Pharmaceutical companies provide vital products to protect and enrich our lives, but manufacturing and supply chain issues can lead to unnecessary escalation of costs, quality issues and product shortages. If the lapse is serious enough, it can also lead to the distribution of expired, substandard, and counterfeit medicines that threaten the health and lives of patients.
Economically, the pharmaceutical industry is under tremendous pressure from a number of regulatory, economic, and technological challenges, including:
- Patent expirations and biosimilars: In its World Preview 2017 report, research firm Evaluate estimates that $194B in sales are under threat through 2022 due to patent expiration and the rise of biosimilars. In addition, biologics and biosimilars are much more complex to manufacture, and require careful handling, raising the bar and the costs of manufacturing and shipping them.
- The Drug Supply Chain Security Act (DSCSA) passed by President Obama in 2013: Although the FDA has postponed enforcement, it’s only a matter of time before penalties will kick in. In particular, the mandate for electronic package traceability involves significant challenges that will require a long runway for implementation, testing, adjustment, and training.
- Counterfeit and substandard drugs: A worldwide problem, the WHO reports that one in ten drugs in middle and low income countries are fake or substandard.
While the rapid advance of technology has created new challenges, it also provides new solutions. There is a significant opportunity for pharmaceutical companies to modernize, digitize, and secure their supply chains, gaining better visibility, accountability, traceability, and improving operations while enhancing compliance and security. Companies can now become demand-driven, synchronizing supply to demand to optimize patient service levels, lower inventory levels, and reduce costs and waste throughout the supply chain.
DIGITAL TRANSFORMATION AND INDUSTRY 4.0
In addition to medical advances that are driving innovative new treatments, there is a commensurate advance in technologies that can help companies manage operations from API manufacturing through to the delivery of patient packs at hospitals, clinics, and pharmacies. These technologies are converging to enable Industry 4.0.
While the first Industrial Revolution heralded the era of mechanization powered by steam, and the second lit the world with electricity, the third Industrial Revolution introduced the widespread availability of computers and information processing.
Now, we stand on the threshold of the fourth Industrial Revolution, which is an, integration of new technologies with a convergence of existing ones that will enable them to interact in new ways. Industry 4.0 creates an ecosystem where computers monitor and control physical systems. Essentially, it is about tighter integration between the physical world and the virtual world, supported by a cluster of technologies like artificial intelligence, blockchain, Internet of Things (IoT), and robotics.
That sounds great. So, what’s the problem?
Industry 4.0 relies on the premise of ubiquitous connectivity on a scale that is difficult to imagine. It requires a new way of thinking that isn’t just enterprise-centric with add-on external connections. It requires a “network-first” perspective, because manufacturing pharmaceuticals and then moving them to the patient and treatment centers, requires a global partnership of tens, hundreds, and maybe thousands or more partners, each of whom use a vast number of systems and devices across a range of facilities.
Such connections, if they are point-to-point connections or hub-to-spoke connections, are difficult if not impossible to establish and maintain due to the sheer number of them. In today’s fast-paced business environment, where new startups and partners popup and fade away, such a cumbersome process is unscalable. Among other problems, these types of connections multiply the data silos and exacerbate data integrity problems.
THE NETWORK SHIFT
For Industry 4.0 to realize its full potential, we need to question the prevailing myopic view and enterprise-centric thinking, and embrace the inherent interconnectedness of commerce. Instead of one-to-one thinking and connections, thinking in terms of many-to-many will reflect the reality of a highly connected ecosystem of people and things working in concert to deliver pharmaceuticals and care to the patient. It’s this conception that has driven the success of companies like Airbnb and Uber, who rely on multiparty networks with a real-time “single version of the truth” to connect supply (drivers) with demand (passengers). These types of multiparty networks are now emerging as the necessary infrastructure to support Industry 4.0.
At the same time, we need to recognize that the new hyper-connected, cyber-physical world must be mirrored with similarly connected and consistent strategies, operational plans, and tactical execution. The true value of Industry 4.0 will only emerge if companies align from top to bottom and across enterprise boundaries to act as unified teams that strategize, plan, and collaborate across an agile network focused on serving the patient. To do that and fully optimize the pharmaceutical network, they need to focus on four key areas.
1. Data is key. Connectivity is not an end in itself, it is a vital means for sharing data and enabling collaboration between parties. Unfortunately, many companies have plenty of data, but it is isolated in separate systems and in their trading partners’ data silos. When data is shared, usually via periodic batch transfers, it is stale and therefore is a poor basis for making decisions and optimizing the supply chain. Companies need a strong community-wide master data management (MDM) strategy that can automatically translate and cross reference data and reconcile differences between systems, while enabling the near real-time synching of partners to achieve a single, unified view. This means all trading partners and systems are synchronized to one authoritative source of the truth, and can operate as one without conflicts and disconnects.
2. Network first. Data alone is useless without the means to capture, distribute, analyze, and put it to use in optimizing execution and strategy. Here, executives need to think more in terms of multiparty networks rather than enterprise systems which are, by their nature, internally focused and limiting. By implementing a network-first strategy, companies ensure connectivity is a priority, so they can easily connect to partners and external systems in order to achieve cross-company visibility and collaboration. A multiparty network requires companies to only connect once. It then manages the connections and data-sharing through a permissibility framework (much like LinkedIn or Facebook). This is highly scalable to support connectivity among thousands of trading partners and devices across vast numbers of sites. Multiparty networks are also (near) real-time. This eliminates system latency that leads to stale data, poor decisions, and weak optimization. Finally, a network enables companies to easily exploit new technologies such as artificial intelligence and blockchain that can be deployed on the network via network services.
