Navigating the Challenges of Pharmaceutical Supply Chain in Asian Markets: Expert Tips and Strategies
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“Health is wealth” was the key global takeaway from the pandemic. It highlighted how critical the pharmaceutical supply chain was and still is - to ensure the prompt and proper delivery of medical products. However, it also exposed gaps made more prominent over the pre-pandemic years.
The traditional supply chain was not built to be adaptable to the surge in demand, which exposes insufficient planning, drug development delays, medical product shortages, and, ultimately, an inflexible supply chain. This was the pivotal moment and opportunity the pharmaceutical industry needed to return to the drawing board to reconfigure their supply chains and strategic approach.
This article entails some of the critical challenges faced by pharmaceutical supply chains involved in Asia and strategic insights on how to tackle these challenges. Let’s get unpacking!
The Challenges Ahead: An Overview
While pharmaceutical companies face numerous supply chain challenges within the industry, the list below emphasizes the urgent areas to which key pharmaceutical leaders should pay closer attention. These include the following.
1. Dependency on single regions for critical materials
Pharmaceutical companies often source critical materials from a single Asian region, with roughly 40% of pharma trades occurring in a single region. For instance, 86% of streptomycin sold in North America was sourced from China alone . This dependency puts them at risk of shortages during natural disasters and local conflicts.
2. Lack of visibility
Limited visibility across the supply chain hampers effective tracking and monitoring of products. For instance, some Asian countries don’t mandate serialization, and each supply chain stage may operate with non-standard product identifiers and processes, preventing data integration. This makes it challenging to identify potential disruptions and quickly respond to supply chain issues.
3. Temperature-controlled logistics
Ensuring the integrity and quality of temperature-sensitive pharmaceutical products is crucial. However, maintaining cold chain capabilities can be challenging in certain regions of Asia where infrastructure (e.g. transportation, storage facilities, and monitoring systems) and environmental conditions may not be optimal (e.g. high temperature and humidity regions such as Indonesia and India).
4. Regulatory complexities
Each Asian country has different regulatory requirements for pharmaceutical products. For instance, in China, pharmaceutical companies must obtain a drug registration certificate issued by the NMPA (a multi-year evaluation for the drug application) before they can produce or sell a drug. On top of that, companies must follow Good Manufacturing Practices throughout the manufacturing process, from raw material sourcing to the finished product development, manufacturing, storage, distribution, and market access. Navigating the complex regulatory landscape adds to the challenges of ensuring compliance and timely market access.
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Strategies and Innovations: Overcoming Supply Chain Challenges
Identifying these obstacles is one piece of the puzzle, but the approaches to overcome them are another. The points below represent a compilation of noteworthy approaches to navigating today’s supply chain challenges.
1. Mitigating shocks
Overreliance on a single source or multiple sources within the same place for vital components may be a caveat that may lead to increased vulnerability to supply chain disruptions. Though the apparent strategy is to diversify by expanding supplier networks and multi-source components or raw materials, companies can take it further to fortify their supply chain solidity.
McKinsey reports that companies can incorporate a balance between just-in-time and just-in-case inventory levels, harden physical assets to be protected against natural disasters, and provide financial aid to critical suppliers that may be in need.
The enablement of rerouting components and flexing production across sites is also another alternative to keep production up and running despite shocks. However, doing so requires investing in robust digital systems and analytics to test out various scenarios and a standard operating model to enable flex production.
Biogen’s swift proactive measures against Hurricane Maria in Puerto Rico are an excellent case example. Having prior experience in managing against natural disasters, Biogen's global risk team identified the hurricane threat days before its occurrence.
Doing so enabled the company to identify supply-chain-related threats and critical sub-tier suppliers. It aptly transferred its production to Kentucky while securing alternative suppliers contingently and paying $1.3 million worth of items with shortage risks .
2. End-to-end Transparency
Transparency involves a macro view of the supply chain. It requires input from internal and external data sources in seven key areas: data security, finance operations, organizational maturity, regulations, reputation, and structure, as they may depend on one another. For instance, a structural assessment indicates a large concentration of multiple suppliers that may be at risk of being affected by climate change, such as hurricanes.
Pfizer is a case study example worth noting as it transformed its global supply chain into a cloud-based information hub for the stakeholders involved. Historically, the pharma company had significant IAT (Information Access Time) as it was operating individual systems and proprietary data sets, which required specific information requests from individual partners, enduring lead times for reports to later then begin coordinating and sorting through analyses of the initial request. This consumed strenuous time to complete and created restraints on other ongoing projects.
In response, Pfizer integrated over 95% of global network provider spending into their Logistics Deliver Platform, their dubbed solution, to enable a single source of truth. The company’s standardized approach and universal access integrations allowed all parties to use one platform to measure the flow of orders, products, and shipments while encouraging network improvement. This was crucial, especially for APAC markets, due to rapid volatility in government regulations, as it enabled timely information visibility for prompt measures to be made .
