Biopharma: The Demand for Supply Chain Diversification

Biopharmaceuticals currently generate global revenues of $163 billion, constituting 20 percent of the pharma market. With an annual growth rate exceeding 8 percent, more than double the rate of conventional pharma, biopharmaceuticals are poised to achieve market dominance in the pharmaceutical industry.

However, achievement of this feat will require a strategic approach to overcoming industry-wide challenges in the supply chain related to the cost and complexity of biopharma operations.

While the small-molecule space and the contract services sector that supply it have been established for decades, the complex, fragile, and more costly-to-produce cell and gene therapies that belong to younger biologics present unprecedented development and commercial challenges.

“One of the consistent problems in bio for the last year has been getting the right level of skilled workers, as well as building a global and stable partners base,” explains Rutger Oudejans, Brand Director Pharma at UBM. “This is an area that small and large molecule will likely collide in 2018 – particularly as more CDMOs and pharma companies begin to diversify their capabilities.”

Current production programs are already struggling to keep pace with demand and regulatory compliance mandates, with more than one prominent player failing to deliver, making it critical to diversify the supply chain in order to manage inventory, distribution networks, and the complexities of the cold chain.

Ralf Otto, an associate principal with McKinsey & Company, writing in a special report, Rapid growth in biopharma: Challenges and opportunities, asserts that to successfully combat these challenges, “[t]he supply chain must not only be resilient, but also increasingly diverse. Companies need to evaluate their overall sourcing strategy and supply chain network design, while diversifying their sources of supply. This approach to supply chain diversity will ensure that organizations have multiple options and can determine the right balance between near-shore and offshore manufacturing. For example, by having a carefully planned ‘portfolio’ of suppliers and resources, companies can spread their risk, mitigating the impact that social, political, and geographic incidents could have on raw material price and availability.”

Further, biopharma must adopt lean and agile operations and peak equipment utilization to boost manufacturing-site capacity for individual molecules by clearing bottlenecks from current facilities, running multiple products in fewer lines, and enhancing the industry’s responsiveness to a highly volatile market without itself becoming destabilized.

As biopharma continues its ascent as the most innovative and promising sector in the pharma industry and moves beyond scientific niche to business mainstream, it will increasingly have to negotiate market pressures related to quality, competitiveness, and affordability, necessitating an ever more agile and integrated approach to overcoming disruptions to the supply chain.

Lifecycle Biotechnologies, as a leading life sciences tools and services company, can be part of the solution if your struggling with supply chain disruption. With a proven track record of understanding and successfully responding to the needs of the rapidly evolving biologics industry, we support diverse client populations across multiple market segments. To see how we can help you achieve more agility in your operations, please contact us today.