The pharma industry has barely had a chance to recuperate from COVID crisis management — yet it already faces the emergence of several potential new crises in 2024.
Geopolitical tensions between the U.S. and China, pressing environmental challenges and an alleged dearth of innovation across the sector have combined to create a tidal wave of issues.
To overcome them, pharma companies must rethink and rebuild operations, with flexibility and resilience at the core. And supply chains should be at the center of this process.
The innovation crisis
Industry experts have been lamenting the ‘innovation crisis’ for several years. Some aspects of this crisis are largely unavoidable consequences of the nature of the pharma industry, where progress can be incremental and slow out of regulatory necessity.
Naturally, the pandemic also had an impact on new product development, as pharma was forced to focus on short-term firefighting rather than R&D or long-term operational strategies. And throughout this time, research costs have risen sharply due to inflationary pressures.
But solving the innovation crisis could be a matter of perspective. According to the British Medical Journal, the real innovation crisis lies in an archaic pharma ecosystem that incentivizes companies to develop new products that offer limited therapeutic benefits over existing ones.
The BMJ report points out that the number of new drugs licensed each year in the U.K has remained consistent (15-25) for decades. Tighter regulations on clinical testing and a faster review process have made no measurable difference.
A digital transformation of the supply chain could shake up this stale ecosystem. Adding digital flexibility into supply chains unlocks new ways for pharma to improve efficiency, reduce costs and increase speed to market.
By rethinking supply chains with a digital future in mind, pharma may find the innovation crisis solves itself as the efficiencies of digitalization make true innovation more viable.
Geopolitical tensions
The pharma industry cannot control the global geopolitical landscape, which is currently fraught with risk due to conflicts across the world.
Perhaps the most significant area of concern for health care in 2024 is the nature of the relationship between the U.S. and China. Relations between the two superpowers are strained as sanctions, countermeasures and a continuing dispute over Taiwan cloud the future.
It means pharma companies should prepare for both best- and worst-case scenarios. This can only be achieved by embracing digitalization wholesale, adding flexibility, agility and resilience to supply chains that could be disrupted or even cut off at short notice.
Digital supply chain management, for example, makes it easier for companies to adopt a ‘China Plus One’ strategy. This enables companies to hedge their bets, reducing risk substantially without sacrificing all of their hard-won market footholds in China.
Environmental concerns
Of course, the needs of any single nation, economy or market are far outweighed by the needs of our planet. This will become increasingly important in 2024, as legislators begin to bring the pharma industry in-scope of tighter environmental controls.
However, digitally-driven diversification can help the pharma industry adapt to more environmentally sustainable ways of working. For example: A distributor that uses digital tools to take a holistic view of all aspects of a product’s life cycle can effectively review supply chains for new efficiencies and potential bottlenecks.
This can be useful when considering alternative ingredients to build resilience. If sourcing an excipient produced using more traditionally sustainable materials results in capsules degrading prematurely, the waste this creates will have a net negative effect on carbon footprint.
As we enter 2024, pharma companies need certainty wherever they can find it. Taking a bold and innovative approach to the way they think about supply chain management means they can adapt. This flexibility will give companies the resilience to not only survive the challenges 2024 will bring — but invariably thrive.
