Healthcare experts Gijs-Jan Otten and Tim van Rees write about patient-centric supply chains. Supply chains are often overlooked as a competitive advantage. They think pharmaceutical companies should take a second look and invest in patient-centric supply chains. Why is patient-centricity so beneficial for both patient and pharmaceutical companies? And what are the risks of the current, product-focused supply chains? Let’s zoom in on pharmaceutical supply chains.  

Why a patient-centric supply chain matters

The changing healthcare system increases the necessity for patient-centricity. Pharmaceutical supply chains can – and should – take their responsibility. Patient-centric supply chains can improve the overall patient value by increasing adherence, patient satisfaction and compliance. It also allows pharmaceutical companies to improve their service offerings. If they maintain their production-centric focus, however, they risk being overrun by competitors or not complying with new reimbursement models. But what does a ‘patient-centric supply chain organization’ look like? And how does it compare to the current pharmaceutical supply chains? Let’s zoom in.

The 5 flaws of current pharmaceutical supply chains  

Sure, the current pharmaceutical supply chains are efficient, and at some pharmaceutical companies shortages barely occur. But there are major flaws in their current ways of working. Flaws that put the current pharmaceutical supply chains at risk. What are these flaws? From our experience in consulting all leading pharmaceutical companies, we detect five red flags in today’s supply chains. 

1. Production-oriented

The first flaw is the overall production-centric focus of pharmaceutical supply. This production-centric focus puts the emphasis on the upstream supply chain activities, up to delivery to the affiliate. The downstream activities, after delivery to the affiliate, are often overlooked or outsourced to third parties. This means, there’s no view of the end-to-end supply chain, and especially the downstream activities. But that is where the patient interaction takes place, and where improvement can be found that actually benefit the patient.

2. Working in silos

The second flaw is a siloed organization of pharmaceutical companies, which is amplified by the production-focus. Most companies we set foot in, lack integral operation of its commercial, production and supply chain organizations. Additionally, the healthcare system in general is notoriously siloed. Nearly all pharmaceutical companies find cooperation with hospitals, private clinics or HIC’s very challenging. Though this is mostly stemming from legal and compliance issues, but improving collaboration across the organization and the entire healthcare chain will contribute to improving the patient value.

3. Risky risk-focus

Another flaw of pharmaceutical supply chains is – ironically – the strong focus on risk and risk mitigation.  This results in limited agility and a limited growth mindset. Compliance rules the game and therefore the focus is not on improvement opportunities to become more patient or customer centric.  An example is that almost all Pharma & Life Science companies have placed critical parts or ingredients for their products in one location or purchasing them from one supplier, in order to increase control. Unfortunately, they are reaping the bitter fruits of this approach in the current (extreme) crisis, demonstrated by the clear increase of shortages in the last year according to KNMP Farmanco’s list of drug shortages1. Focussing on reducing risks instead of focussing on customers and patients, proves to be a risk in itself.

4. A lack of perspective

Furthermore, there is limited conceptual knowledge of the total end-to-end chain from supply to patient. There are many layers of clay, each with their own information and data systems. In addition to the many layers of clay, supply chain organization often lack the knowledge and capabilities to become a trusted partner for their commercial counterparts, both within and outside of their company. This not only hurts supply chain performance, it also hinders organizational improvement. An organization deprived from company-wide data to be used to improve products and services, misses opportunities to make improvements that benefit the quality of life for patients;  

5. Missing insights

And finally, the main focus of supply chain organization is on their activities. Consequently they are often missing the opportunity to become a company wide data hub that could be used to improve products and/or services and provide insights to improve of the quality of life for patients. 

Opportunities to improve pharmaceutical supply chains

Despite these flaws, the pharmaceutical supply chains maintain to deliver most of their products on time and in full. But that does not mean that these flaws should not be seen as opportunities to improve the supply chain organization. There are ample opportunities to improve the pharmaceutical supply chains. Let’s take a closer look.

End-to-end insights

Since solutions are becoming more patient-specific; the supply chain should be integrated within the end-to-end healthcare chain to improve the control of such a ‘one-piece flow’ chains. Thereby increasing visibility and reducing the high stocks and high transport costs. 

