The pharma supply chain desperately needs an injection of innovation, and executives at drug companies are looking to Amazon to fill the script.
Why Amazon? Because the online behemoth has built its reputation on solving some of the most enigmatic supply chain riddles. The mere mention of the Seattle company joining the fray (combined with its acquisition of wholesale pharmacy licenses in 12 states) actually prompted CVS to roll out next-day delivery, according to USA Today.
Nevertheless, Amazon still has a lot of ground to cover before it can cement its footprint in pharma distribution. Existing pharma distributors still have some breathing room, but not much, especially given the slew of challenges that ail the pharma supply chain.
A complicated prognosis
Drug makers, retailers and distributors have, and always will, struggle with specific complications tied to pharma logistics. These include:
- Long, expensive lead times: It takes 10 years (or more) and costs $2.7 billion on average to get an active pharmaceutical ingredient from the lab to the market, according to the American Medical Association.
- Increased competition: Generics can afford to be more competitively priced since they do not spend as much money on research and development.
- Regulatory holdups: The Food and Drug Administration may exercise its right to detain and review shipments at any time, a process that can take weeks if not months.
- Cold chain logistics: Distributors must spend additional time, effort and money ensuring that cargo is climate-controlled, especially for biopharmaceuticals.
On top of that, pharma logistics are at the mercy of the usual supply chain kinks: weather patterns, global political and social conditions (think Brexit), shifting market demands (e.g. ever-increasing consumer expectations) and much more.
Finding reliability in the face of so many exceptions is like trying to run a business from the eye of a storm.
Does your supply chain bend before it breaks?
When architects design skyscrapers, they purposefully allow them to sway in order to alleviate the amount of pressure caused by high-speed winds. These structures are built to last forever, and flexibility is a huge part of that resilience.
Architecting a pharma supply chain is a similar endeavor. Yes, reinforcing your distribution network with additional resources certainly helps, but reliability is really about optimizing existing resources for maximum flexibility. The resources themselves (e.g. number of fleets at your disposal, location of distribution centers) need to be resilient to adversity – because in pharma logistics, that’s the status-quo. Investing in more infrastructure won’t solve your problems unless you first invest in better management of that infrastructure.
Again, the number of variables that go into managing the pharma supply chain by exceptions is substantial. However, advanced algorithms can calculate outcomes that maximize current infrastructure utilization, while simultaneously factoring in the impact of unforeseen or last-minute adversities. The result is a much-needed injection of flexibility into your existing infrastructure. As an added bonus, this ability to accurately forecast outcomes by existing variables creates an opportunity to make smarter, more exact investments in resources that will actually improve your operations.
The pharma supply chain will never be simple, but it feels so much more manageable with the right intelligence at the helm. Click below to learn more.