3. Develop a Robust Cold Chain Infrastructure
Start by conducting a comprehensive needs assessment to understand the unique challenges and regulations of the Asian market. Asian countries have specific supply chain guidelines, regulations, and best practices to follow, such as transportation infrastructure and local mandates. Understanding these factors is vital for developing an effective cold chain strategy.
Investing in temperature-controlled storage and distribution facilities is the next piece to the puzzle - a crucial factor for maintaining the integrity of pharmaceutical products throughout the supply chain. These facilities should have reliable temperature monitoring systems, a backup power supply, and robust security measures to maintain the required temperature range and ensure product integrity throughout the supply chain. For instance, the back-then developing COVID-19 vaccines by Pfizer and Moderna required transport temperatures at -70 and -20 degrees Celcius, respectively .
Pharma companies must ensure their facilities are qualified by testing them with a mapping study identifying areas prone to fluctuations beyond the optimal and approved temperature range. This should be done when storage facilities are empty and when stocked with supplies.
To maintain temperature ranges, companies must have proactive measures such as incorporating guard band monitoring systems with alarms that activate when a temperature threshold is reached and continual data reporting to counter any issues. Establishing reactive approaches is also crucial, including contingency planning with internal stakeholders and having product-moving procedures to mitigate disruptions due to external strains such as natural disasters .
Lastly, utilizing cutting-edge packaging technologies is essential for protecting pharmaceutical products during transportation. Insulated containers, thermal blankets, and temperature data loggers help maintain the required temperature range. Implementing real-time temperature monitoring systems that track and record temperatures at various supply chain stages enables any temperature excursions to be promptly addressed. Active packaging systems that enable temperature monitoring, insulation, and active cooling systems are currently being developed, which may very well be an exciting innovation for companies to look forward to.
4. Engage with regulators
Building solid relationships with regulatory authorities in each market is crucial for pharmaceutical companies. Engaging proactively with regulators can help companies stay informed about regulatory updates, seek clarifications on compliance requirements, and address any issues that may arise.
India, for instance, represents one of the emerging markets with tremendous potential where the CDSCO (Central Drugs Standard Control Organization) plays the centerpiece in pharmaceutical regulation. Pharma companies will have to sort through India’s fairly tangled regulatory environment that comprises requirements for clinical trials, labeling, and drug registration that need resource-allocating to generate data and conduct trials on par with Indian regulatory standards.
Local clinical trials are particularly mandated in specific cases for approval as doing so ensures safety and drug efficacy for Indians. Cipla, an Indian pharma company, was able to leverage CDSCO’s accelerated approval pathways for essential drugs (in this case, its antiretroviral drug, Triomune) to enable apt access for patients .
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Shifting Lenses: What we can learn from the West’s pharmaceutical supply chain
While external factors differentiate the pharmaceutical supply chain landscape in Asia from the West, there are learning gaps that pharmaceutical companies with footprints or dealings in Asia can further narrow.
Though pharmaceutical companies have made progress in enhancing supply chain resilience, there may be opportunities to incorporate further practices like stress-testing the supply chain for potential disruptions. A primary reason why supply chain approaches commonly employed in Western markets may not yet be fully incorporated in Asian markets lies in the differences in regulatory environments and market dynamics.
Regulatory complexities in Asian markets may require companies to prioritize compliance and market-specific requirements over adopting certain supply chain practices from the West, such as the GMP, where manufacturers would create two versions of the same drug for two separate populations in respect of the distinct, local regulations and the tolerance of the internal market for lower quality but lower price. Differences in infrastructure, technology adoption, and cultural norms between regions may also play a role in the varying levels of incorporation of supply chain practices observed in the Western markets.
By studying best practices in building resilient and efficient supply chains, pharmaceutical companies can identify potential areas for improvement and adaptation to their contexts. Collaborative efforts, knowledge sharing, and strategic partnerships between pharmaceutical companies globally may facilitate the exchange of supply chain strategies and practices to enhance operational efficiency and resilience in the pharmaceutical industry.
Wrapping it up
Pivoting through the challenges presented in the highly regulated pharmaceutical industry can be a make-or-break point for pharma companies looking to tap into emerging markets. With the rising need to evolve past traditional supply chains, pharmaceutical companies must closely consider iterating their supply chain systems to meet marketing demands while closely adhering to local regulations.
Albert Einstein once said: “No problem can be solved from the same level of consciousness that created it,” but when you surround yourself with those who know something you don’t, you see possibilities. Sign up for the LogiPharma Asia 2024 event and delve into deeper insights from global leaders and experts across the pharmaceutical supply chain landscape.