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Pharma needs to rethink supply chains in an era of patent expiry and global outsourcing

By Gareth Macdonald , 26-Mar-2012

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Planning supply chains early is an important part of maintaining margins but is often overlooked by Pharmas too focused on developing the next product in an era of patent expiry says industry consultant.

In-Pharmatechnologist.com spoke with Hedley Rees from Biotech Pharmaflow who said that the supply chain is critical to delivering a value pharmaceutical product to the marketplace which – in turn – is vital for revenue generation.

Any business which wants to maintain sustainable competitive advantage has to be able to provide customers with sustainable, quality products. A lot of the issues that we have with patent expiries exist because the industry has not done the underpinning work to increase effectiveness and efficiency… so that it can make good margins on what it supplies to patients.”

Rees went on suggest that, instead of supply chain efficiency, the drug industry has focused on bringing new products to market as quickly as possible to maintain revenues thereby missing out on the easy wins that are provided by simply doing the basics better.

He also voiced concerns about outsourcing, arguing that drugmakers efforts to find the best deal have created supply chains that are complex, disconnected and inefficient and – ironically given the original motivation – can lock manufacturers into cost escalation and inefficient processes.

As we develop drugs – for some reason - developers  seem to go all over the world to make their various products and…tend not to take a strategic view of sourcing so we find very often that API and excipient suppliers do not get involved until too late.”

Solution, engagement and planning

The solution – according to Rees  - is modernisation, who believes that instead of a ‘mass production’ approach the drug sector needs to adopt a lean model like the automotive industry – which, for example, puts the responsibility for quality on the person making each product.

He also thinks that drugmakers need to engage with suppliers and form closer bonds with contractors for the greatest efficiency gains.

"If we engage in the reintegration of the supply chain or build strong strategic partnerships with contract manufacturers, contract research organisations and logistics services providers...we would see much less complex supply chains with fewer compliance gaps and it would be much more difficult for criminals to damage the industry through counterfeiting."

Hedley Rees is a practising consultant, coach and trainer in Pharmaceutical Operations and Supply Chain Management.   His enduring interest is in driving industry improvements through the regulatory modernization frameworks of FDAs 21st Century Modernization and ICH Q8 – Q11.

His book “Supply Chain Management in the Drug Industry: Delivering Patient Value for Pharmaceuticals and Biologics” can be purchased here .

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