Reshaping Pharma Supply Chains: Balancing Sustainability and Resilience in a Changing Landscape
Mohammad Samy, Head of Supply Chain at Pharmanovia.
The pharmaceutical industry has undoubtedly exhibited a lack of urgency in prioritising environmental and sustainable strategies at the forefront of its operations, particularly in relation to its supply chains. An ‘always on’ attitude dominated the industry in years gone by, which prioritised the rapid manufacture and delivery of medicines to keep up with increasing demand.
The past few years have shown that attitudes need to change. Inflation rates remain despite declines in some markets and economic headwinds continue to persist globally. Moreover, the backdrop includes a global pandemic, political unrest, detrimental climate events, including flooding and wildfires engulfing acres of natural habitats. This instability has been a wake-up call to many as we feel the squeeze to cut expenses and ensure supply chain resilience while trying to meet ambitious environmental, social, and governance (ESG) targets.
As we, like every other industry, grapple with unstable markets, it’s impossible to ignore the need to look inwardly and put more credence in ESG goals and sustainable objectives.
But when it comes to our value chains, how can we future proof them to build resilience and agility without compromising our ESG efforts?
Build Planning Time Around Sustainable Efforts
A key post-pandemic development has been the increase in collaboration between industry leaders, allowing for greater flexibility and collective responsibility in reducing the carbon footprint of the pharma industry.
For example, there are ways to significantly reduce the carbon footprint of long-haul shipments and make high-volume shipments over long distances more sustainable and economical. At Pharmanovia, we switched from air to sea freight which generated an 18% reduction in our scope 3 carbon emissions. While this transition can help to meet our ESG goals, it does require a longer shipping time frame; so, to offset this, it has required us to improve efficiency in other areas, such as manufacturing cycle time, efficient release process, extending shelf-life, target inventory management backed up by data analytics & integrated LSP (Logistics Service Provider) management. We have also onboarded several global logistics partners to give us greater flexibility in our transportation options to ship products out as efficiently and quickly as possible to relevant markets.
Sustainably Meeting Demands in a Fluctuating Market
Traditionally, the E2E cycle time of pharmaceutical product can take up to six months from manufacturing to final delivery to patients. This timeline is largely due to products typically being manufactured in larger volume and country specific make-up. This long lead time can be a problem if there are changes in market demand. For example, if a new drug is approved by the Health Authority, you may need to quickly ramp up production to meet demand. However, if you’ve already manufactured a large bulk batch of the drug, you may have to write off some of the product if demand doesn't materialise.
This is where late-stage customisation (LSC) comes in. This process can allow organisations to react quickly to changes in market demand without having to worry about write-offs.
In addition, it allows for improvements in sustainability processes. For example, at Pharmanovia, we've been working to onboard several LSC sites to allow us flexibility in keeping the semifinished product closer to the market and minimises the risk of write-offs and wastage.
Not only that, but we are also working diligently to optimise weight and size of packaging of our products while using recyclable material where possible to offer meaningful impact to the environment by reducing the waste.
Leaving no Stone Unturned in the Value Chain
As an industry, we’re starting to learn that sustainability efforts are not just limited to one's organisation - it’s our responsibility to hold partners to the high standards we expect of ourselves and to choose to work with responsible, value-aligned third parties.
Consistently monitoring the progress of third parties to ensure their dedication to ESG initiatives is now a pivotal driving factor in any impactful ESG strategy. As an example, our procurement strategy encourages working with partners who invest in sourcing renewable energy, such as photovoltaic solar panels to generate their own onsite energy.
Although holding partners accountable for how they conduct business may have more short-term implications (including financial costs or increased time frames), it can certainly pay off in the long run, and help drive meaningful change across the sector by encouraging those falling behind to develop plans for improvement.
Mitigating Risk Through a Dual-Sourcing Strategy
The pandemic served as a stark reminder of the critical need to avoid excessive reliance on a single geographical region or supplier. We must build greater resilience by diversifying supply chains to establish regional and local networks.
This can be achieved by embracing a dual-sourcing strategy. This strategic approach aims not only to reduce reliance on any sole supplier but also to open avenues for more favourable negotiations. By doing so, you can gain better control over costs, enabling you to opt for more cost-effective products and transportation methods. All the while, ensuring you remain steadfast in upholding robust governance standards and adherence to local regulatory guidance.
Redressing the Balance Requires a Collaborative Effort From us All
The last few years have taught us that we need to find a way to balance the provision of safe and compliant medicines with the pursuit of sustainability in mind. To be industry leaders, we must embrace a proactive stance rather than a reactive one, it's our duty to re-examine our value chains through a sustainability-orientated lens.
Change is always hard and does require investment, but the potential for better outcomes is huge – for patients, healthcare systems, and, of course, the world.