To Future-Proof the Pharma Supply Chain, Digitize

  • Published:
    Aug 10, 2022
  • Category:
    White Paper
  • Topic:
    Digital Transformation

In this article, we’ll explore three ways digitization can help pharmaceutical companies bridge the widening gap between supply and demand.

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Pharmaceutical Drug Shortages: An Overview

What is a drug shortage?

A drug shortage is a supply issue affecting the manufacturing or distribution of a drug product. As a result, medical institutions, retailers, and patients encounter difficulty accessing these drugs, impeding adequate treatment.

What causes drug shortages?

Drug shortages are generally caused by manufacturing and quality issues, logistical problems, or shortages in raw materials.

At the production level, shortages can be caused by the limited availability of ingredients. Logistically, transportation issues triggered by natural disasters or delays may disrupt processes at any step of the manufacturing or distribution process.

Common causes of drug shortages [source]

What is the impact of drug shortages?

Around the world, drug shortages are adversely affecting countries on a clinical, economic, and humanistic level. The causes — attributed to supply, demand, and regulatory issues — are yet to be solved by authorities in the industry.

Drug shortages have grave effects on patients, who commonly see increased out-of-pocket costs, drug error rates, adverse events, and even mortality. Additionally, these effects disproportionately affect patients based on their socioeconomic standing.

This is why it’s more important now than ever to find novel solutions that emphasize scalability and sustainability. A critical shift in technology is needed to get the pharmaceutical industry ready for this new era. 

How Can Digitization Strengthen the Supply Chain?

Digitizing the pharma supply chain could heighten the following:

  • Compliance
  • Traceability
  • Visibility
  • Efficiency

To bring about this transition, the workforce needs to be educated in how to use digital technologies accurately and efficiently. That’s why one of the most important aspects of healthcare business training is software and technology integration.

This demand is being recognized even in educational institutions, which are heightening healthcare management programs. By focusing on population health management, business operations, and healthcare compliance, they seek to produce graduates focused on proactively contributing to pharmaceutical innovations.

Without dedicated attention to innovating operations technologically, the industry will continue to fall short of meeting the world’s healthcare needs.

The Race to Digitization

The pharma supply chain was constructed with repetition and predictability in mind, but its linear structure has proven unable to meet unexpected circumstances like COVID-19.

When the pandemic first broke out, global lockdown measures prevented drugs from being exported or imported. Unsurprisingly, this created a widespread pharma supply chain disruption.

At the time, it was reported that the production of 57 drugs was at risk due to disruptions in manufacturing and exports in China. This proved critical in the face of a global health crisis when COVID easily compounded with other illnesses.

“The COVID-19 outbreak and measures to prevent its spread disrupted some supply lines because China is a significant source for many active pharmaceutical ingredients.”

— Stephanie Kennan Senior Vice President, McGuireWoods Consulting

Even as the world edges back to normalcy, it’s important to implement measures that will prevent such disruptions from happening again. This is why it’s crucial to develop a smart, interconnected, and efficient digitized pharma supply chain.

Through advanced capabilities such as demand-sensing and data visibility, drug manufacturers can proactively manage risk and address sudden shifts in the market.

Read on for three key ways digitizing the pharma supply chain can benefit the industry and future-proof it in a post-COVID world.

3 Key Benefits to Digitizing the Pharma Supply Chain

Benefit #1: Reducing Costs

One of the first considerations for digitizing the pharma supply chain is the cost factor. While investing in digitization may initially be costly, incorporating automation, artificial intelligence, and machine learning, as well as centralizing data systems, can streamline the process into heightened efficiency.

Widespread adoption of digitization requires investing numerous resources from the development process to mitigate government and international regulation. But while the price may be high, the price of stagnation is even higher. 

Drug shortages cost US hospitals an estimated $200 million annually on expensive alternatives and additional labor costs of $359 million every year. If implemented successfully, preventative measures to combat drug shortages can reduce supply chain costs by 50%, according to a report by the Digital Supply Chain Institute (DSCI). This effectively benefits a number of stakeholders, especially patients, from different economic levels.

"Successful companies will take advantage of new management practices, a continuously expanding data reservoir, and new technologies relevant to DSCs if they are to have future competitive advantage and delighted customers."

George Bailey, DSCI Project Leader, CGE

An effective transition towards digitization can reduce costs dramatically by improving certain decision-making matters such as finding alternative sourcing for materials or managing distribution logistics. As a result, it can help to foster:

  • Operational efficiencies
  • Tracking transactions
  • Predicting market changes
  • Less labor-intensive workflows
  • A reduction in human error

By installing digital measures that facilitate automated error detection and smarter solutions, pharma companies can address supply chain issues even before they arise. Additionally, they can use these tools to calculate the best action points for cost and resource reduction while optimizing efficiency.

