{"id":26513,"date":"2017-11-15T22:37:26","date_gmt":"2017-11-16T03:37:26","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/pfizers-digital-supply-chain-transformation-innovation-or-necessity\/"},"modified":"2017-11-29T00:22:47","modified_gmt":"2017-11-29T05:22:47","slug":"pfizers-digital-supply-chain-transformation-innovation-or-necessity","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/pfizers-digital-supply-chain-transformation-innovation-or-necessity\/","title":{"rendered":"Pfizer\u2019s digital supply chain transformation: innovation or necessity?"},"content":{"rendered":"

The pharmaceutical industry is a global, growing industry with worldwide revenues exceeding one trillion dollars. Prices consumers pay for drugs also continue to grow at staggering rates, casting the industry\u2019s efficiency woes under a spotlight. Amidst the growing awareness and discourse surrounding health care policies and reform, a large area of potential improvement in the pharmaceutical industry remains largely untapped: its supply chain. The pharmaceutical supply chain is one of the most complex supply chains in the world, given the global nature of the industry and size and scope of companies that dominate the space. It has also been historically unwieldy and resistant to transformation, including technological change. However, the past couple of years have presented both increased opportunity for and pressure to achieve digitization of its supply chains[i]<\/a>.<\/p>\n

As cloud and big data technologies advance, it has become increasingly feasible to achieve end-to-end tracking and sophisticated analysis of the supply chain, from initial testing to patient usage. The attractiveness of leveraging these new technologies increase when considering three major trends straining the industry: the rise of generics, increasing volume of prescriptions, and rise of cold chain logistics[ii]<\/a>. The percentage of generics in the market has been steadily rising and is predicted to make up 92 percent of total prescriptions by 2020. While traditionally depending on blockbuster patented drugs for most of their revenue, companies now must find other ways to make up this revenue. Alongside this rise in generics is a rise in the volume of prescriptions, likely due to effects of the aging population and the amplification of new drug products, making more accurate forecasting and inventory management increasingly paramount. The rise of biologics, which require storage in cold temperatures, are increasing inventory holding costs and further require better demand forecasting. These pressures, along with regulatory serialization mandates that essentially force drug companies to at least have primitive digitization of its supply chain (e.g. the US requires drug companies to serialize each sellable unit to track end-to-end movement of drugs along the supply chain for patient safety reasons), make investing in supply chain digitization exceedingly attractive and necessary[iii]<\/a>.<\/p>\n

Pfizer, one of the largest pharmaceutical companies in the world, took note of this changing landscape and first moved its supply chain to cloud in 2012[iv]<\/a>. In 2015, Pfizer introduced the Highly Orchestrated Supply Network, described in its 2016 Annual Review to achieve \u201ccomplete visibility into the status of products at all times\u201d and \u201cimmediately identify demand \u2013 from anywhere in the world \u2013 and quickly alert the best production facility to manufacture the product to meet that demand and ensure it is delivered on time\u201d as its ultimate goal over the next five+ years[v]<\/a>. Pfizer is also looking to move into the e-commerce space for prescription medications in the near future, a task previously limited by the prevalence of paper prescriptions directly from the doctor\u2019s office, but now in portion slowly being replaced by online prescriptions, ordering, and delivery[vi]<\/a>. The E-commerce space will offer a more direct, less costly way for drugs to move through the supply chain, while offering more granular point of service data for demand forecasting and other analytics.<\/p>\n

Pfizer is indeed investing in supply chain digitization,\u00a0 but stepping beyond what is almost a necessity is required to elevate themselves above competitors. Pfizer should turn their focus on how to expand their integrated, cloud-based supply chain information system to emerging markets, where often paper trails and inconsistent internet are still the norm[vii]<\/a>. As the company and industry as a whole are expanding into these developing markets as a source of continued growth for the future, their full integration into the global supply chain is essential, and can achieve unprecedented synergies of scale with decreased overhead costs and rapid movement of drugs across the chain to adeptly meet demand. Furthermore, in the age of personalized medicine, Pfizer can leverage their more digitized supply chain to collect real time data from patients through various consumer technologies (wearables, phones, etc) for care analytics to iteratively improve treatments. Finally, in order to remedy the conflict between need for speed of delivery and rising inventory holding costs, Pfizer needs to invest in technology of the future, such as drones for same day delivery.<\/p>\n

While the potential for efficiency savings is huge with digitization, patient safety is always at the forefront of the drug industry. Will moving into this new age of data analytics and high technology (e.g. drones) be able to sufficiently maintain patient safety and confidentiality and pass federal patient safety requirements? What is the feasibility of complete global digitization in an industry looking for growth in emerging markets? How can Pfizer differentiate itself when digitization is becoming just short from forced onto the entire industry?<\/p>\n

(790 words)<\/p>\n

[i]<\/a> PWC, \u201cDigitization in phama, gaining an edge in operations\u201d 2016.<\/p>\n

[ii]<\/a> Allen Jacques, \u201c2017 Trends and Transformations in the Pharma Supply Chain\u201d<\/p>\n

FusionOps, December 29, 2016, [https:\/\/www.pharmpro.com\/article\/2016\/12\/2017-trends-transformations-pharma-supply-chain], accessed November 2017.<\/p>\n

[iii]<\/a> Evren Ozkaya, \u201cPharma\u2019s Digital Supply Chain Transformation,\u201d Pharmaceutical Manufacturing 2017.<\/p>\n

[iv]<\/a> Paul Taylor \u201cPfizer moves supply chain to cloud,\u201d Financial Times, September 11, 2012, [https:\/\/www.ft.com\/content\/1608e5d6-fc59-11e1-ac0f-00144feabdc0], accessed November 2017.<\/p>\n

[v]<\/a> Pfizer, 2016 Annual Review, \u201cTransforming Delivery of High Quality Products.\u201d<\/p>\n

[vi]<\/a> \u201cDigitizing the supply chain: Why Pfizer is investing in IoT, drones, and personalized medicine,\u201d January 31, 2017, Internet of Business,<\/p>\n

[https:\/\/internetofbusiness.com\/digitizing-supply-chain-pfizer-iot\/], accessed November 2017.<\/p>\n

[vii]<\/a> Allen Jacques, \u201cThe Digital Supply Chain: Seizing Pharma\u2019s Untapped Opportunity,\u201d Pharmaceutical Technology (2017) 1: p20-23.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Faced with increased price and regulatory pressures, the pharma industry is forced to look to other avenues for revenue growth, including digitilization of its historically unwieldy and heavily regulated supply chains. 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