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Pharma Tech Outlook | Monday, June 12, 2023
In a complex API supply chain, effective business strategy and forecasting are crucial for pharmaceutical companies.
FREMONT, CA: The generic or non-branded segment of the pharmaceutical industry has been dominant in the market due to various factors such as rising healthcare costs, government focus on generics for cost reduction, and decreasing global pharmaceutical product pipelines. Managing the supply chain for Active Pharmaceutical Ingredients (APIs) has become increasingly complex, involving multiple players. Business strategy and forecasting managers play a crucial role in this context. They must collaborate with the supply chain manager to ensure seamless coordination among various functions, such as sales, production, marketing, and product development while prioritizing customer satisfaction and profitability. Effective forecasting leaders must possess diverse skills and adapt to evolving information systems within the company.
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The API industry and its supply chain function have undergone a significant digital transformation driven by systems and IT infrastructure advancements. Adopting a dualistic, long-term supply strategy emphasizing cost control, supply reliability, and diversity is essential to effectively manage risks. This approach strengthens the integrity and resilience of international supply chains, safeguarding against disruptions and uncertainties.
The soaring prices of APIs have become a major concern in the pharmaceutical industry. Significant price hikes, like that observed with methylprednisolone during the COVID-19 pandemic, highlight the impact of booming transportation costs, API production line disruptions, and rising energy prices. The health crisis has exposed the vulnerabilities of the fragmented API manufacturing process, leading to structural supply difficulties.
A thorough understanding and knowledge of API suppliers are paramount. Geographical diversification of suppliers is a crucial initial step to mitigate risks. Developing a comprehensive risk profile for source countries and suppliers, incorporating strategic techniques such as SWOT and PESTLE analysis, can provide valuable insights into the potential and existing API suppliers. When strategic forecasting is integrated with supply chain management, supply chain leaders can make informed decisions.
API or excipient supply issues often extend beyond ingredient shortages, indicating broader operational problems at certain suppliers. Evaluating the root causes of issues with problematic suppliers and exploring alternative partners with a proven track record of reliability and supply sustainability is essential. Advanced forecasting tools employed by leading pharmaceutical companies enable the analysis of suppliers' historical trends and predictions for future periods, identifying potential disruptions or smooth operations.
Pharmaceutical companies face significant challenges in the current landscape, emphasizing the need for resilient networks. Integrating flexibility and redundancy throughout the value chain, coupled with enhanced visibility, enables efficient prediction and response to supply chain disruptions. End-to-end supply chain visibility helps identify potential risks, allowing organizations to mitigate their impact effectively. Managing the API supply chain closely, considering risk and reliability ensures a secure and consistent supply for steady production. An integrated business strategy and forecasting plan aligns organizational goals, captures immediate needs, and positions companies for success in this dynamic environment.
Embracing digital transformation, mitigating risks through diversification, and leveraging forecasting tools enable proactive decision-making and improve supply chain resilience. The ability to adapt quickly, enhance visibility, and foster collaboration throughout the value chain empowers organizations to navigate challenges, ensure supply stability, and meet the demands of the evolving pharmaceutical industry.
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