Benefit #2: Maximizing End-to-End Visibility

Another way that digitizing the pharma supply chain can benefit pharmaceutical companies is by providing access to critical manufacturing data, particularly in relation to suppliers and distributors. Digitization will further companies’ manufacturing execution systems (MES), which oversee each step in the drug product life cycle, from raw materials to finished goods.

MES operates in real time to oversee multiple elements in the production process, including inputs, personnel, machines, and support devices. But while pharmaceutical companies’ MES store important data about their own workforce, batch records, quality, and process, they may often not have access to crucial information from external suppliers or distribution networks.

This could prove detrimental to the manufacturing process. Pre-pandemic, over 87% of clinical compounds failed to ascend to clinical manufacturing. With a nearly 1 out of 10 success rate, pharmaceutical companies should have sought to address aspects of development being overlooked — in addition to lack of clinical efficacy, unmanageable toxicity or side effects, and most importantly, poor strategic planning. 

All of these issues were intensified in light of COVID, which heightened the demand for even more novel manufacturing needs.

With supply shortages, trial recruitment, and regulatory delays being aggravated, clinical researchers will benefit largely from optimizing efficiency between multiple levels in the supply chain.

“It is important to note that disruption to supply chains and subsequent drug shortages don’t just affect patients already prescribed and taking those drugs. It also affects clinical research of investigational drugs, which rely on similar manufacturing plants.”

— Allie Nawrat, Senior Journalist, Unleash

Automating visibility between each node in the supply chain enables transparency and collaboration. Digitizing their MES allows manufacturers greater end-to-end visibility, enhancing communication and responsiveness throughout the process — particularly by spotting vulnerabilities and anticipating needed actions at each point in the production process.

In this manner, companies can usher in a more holistic digital transformation that not only spans individual companies, but facilitates collaboration and communication between them. 

Benefit #3: Meeting Patient Needs More Quickly

At the end of the day, it’s all about the end user: the patients who take the drugs. Digitization makes it easier to spot and resolve their needs more quickly.

Automating the supply chain and fostering global connectivity through collaboration systems can help usher the pharma industry into Pharma 4.0, which introduces the idea of converging people, systems, and data within one network.

Patients suffering from drug shortages may encounter the following obstacles:

  • Inadequate treatment due to drug substitutes
  • Shortages necessitating transfer to other medical facilities
  • Unavailability of required care

Through digitalization, pharmaceutical manufacturers can help to address and resolve these needs. By using modern technologies to speed up production while maintaining quality, manufacturers can bring drugs to market faster, helping patients get the medicines they need more quickly.

“If we were to redesign care — forgetting about the legacy structure — we would never design it how it is today. We would design a system where patient health and convenience were the top priority and the financial incentives of hospitals, payers, and providers would be focused on keeping people healthy."

— Diego Miralles, M.D., Global Head of Innovation, Janssen Pharmaceuticals

Applying technological innovations can help revolutionize how pharmaceutical companies collaborate and care for the people who use their products. One way they do this is through synchronized planning and smarter demand-sensing.

By using consumer and patient data, pharmaceutical companies are able to detect whether there will be an inadequate supply of certain drugs within certain areas. This allows them to respond accordingly, letting them coordinate with each node in the supply change before a shortage occurs.

Through digital tools like automations and advanced monitoring, the pharmaceutical industry can successfully direct its efforts toward its North Star: the patients who depend on these drugs for their well-being.

Closing Thoughts: To Innovate, Digitize

Drug shortages during the pandemic have opened up opportunities for the pharmaceutical industry to assess how they can innovate on their supply chain through digitization.

Incorporating technologies like artificial intelligence, machine learning, and centralized data systems can streamline the process and maximize efficiencies, effectively reducing costs. Moreover, digitization can provide end-to-end visibility, which minimizes disruptions in the supply chain through real-time data access.

Ultimately, digitizing the pharma supply chain can allow the industry to revolutionize processes and innovate on its research and development operations. In doing so, pharma can help to build stronger connections between people, systems, and data.


  1. Maryville University. (2022). Online Bachelor’s in Healthcare Management Degree. Maryville Online.
  2. Nawrat, A. (2022, July 11). Covid-19 pandemic: knock-on effects for pharma supply chains. Pharmaceutical Technology.
  3. Phuong, Jonathan Minh, et. al. (2019, May 3). The impacts of medication shortages on patient outcomes: A scoping review.
  4. Shukar, S. (2021, July 9). Drug Shortage: Causes, Impact, and Mitigation Strategies. National Center for Biotechnology Information.
  5. Sun, Duxin. (2022, February 23). 90% of drugs fail clinical trials – here’s one way researchers can select better drug candidates.
  6. Wadlow, Tom. (2020, May 18). CGE: going digital can reduce supply chain costs by 50%.