Supply chain seat at the table? Maybe not yet…

In our 2014 CSCO study, we asked respondents whether the executive management team appreciated the alignment of business strategy and supply chain strategy. Fifty-one percent of the entire respondent pool selected "absolutely, supply chain is understood as an equally important part of business success as sales and marketing or R&D/product development." For CPG respondents, that number sky-rockets to 68 percent; for pharmaceutical respondents, it plummets to 39 percent. In fact almost one fifth of pharmaceutical industry respondents feel that "supply chain is understood primarily as a cost centre that affects margins."

Apparently, a fairly large percent of respondents feel their organizations look at the role of supply chain through a very outdated lens. This is unfortunate since, arguably, the impact supply chain can have on the future direction of the industry is great indeed.

Take the issue of medication adherence. Some estimates put medication non-adherence at 50 percent. Patients failing to follow the treatment regimen prescribed by their physicians adds significant costs to healthcare delivery overall. The lack of adherence for chronic conditions such as diabetes is particularly costly and burdensome. Whether due to confusing instructions, confusing dispensation technologies, or challenges in replenishment, supply chain engineers have the skills to design solutions to this issue. The point though is their organizations need to view supply chain as more than product manufacture; it needs to see supply chain as an enabler of disease management.

Another area where supply chain can be more solution-oriented is in the innovations around cellular and genomic therapies due to advances in biotechnology. Cell therapy is the personalized medicine made manifest where cells from a sick patient are taken from his or her body and used in the treatment of the patient’s condition. For an organization processing and handling these cells, all kinds of supply chain challenges must be addressed, including the return of the processed cells, ensuring that samples from different patients don’t cross-contaminate, and ensuring complete data integrity, among other challenges.

In both of these examples, supply chain plays a critical role in simplifying patient lives and improving the experience of patients.

New product introduction and market expansion

In our Chief Supply Chain Officer study, we asked respondents what they thought were the main benefits of having a high performing supply chain. For pharma/healthcare companies two benefits stand out: accelerating new product introduction and enabling market expansion.

Regarding the acceleration of new product introduction processes, pharmaceutical organizations can take a page from high-tech organizations like Samsung (which has moved into bio-similars manufacture to go after higher-margin opportunities).  Samsung’s expertise lies in its ability to radically reduce cycle times, a skill in great demand within life sciences.

The Outlook

When it comes to market expansion, opportunities exist for pharma organizations to collaborate with its industry peers around capacity sharing.  Growth countries such as Russia and China often require local manufacturing in order to sell and distribute product within country.  Rather than have 30 different pharma companies building 30 separate plants, some pharma companies are looking to build one plant and share capacity to reduce the large capital outlay.