It’s no secret that industry trends have seen a significant dip in drug discovery rates and decreased returns on project investment costs. The average blockbuster drug necessitates 10-15 years for development and a 2014 Tufts Center for the Study of Drug Development calculated an estimated $2.56 billion for development if a pipeline candidate fulfills its 0.01% chance of reaching the market. As such, biotech companies and pharmaceuticals have become increasingly focused on capital spending efficiency and improving operational performance and agility. The upstream supply chain is one major target for optimization and cost reduction.
The increasing complexity of customer demands, stringent regulations, and market and production globalization require a broad range of operational and technical skills and decisions. As a result, companies are being forced to reevaluate their core operational competencies and determine the best approach to improve cost, quality, and risk management. Improving supply chain efficiency has become a major priority and opportunity within the industry but companies may not wish to invest in the manpower or infrastructure required to meet their supply chain objectives. One possible answer is outsourcing to upstream supply chain manufacturers and/or for third-party logistics and distribution partners.
Procurement of raw materials is merely one aspect of supply chain in the bioproduction industry, but compliance with changing FDA and other international regulations in addition to traditional challenges associated with the raw material supply chain are becoming more of a time-spend for drug companies. It may therefore be cost-effective for them to collaborate or even outsource elements of inventory management, distribution technology, raw material quality data, and complex logistics with upstream supply chain partners. This will require identifying those organizations that are focused on and specialize in ensuring the safety and integrity of raw material manufacturing, testing, packaging, storage, handling, and distribution to the end user.
An exorbitant investment in time and money goes into maintaining product quality to ensure patient safety and protect drug companies from the risk of losing millions. Collaboration and outsourcing in areas outside a companies strategic core competency can be an effective way mitigate risk, increase reliability, and distribute costs to increase returns on a pipeline drug – a necessity for surviving in today’s already volatile market.