding with new vaccines in the event of pandemics, and to ensure that demand does not outstrip supply.

Part of the supply chain problem is that more pharmaceutical companies are selling drugs, devices, therapies and services supplied by different partners. In addition, they are serving smaller patient segments, rather than relying on major new drug discoveries that drive revenue over many years. “The companies we spoke with said they are looking to a different kind of supply chain — one that gives the insight to react instantly to risks or threats, is much smarter and [is] able to provide them the insight and agility necessary to compete in a changing marketplace,” said Dr. Philippe Cini, IBM Global Business Services, Life Sciences Supply Chain Management Partner.

Counterfeiting is one of the biggest risks facing the pharmaceutical industry today, and according to the World Health Organization, approximately 10 percent of the worldwide drug supply is counterfeit. To combat such risks, sophisticated simulations and data models can help companies calculate risk, and intelligent products and packaging devices, such as barcodes, RFID tags and other smart devices, can prevent theft.