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Drug Companies Struggling to Improve Supply Chain to Battle Counterfeiting, Safety Concerns
As global complexity increases risks for pharma and life sciences organizations, track and trace growing in importance to ensure more agile, secure supply chains, IBM study concludes
Armonk, NY — September 16, 2009 — Reducing the risk of counterfeit drugs and contaminated medications amidst the complexity of global manufacturing are among the top concerns of the pharmaceutical and life sciences industries today, according to a new IBM study.
The study surveyed executives at pharmaceutical, biotechnology, medical device and consumer health care industry companies who are responsible for planning, logistics, procurement and coordination throughout the life of a drug or medical device.
More than 50 percent of executives polled for the study said their companies fail to respond quickly enough to pandemics and other emergencies because of lapses in their supply chain. Companies must work to improve their ability to keep wholesalers, hospitals and pharmacies stocked with the products they need to meet patient demand, the study concludes.
Tracking every step of how drugs are manufactured and distributed are key priorities for more than 70 percent of companies. And 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. These are all critical steps to rapidly responding with new vaccines in the event of pandemics, and to ensure that demand does not outstrip supply, IBM writes.
Other key findings:
Compared to 18 other key industries, the life sciences business is one of the most highly globalized, particularly in the area of research and development. But from a supply chain perspective, the industry is not as advanced.
In general, global sourcing brings with it challenges including daunting capacity, quality, lead times and delivery issues. For the life sciences industry, 76 percent of respondents suffer quality issues linked to global sourcing, while nearly 50 percent reported increased sales from their globalization efforts due to the growing population of consumers in rapidly developing markets.
The study surveyed executives at pharmaceutical, biotechnology, medical device and consumer health care industry companies who are responsible for planning, logistics, procurement and coordination throughout the life of a drug or medical device.
More than 50 percent of executives polled for the study said their companies fail to respond quickly enough to pandemics and other emergencies because of lapses in their supply chain. Companies must work to improve their ability to keep wholesalers, hospitals and pharmacies stocked with the products they need to meet patient demand, the study concludes.Tracking every step of how drugs are manufactured and distributed are key priorities for more than 70 percent of companies. And 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. These are all critical steps to rapidly responding with new vaccines in the event of pandemics, and to ensure that demand does not outstrip supply, IBM writes.
Other key findings:
- 64 percent of the executives in the study reported rising customer demands such as requests for designer drugs or specialized packaging as a major challenge
- Monitoring risk to prevent counterfeiting, drug and device recalls, or even the loss of intellectual property, is a priority for 75 percent of executives, as margins become slimmer and supply chain complexity rises. Three-quarters have risk and performance initiatives such as surveillance programs, anti-tamper devices and specialized labeling, but with mixed results.
- 46 percent consider vendor-managed inventory for their customers extremely effective, but only 4 percent use it to ensure they are precisely meeting customer demands for products
- 65 percent collaborate with suppliers on demand planning, but only 31 percent do so with customers, often resulting in an overstock of supplies or missed sales targets.
Compared to 18 other key industries, the life sciences business is one of the most highly globalized, particularly in the area of research and development. But from a supply chain perspective, the industry is not as advanced.
In general, global sourcing brings with it challenges including daunting capacity, quality, lead times and delivery issues. For the life sciences industry, 76 percent of respondents suffer quality issues linked to global sourcing, while nearly 50 percent reported increased sales from their globalization efforts due to the growing population of consumers in rapidly developing markets.
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