The pharmaceutical industry is constantly evolving, and one of the most critical areas of transformation is in the supply chain. The importance of a well-functioning supply chain has never been more evident than in recent years. A pandemic, geopolitical conflict, increased costs and uncertain availability have had fundamental implications for pharmaceutical organizations.
As we move further into the future, the industry must continue to adapt to the changing landscape, embracing new technologies, regulations and practices. In this article, I will explore the first half of the top 10 trends shaping the pharmaceutical supply chain and discuss how they are impacting the industry’s future.
1. “Industry cloud” accelerates pharma cloud-native supply chains.
When I speak with executives, on-premises solutions tend to be an inhibitor to growth. This is largely due to there still being a significant amount of on-premises solutions in the manufacturing sites.
In general, industry clouds are industry-contextualized cloud services, tools and applications optimized for the most important use cases in that specific industry. The pharma industry is feeling the pressure of competition from startups and cloud-native disrupters.
Industry clouds contextualize cloud offerings, thus eliminating risky, time-consuming and costly endeavors. They have the potential to accelerate and take the risk out of cloud migrations by providing APIs, common data models and workflows, including industry-specific applications, solution accelerators and a platform marketplace of third-party partner solutions to work with the industry cloud platform.
Leading pharma organizations are looking to industry clouds as a way to accelerate the movement of strategic workloads to the cloud as a way to address many of these problem areas. Some of the key ones being considered are:
• Supply chain orchestration platforms and control towers
• ERP into the cloud
• Cloud-based MES solutions
• Quality control and labs
2. Digital ecosystems render traditional supply chains obsolete.
According to IDC, “By 2025, driven by volatile global conditions, 75% of business leaders will leverage digital platforms and ecosystem capabilities to adapt their value chains to new markets, industries, and ecosystems.” Pharma organizations have the opportunity to tap into the 70% of the new value being created over the next decade by these digital ecosystems and platform business models.
“More than 50 percent of companies already expect to intensify their collaboration models with other industry players through, for example, service agreements, joint ventures, or ecosystems. Some are already in motion; examples include Pfizer and BioNTech, which have already established a strategic partnership in mRNA technology discovery, and AstraZeneca and Huma, which are collaborating to scale innovation for digital health,” according to McKinsey.
This isn’t just a trend with big pharma but also with biotech; venture capitalists have invested over $35 billion into biotech companies with advanced platform technologies that they feel will transform the industry. The key trends that will help them get there will be Web3, data platforms and decentralization constructs.
3. Generative AI democratizes AI for the masses.
Artificial intelligence (AI) is transforming industries across the board, and the pharmaceutical industry is no exception. The use of AI within the industry has already had a profound impact, from drug discovery to clinical trials.
Now, pharmaceutical companies are using generative AI approaches like GPT-4, BioGPT ChatGPT and others to democratize AI with large language models (LLM). This creates a more human-like experience that eases the burden of interacting with complex processes and technologies. Early evidence is showing strong productivity gains that ultimately improve business efficiencies and cost reduction and enable more prediction into the supply chain.
Recent research identified over 270 companies working in AI-driven drug discovery. These include traditional biopharma companies but also small AI-driven startups. In fact, it’s anticipated that over 30% of new drugs could be discovered using generative AI solutions by 2025. This is up from zero today, according to Gartner.
By leveraging generative AI, pharmaceutical companies are able to more accurately forecast demand, improve inventory management, and reduce lead times. Additionally, generative AI is being used to optimize the production process itself, reducing the time and resources required to produce medications. As a result, pharmaceutical companies are better equipped to meet patient needs and deliver treatments more efficiently
4. Autonomous supply chains and “lights-out” manufacturing improve efficiency.
Autonomous supply chain planning enables pharma companies to become more agile and competitive. An AI-driven approach to planning ensures visibility of supply chain activity but also allows for the prediction of future events. This all starts with creating a data strategy that directly addresses data availability, access and quality, and leveraging technology to eliminate unstructured and manual data entry.
Lights-out manufacturing will be vital to enable machines to run autonomously with entire production processes. These smart factories have the potential for “reduction in manufacturing cost (by 15%-30%), manpower (by 50%-70%) and power consumption (by 40%), lesser product deviation (by 50%), smaller footprint (by 50%-70%) and faster scale up.”
The World Economic Forum has designated Johnson & Johnson as a “Lighthouse,” due to its successful launching of Industry 4.0 technologies. Meanwhile, Pfizer’s Portable Continuous Miniature and Modular (PCMM) oral solid dose manufacturing unit has delivered 35% operating cost improvement with their lights-out factory.
5. Consumers and governments demand ESG practices.
With manufacturing contributing to over 20% of CO2 emissions in the U.S., pharma is facing increased pressure to provide a plan for how their organizations will address environmental and social issues.
Integration into the broader supply chain network core suppliers, manufacturing and CMOs will be required to gain visibility into what the problems are and how to fix them. Organizations are partnering with collaboratives like the Carbon Reduction in Manufacturing Initiative to accelerate the cutting of global emissions in the industry.
For pharma organizations to move forward, they will be required to weave ESG into their supply chain strategies as a foundational requirement.
Be on the lookout for Part Two of the top 10 pharma supply chains for 2023.