Ready for outcome-based reimbursement

Governments and Healthcare Insurance Companies (HIC’s) are increasingly more focused on outcomes, thereby changing the current ‘fee-for-service’ reimbursement model to outcome-based reimbursement models. The control of all aspects of a pharmaceutical company, including the supply chain, can and should be tailored in advance to meet the upcoming outcome-based reimbursement models;  

Prepared for the next pandemic

The current COVID pandemic has had an enormous impact on worldwide supply chains. There will be other and even greater risks, so-called black swans, that will put an even greater pressure on agility and resilience of pharmaceutical supply chains. Pharmaceutical supply chains should take the opportunity to learn from this crisis in preparation of future black swans. 

Differentiation 

Every product is different, and markets have different requirements. Hence, there is no ‘one size fits all’ supply chain, thereby creating the need for multiple product-market combinations (PMC). There is an opportunity to apply a customer segmentation by differentiating Value Chains with different Service Level Agreements (SLAs) for each product-market combination. The SLAs of a Value Chain may depend on, for example, the possible added patient value, the phase in the Product Life Cycle (PLC), the role of wholesalers, and the market dynamics. Each Value Chain will deliver the optimal service, at the optimal cost and minimal environmental impact for each PMC, whilst also increasing customer experience and patient value.  

Our vision

There’s a lot of untapped potential, and we know quick-moving pharmaceutical companies are eager to become more patient centric. We believe that pharmaceutical supply chain organizations must quickly transform from a ‘task-oriented, reactive organization that focusses on solely on operational excellence’, to ‘an innovation-oriented, pro-active organization that drives patient centricity’.

Patient-centric pharmaceutical supply chains should ensure availability of critical medication, whilst providing innovations and solutions in a fast and cost-effective way to extend the boundaries of what is possible within the end-to-end healthcare chain. And in addition, deliver actionable patient and customer insights to continuously improve their end-to-end services. These efforts will improve the, amongst other, the adherence and compliance, which will lead to an improvement of the overall medical impact for patients and the patient experience. A crucial aspect for a successful transformation is that it should be a shared effort between the financial, operational and commercial disciplines of a pharmaceutical company. 

What do ‘patient-centric supply chains’ look like?

In our opinion, ‘patient-centric supply chain organizations’ should incorporate the following seven points into an integral vision and construct an actionable roadmap to realize this integral patient-centric supply chain vision to increase the patient value. 

1. Strategic alignment across the entire organization: the corporate patient-centric strategy is translated and embedded into the supply chain strategy to provide guidance and clarity from boardroom to work floor.  
2. End-to-end supply chain conceptualisation: There is one single hub managing the product oriented end-to-end supply chains, thereby increasing the end-to-end supply chain visibility to improve the guarantee of supply and the supply chain responsiveness. 
3. Integrated Business Planning: Fulfillment is tailored to the dynamics of the product-market combination which will improve the end-to-end Cost-to-Serve per product-market combination  and increase both the customer & the patient experience. 
4. Innovation: Supply Chain orchestrates the process from product/solution ideation to market introduction, to accelerate the time-to-market of these innovations.  
5. Data & performance improvement: There is a data ecosystem driving continuous improvement. KPI’s trigger and drive supply chain improvements and feedback, ‘right-to-left’ customer & patient information, is properly used. This will lead to improvements across the entire supply chain, from guarantee of supply & responsiveness to environmental impact & patient experience.  
6. Culture & leadership: The company identifies, develops and invests into future supply chain leaders with the ability to focus on patient centricity. This will embed the patient-centric strategy into the daily operation and creates ambassadors for patient centricity. 
7. External exposure: Key supply chain partners jointly work on continuous improvement of planning and share an incentive system. Partnering with the entire ecosystem will accelerate the journey to a patient-centric supply chain with increased value for the patient.  

Do you want to be part of the solution and help to increase patient value through your supply chain? Join our round table discussion with a small group of likeminded industry peers on June 30th.

Join our Patient-Centric Supply Chain Round Table, June 30th.

Please get in touch with Gijs-Jan Otten if you want to be on the guest list.