Will Supply Risk Threaten the Safety of Tomorrow’s Drug Supply?

Even though this article only highlights the findings from a recent PWC and Axendia study looking at the future of the pharmaceutical supply chain, it echoes a number of the things I've heard from industry procurement and operations executives quietly expressing concern over the impact of the global sourcing of active pharmaceutical ingredients on drug safety. According to above-linked synopsis that summarizes the findings, we're marching down a global sourcing and manufacturing path that few think we'll back away from. To be specific, of the 112 executives interviewed for the study, "78 percent think sourcing ingredients outside the US will increase and 76 percent believing more manufacturing will be done elsewhere."

Yet the concern over the efficacy of the extended supply chain and raw material safety is just as real today as it was before early scandals in the industry, such as tainted ingredients in Heparin sourced from China that caused a number of deaths and hospitalizations. Fundamental to this challenge is that "the standard method of supply chain monitoring though supplier audits only provides 'snapshots in time' [which] become increasingly expensive and complex when multiple parties are involved." To this, I would also add based on our own discussions with different pharmaceutical executives numerous other challenges including: global suppliers consistent hitting of the low end of tolerances, logistics/handling of active pharmaceutical ingredients and API-level traceability (vs. supplier or site traceability).

Aside from staying healthy and minimizing pharmaceutical usage, what is the best defense for consumers and market watchers given what seems like an assured march towards global sources of supply and manufacturing in the pharmaceutical supply chain? For one, when traveling in emerging markets, it will be important to know that similar products from the same manufacturers labeled under a common brand (or not) may have very different levels of traceability and visibility within their supply chains based on different country standards. Second, I'd recommend developing an understanding of the level of investment (check the box versus company changing) in how different pharmaceutical providers are setting up their supply chain from an overall global supplier management perspective. Are they investing in systems and tools (look for announcements, case studies, etc.) that provide traceability, auditing, etc. beyond the basics? Are they doing more than outsourcing your safety to supplier monitoring consortia?

Questions like these just begin to scratch the surface of challenges in the global pharmaceutical supply chain. The fundamental problem we face here is one of a drug-like addiction itself for the pharma companies -- the cost savings of sourcing APIs from global sources can reach 80% or more. Try dangling that in front of shareholders and asking companies to break a habit they've just started.

Jason Busch

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