As we enter a new decade in the digital age, data management has become a top priority for many high-value industries, especially pharmaceutical and healthcare companies. This sector strives to keep pace with the increased demand of COVID-19, as well as burgeoning technologies and the rapid globalization of supply chains.
Innovations in technology have provided pharmaceutical and healthcare companies with efficient data processing, real-time information and an unprecedented level of supply chain visibility. However, the ever-changing nature of their supply chains can leave companies vulnerable to theft and emerging cyber risks. With the proper technologies, companies in these high-risk sectors can add layers of protection against cyber-security threats, counterfeiting, cargo theft and temperature excursions, among other costly risks.
Overhaul and Freightwaves have come together to analyze the risks and solutions surrounding pharmaceutical logistics as part of a white paper report, Command and Control for Pharmaceutical Logistics.
Logistical issues such as temperature fluctuations and cargo theft have heightened the need for a unified command-and-control center that can overlay multiple data sources for one analytical tool. Companies that adopt this tool not only have access to a global view of their shipments but also possess a competitive marketplace advantage.
Pharmaceutical supply chains are becoming increasingly complex, and a growing number of exchange points have complicated the path from production to consumption. New modes of transport also make the likelihood of error even greater as bad weather and traffic congestion can result in additional delays.
Delays not only cost time and money, but also leave entire shipments vulnerable to temperature fluctuations. According to the IQVIA Institute for Human Data Science, the biopharma industry loses $35 billion annually due to failures in temperature-controlled logistics. Pharmaceutical Commerce estimates that by 2022, 30 of the top 50 global pharmaceutical products will require cold chain handling, as in-transit control over temperature, humidity, vibration and light become priorities.
Over-the-road (OTR) trucking is still one of the least secure forms of transportation globally, making the movement of high-value pharmaceuticals by truck a risky venture. It is estimated that the average pharmaceutical cargo theft is valued at $121,185. While in-transit cargo theft is a major concern, an extra set of padlocks is no match for invisible attacks in the form of malware and ransomware.
A 2018 Proofpoint report stated that among Fortune 500 companies, cyber attackers targeted the pharmaceutical industry the most. What often catches the attention of cyber-criminals is the rich intellectual property associated with prescription medicines.
Counterfeiting is also an ever-looming threat. In addition to the loss of sales and damaged reputations, companies find themselves allocating much of their funding towards combating fraudulent drugs, leaving less money available for groundbreaking research.
Moreover, counterfeiting can have deadly consequences. According to a 2017 report by PricewaterhouseCoopers (PwC), the counterfeit drug market is valued at $163 billion to $217 billion per year, making it the most lucrative sector of the global trade in illegally copied goods. The 2017 PwC report also revealed that 10% of all drugs in circulation are counterfeits. Beyond that, the American Society for Microbiology estimates that one million people die annually from ingesting fraudulent medications.
The white paper suggests that pharmaceutical and healthcare companies create security-enhanced audit trails that trace products throughout the supply chain. Evidence-based documentation can quickly mitigate potential risks and be very useful for healthcare companies, insurance companies, law enforcement and regulatory agencies should an investigation occur.
Regulations have been put in place to provide corrective action against supply chain threats. The whitepaper defines Good Distribution Practice (GDP) as the set of regulatory guidelines governing the wholesale distribution of medicinal products to ensure that their quality and integrity are maintained throughout the supply chain from manufacturer to end-user.
Pharmaceutical companies rely on guidelines such as GDP to mitigate risk. Failure to comply with these guidelines at any point within the supply chain can damage the product's quality and cause an irreparable loss of public trust in the company. In addition, supply chain errors and irregularities can lead to Corrective Action, Preventative Action (CAPA), which is an important aspect of the GDP regulatory guidelines. A 2019 Pharma Manufacturing article reported that the financial cost for CAPA cases can range between $10 million and $1 billion, depending on the case's severity.
Manufacturers invest significantly in quality-assurance monitoring, but their efforts are ultimately futile without a logistics monitoring system in place. The whitepaper states that the only way pharmaceutical companies can ensure the quality and safety of their products is through supply chain visibility at each step of the process.
Smart platforms like Overhaul have programmed artificial intelligence (AI) to take corrective action when a step in the supply chain does not meet standard operating procedures (SOPs). This AI technology could alert the party in control of the shipment or notify authorities when shipments have been tampered with or stolen. Its intelligent notification system works in real-time by connecting users to touchpoints in the supply chain and can alert law enforcement agencies when illegal in-transit activity is detected.
The use of real-time data streamlines communication between operations and drivers, while eliminating unnecessary paperwork. The whitepaper states that real-time data also protects the product's integrity as high-value pharmaceuticals are transported through lower-security modes of transit like OTR. Notifications can be sent if truckload tampering is detected on stopped loads such as broken seals.
Real-time insight into inventory levels also provides accurate forecasting and managing through periods of peak demand. Companies have traditionally relied on historical data to model future demand and inventory management. According to the white paper, assuming that next year will be similar to last year is just as dangerous as shocks to the system like COVID-19 happening regularly.
With the proper technologies, pharmaceutical and healthcare companies can easily attain real-time information to unlock total supply chain visibility. The COVID-19 pandemic has challenged medical supply chains to become faster and more secure. No company can fully insulate itself from the ever-evolving threats that emerge from an ever-changing market, but smart companies will utilize the right tools to protect itself from threats old and new.