3. Patient-centric. We all exist to serve the patient; therefore, it is critical that servicing them be the communal goal and the ultimate measure of success within the pharmaceutical supply chain. The needs of patients and their healthcare staff need to drive the supply. Blindly pushing drugs and products down the supply chain is a sure way to inflate inventory levels, increase waste, overload warehouses, and generally increase costs with no return. A patient-centric perspective requires end-to-end visibility from the patient and treatment centers to the manufacturing facilities. It requires aligned strategies across trading partners, coupled with collaborative planning and execution at all levels. In such a scenario, supply can be synchronized to real-time demand and shared immediately with upstream partners. This enables all parties to quickly ramp up or ramp down production as needed and respond to pending shortages by rerouting or shifting supplies to better balance supply to actual demand.
4. Intelligent automation. Given the vast amounts of data that pharmaceutical manufacturing and supply chain processes require and generate, it is impossible to manage and run a data-driven operation without automation. Because multiparty networks connect all agents and systems in the supply chain, they can help optimize and automate the coordination of supply across all parties and sites to best meet that demand, while considering all constraints (such as freight capacity and expiration dates), to serve the patient at the lowest possible cost.
This optimizes the entire network without penalizing trading partners. Traditional systems typically only optimize the local system, and move costs (such as extra inventory) onto other partners, which creates inefficiencies elsewhere and prohibits the full optimization of the supply chain.
One of the most exciting developments in business network optimization is the emergence of intelligent agent technology. Intelligent agents are software programs designed to scan the network for potential issues, and continuously and incrementally optimize the network. They can predict demand, adjust orders as needed, and generally work to keep supply in synch with demand.
NETWORK SERVICES FOR PHARMA
Once this foundation is in place, companies can layer powerful multiparty applications on top of the network. These applications run on a multiparty data model that supplies the real-time, single version of the truth at the heart of the network. Typical applications in the pharmaceutical supply chain include:
- Serialization and authentication. These technologies are a key means to secure the pharmaceutical supply chain. Serialization is the process of assigning patient packs or product with a unique identifier, enabling it to be traced throughout its journey through the supply chain (and back if necessary). Product authentication technologies allow the product to be authenticated through various means, including special marks on labels and packaging and, more recently, through the use of DNA-infused inks. One of most effective authentication devices are Raman spectrometers, which use lasers to analyze and compare the actual composition of drugs against the profile of authentic drugs in a library maintained on the network. The spectrometers can identify and flag anomalies, automatically alert the relevant supply chain partners, so the product can be removed from the supply chain.
- Chain of Custody. With product serialized and authenticated, companies need to maintain a record of the chain of custody throughout the supply chain to ensure the product is not diverted, switched, or mishandled at any point. This becomes even more important for sophisticated and fragile products like biologics and biosimilars. A chain of custody solution should support real world scenarios, such as tracking through consolidation and deconsolidation, lot splitting and blending, etc. A chain of custody solution helps secure the supply chain in two ways. First, the increased tracking and oversight of the product discourages tampering and mishandling and encourages compliance. Second, if and when there is a recall, supply chain managers can quickly identify affected product with pinpoint accuracy, alert their relevant trading partners, and collaborate to initiate a targeted recall to minimize costs and consumer concern.
PREPARING FOR INDUSTRY 4.0
With Industry 4.0 on the horizon, it is urgent that companies assess their readiness and prepare for the demands and the impact that this new hyper-connected world will have on the pharmaceutical industry.
Real-time, precise, and complete data will be a huge advantage and will play an increasingly vital role in the Industry 4.0 era - driving innovation, efficiencies, and competitiveness. Companies able to harvest healthy data, extract actionable insights, and use it to identify new sources of value and drive business and operational improvements, will be hard to beat.
With the growth of IoT, robotics, AI and smart things, there will be no shortage of available data. A real-time, single version of the truth will become even more critical than it is today but MDM within the enterprise will be less important than Community Master Data Management which synchronizes data from all trading partners’ key systems across the network.
Clean, consistent, and complete data distributed across frictionless multiparty networks will be necessary to ensure organizations and all their key trading partners are aligned on objectives, subject to common metrics, and able to track and adjust both strategy and execution as it is necessary. Of course, this data will also drive day-to-day operations, and enable visibility, transparency, and better decision-making, both human and artificial. On a multiparty network with a single version of the truth, decisions tend to be smarter, plans more realistic, and execution much more successful.
While Industry 4.0 is yet to transform today’s business, many of the essential elements are here now. Companies can join and explore multiparty networks now, and unify their internal systems, facilities, and devices, and connect with existing and new trading partners on the network. They can harness and use data from IoT devices, spectrometers, smart facilities, vehicles, and external networks like blockchain. New technologies can be “plugged into” the network, and be available to the entire community, without each organization implementing it independently in a silo.
By embracing and combining the power of these technologies, partners in the pharmaceutical industry can coordinate around actual patient needs and their own strategic goals, to deliver higher value to patients, more securely, and at lower cost.
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