Analyst
Insight: Recently, Big Pharma went through a significant period of mergers and
acquisitions to gain a global market presence and product offering expansion.
Now it appears the tides may be shifting. A
segment of Big Pharma is shedding non-core business units and focusing on core
profitability. But the acquisition strategy is not dead. These diverging paths
are both focused on increasing flexibility and profitability to adapt to market
uncertainty. Supply chain planning and adaptability have moved forward as
integration of business units has increased in all regions of the globe. –
Brian Hudock, partner, Tompkins Associates
Pharmaceutical supply chains have always been
focused on product security, product protection and customer safety. Many past
decisions have leveraged risk as the primary factor, making it easier to
justify budgets and expenditures. Today, the safety of product and patient is
still the top concern, but best practices, responsiveness and cost reduction
are also critical.
Global expansion and variable margins in
emerging markets, as well as diversification of product portfolios, highlight
the value of supply chains and costs associated with eliminating 100 percent of
service risks. And there is sufficient justification for setting a target of
100 percent, especially with existing and pending challenges such as:
- Evolving and Emerging Global Markets – Multiple-tier pricing structures
and approval processes make market entry and sustainability challenging.
- Government Price Controls – New
legislation is now impacting facility and production location selection.
- Track & Trace Regulation –
Governments around the world are moving toward product serialization,
and California has its 2015 pedigree mandate. Another example is the European
Union’s ratification of the Falsified
Medicine Directive, which sets the stage for expanded use of serialization
within the EU. These are key regulations that help protect the integrity and
safety of pharmaceutical and medical supply chains.
- Sourcing and Quality Controls – Issues with global suppliers,
particularly in Asia, continue to demand more inspection.
- Integrated versus Decentralized Supply Chains – Integrated systems
create efficiency, and rapid organization realignments make adaptability
critical.
- Logistics Service Providers Rationalization – Having fewer partners
with a more global reach increases short-term flexibility, while reducing risk.
But also consider costs and restrictions when selecting core LSP partners.
- Integration or Diversification of Supply Chains – Whether shared
facilities, consolidated shipping, or integrated procurement and sourcing, the
ability to add or shed business units while maintaining secure and seamless
business execution is critical.
Due to additional pressures and uncertainties
in 2012, it is important to ensure a short planning horizon for supply chain
adaptability and rapid reorganization. An integrated, adaptable global supply
chain that has full visibility and shared planning is needed to achieve
profitable growth.
The
Outlook
For pharmaceutical companies in 2012, supply
chains will play a major role in their ability to adapt, consolidate or refocus
their core business segments. The world will continue to throw new obstacles
and challenges for moving products and materials into and out of specific markets
and countries. But with the right supply chain configuration and adaptability,
pharmaceutical and related healthcare supply chain leaders will overcome these
obstacles effectively.
Supply Chain Brain
Business & Investment Opportunities
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