Easing ‘pain in the [supply] chain’
Are high distribution costs and overly complex regulations stifling pharmaceutical and health product suppliers’ ability to fully engage with the fast-changing healthcare marketplace?
That’s one concern raised by a global survey of healthcare executives in the United States, Canada, Europe, Asia and Latin America from United Parcel Service. In its seventh-annual “Pain in the [Supply] Chain” study, UPS found widespread worry among drug and health products manufacturers and distributors about operating in a turbulent global marketplace fraught with increasing costs, complex legal hurdles and the high risks associated with handling and shipping expensive, highly perishable specialty and biotech medicines.
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“An environment of increasing risks, complex regulations and continuing cost pressures is impeding healthcare executives from moving quickly to seize untapped industry opportunities,” UPS reported. “Globally, healthcare executives are planning for strategic partnerships and technology investment to mitigate risks and capitalize on growth opportunities.”
Responding to the survey were more than 530 supply chain and logistics decision-makers in the pharmaceutical, medical device and biotech industries. Many respondents expressed frustration with burdensome marketing and distribution requirements in North America and overseas, along with concern over supply chain security.
“The most significant factors contributing to uncertainty in the healthcare supply chain are more stringent regulations and increased product protection challenges,” UPS reported. “Regulatory compliance is the top supply-chain pain point, cited by 60% of respondents. Furthermore, 78% cited regulatory compliance and increasing regulations as a top trend driving business and supply chain changes.”
“Product protection also is increasingly challenging in a highly global marketplace, with 46% citing product security as a top challenge and 40% citing product damage and spoilage as a top concern,” according to the company. What’s more, UPS said, cost management and economic factors continue to weigh on healthcare suppliers, “with 49% of those surveyed still feeling an impact from the economic downturn six years later.” That impact is most evident in the United States, “where 60% of healthcare logistics decision-makers cite economic concerns.”
“We understand that regulatory compliance, costs, product protection from damage and spoilage ... are key concerns,” Robin Hooker, UPS director of healthcare sector marketing, told DSN.
Worries over the safe handling, storage and shipping of medicines are especially acute among biotech manufacturers and distributors, he said. “There’s a lot of legitimate concern for ... product security and time and temperature sensitivity, and the potential for ... these large-molecule products to get damaged in transit. Within biopharma especially, we are seeing dose values of $8,000 to $12,000 for oncology treatments.”
“When you look at that level of value, do the manufacturers understand supply-chain risk mitigation? Do they understand fully the necessary [shipment] pack-outs? And do they understand the network environment that these products will flow through? Some of these biopharmaceuticals are quite fragile. There’s a lot of inherent risk,” Hooker said. That includes “high-probability but low-impact events that can disrupt the supply chain,” Hooker said, as well as the risk of “low-probability, high-impact events like a Superstorm Sandy ... that nobody could have planned for.”
“Understanding risk is really the key,” he said. “So on the healthcare side, we’ve developed a good understanding of health product as it flows through our network.”
Shifting health trends that bring products and services directly to patients are lending new urgency to the search by pharmaceutical and health equipment suppliers for new and more effective distribution models, UPS asserted, by “leveraging new distribution channels and models to meet changing customer demands as e-commerce, urbanization and home health care grow.”
Given those trends, Hooker said UPS “has suddenly ... found ourselves smack dab in the middle of delivering care with the shift toward home care.” With that “awesome responsibility” to focus on “a patient, not a package,” the company’s goal is “to deliver health care in a compliant manner to the farthest reaches of the globe as we expand our global footprint. But at the same time, ensure that the healthcare supply chain is safe. And that we’ve developed solutions that enable healthcare stakeholders to generate better outcomes and do it in a more efficient manner.”
Hooker urges health product suppliers to engage more directly with companies like UPS that have the distribution expertise to deal with local regulations, shipment challenges and product security on a global scale. It means the ability to deliver highly sensitive materials like expensive and critically needed medicines safely to health providers and patients themselves, he said.
“If I had to leave a client with just a couple of pieces of advice, it would be to seek collaboration with experts in the healthcare supply chain ... so that you’re developing a strategy... that’s very collaborative and leverages the skills of both entities,” Hooker said.
“IF I HAD TO LEAVE A CLIENT WITH JUST A COUPLE PIECES OF ADVICE, IT WOULD BE TO SEEK COLLABORATION WITH EXPERTS IN THE HEALTHCARE SUPPLY CHAIN ... SO THAT YOU’RE DEVELOPING A STRATEGY ... THAT’S VERY COLLABORATIVE AND LEVERAGES THE SKILLS OF BOTH ENTITIES.” — ROBIN HOOKER, DIRECTOR HEALTHCARE SECTOR MARKETING, UPS