A Pharmaceutical Company's View on Supply-Chain Security: A Perspective from Pfizer

A dangerous melamine substitution in nutritional products in China, the $75-million heist of drugs from Eli Lilly's Connecticut warehouse, and 149 deaths in the US from contaminated heparin are all examples of headline-making news stories of pharmaceutical supply-chain attacks. These types of threats are occurring with greater frequency, and concern for patient safety is escalating. Counterfeit products, cargo theft, illegal diversion, and economically motivated adulteration are creating greater challenges for Pfizer and other global pharmaceutical companies while putting patient safety at risk.

The World Health Organization (WHO) estimates that 10% of all pharmaceuticals in the global supply chain are counterfeit, and that level may reach 70% in some developing countries (1). Although it is impossible to accurately quantify the extent of the global problem, the impact of counterfeiting has been estimated to be as high as $200 billion per year (2). Other supplychain security problems also are on the rise. From 2007 to 2009, for example, the rate of pharmaceutical cargo theft in the US jumped 350% (3).

Contributing factors

Several business trends are contributing to the problem. Cost and pricing pressures, generic-drug competition, and challenges with R&D productivity, coupled with the loss of exclusivity of key products—all are pushing pharmaceutical companies toward more complex supply chains, increased levels of contract manufacturing, and more licensing agreements. These issues, along with companies' efforts to expand into new and emerging markets, are providing ample opportunity for criminals to illegally enter the supply chain.

Partnerships

We all realize that we operate in a global marketplace. The pharmaceutical industry's raw materials may originate in one part of the world while products are manufactured in another. Packaging can occur in many markets, and products are transported and sold globally. Supply-chain security is an international issue and a global health imperative.

To successfully address the problem, pharmaceutical companies, regulators, suppliers, law enforcement, and other supply-chain partners must work closely and cooperatively together. Collaboration already is occurring through organizations such as Rx–360, World Health Organization, the Pharmaceutical Security Institute, the Partnership for Safe Medicines, and Interpol to name a few.

The pharmaceutical industry, consumers, and the public at large should realize that we are all in this together. Effective global solutions are required to shore up the entire supply-chain security system because criminals will always attack the weakest links to steal, divert, counterfeit, or adulterate drug products.

The main players in the supply chain—pharmaceutical companies and their external partners, trade groups, law enforcement, government agencies, and industry consortiums—can influence change. Whether by working together or in part (i.e., as a group proposing a strategy, by influencing another partner in the chain, by supporting an initiative, or by implementing a specific requirement), we can, for example, increase global penalties for supply-chain crimes, increase public awareness of supply-chain risks, share best practices, and work to develop harmonized global supply-chain solutions. We must embrace opportunities for the industry and its stakeholders to work together to keep the pharmaceutical supply chain safe for millions of patients who depend upon the products it provides to improve their lives. They expect safe and effective medicines, and it is the industry's responsibility to deliver them.

Holistic approach to supply-chain security

External partnerships and cooperation are vital to keep the global supply of medicines safe, but pharmaceutical companies also can do a great deal to maximize supply-chain security at the organizational level within their companies. The industry can start by taking a holistic approach to supply-chain security from the procurement of raw materials through product delivery. Risk-management principles and integrated layers of protection are important at each juncture of the supply-chain continuum. Pharmaceutical companies need to understand and integrate the myriad internal organizations and activities that touch their supply chains and collaborate to reach effective solutions.

The areas that make up the supply chain—including raw-materials procurement, manufacturing (internal manufacturing and through external suppliers), transportation, warehousing, quality, distribution, and marketplace monitoring—must be aligned and work together for maximum effectiveness.

Pfizer's supply-chain security strategy

That approach is exactly the direction Pfizer is taking. The company looks at supply-chain security holistically and integrates and aligns the efforts of all the related organizations across the company in a comprehensive approach for solving the problem. The company no longer work in silos. Instead, Pfizer focuses on connecting all the dots in the supply-chain continuum, so its supply chain is aligned with maximum effectiveness .

Pfizer's approach when developing its strategy was three-pronged and driven by a focus on operational excellence. First, the company understood the threats, mapped its current state, and developed a future state map to optimize its program. Through this approach, we identified 15 organizations and more than 100 business processes within Pfizer that directly affect the security of its supply chain. As a result of this process, the company has been able to more fully understand the strengths and weakness across its supply chain.

For example, Pfizer created a dedicated supply-chain security function within its manufacturing organization and instituted a standing cross-company supply-chain security team responsible for strategic direction, program management, and continuous improvement. Because supply-chain security threats are constantly evolving and the regulatory landscape is rapidly changing, the company needs to be agile and flexible so that it can provide an effective response.

Industry opportunities

For Pfizer, the process of developing and deploying an integrated supply-chain security strategy has required the company to target a number of internal and external areas of focus. Included among them are: better integrated security and logistics requirements within the company's supplier quality-management processes; increased supply-chain visibility and control; global deployment of standards and best practices; improved oversight of external logistics providers; and more effective management of global serialization initiatives. Perhaps no point is worth stressing more than collaboration. The company is committed to improving its internal capabilities while also strengthening external supply-chain partnerships with regulators, law enforcement, suppliers, and industry groups.

Given the increasingly complex pharmaceutical supply chain, a collaborative approach by pharmaceutical companies within their own organizations, with each other, and across the industry is absolutely essential to win this war. And win it we must, not just for the good of the businesses that pharmaceutical companies support but—more importantly—for the safety of the patients who depend upon drug products.

Brian Johnson is senior director of supply chain security at Pfizer.

Read more from Johnson about supply chain security

References

1. WHO, "Counterfeit Fact Sheet" (Geneva, Switzerland, Nov. 14, 2006), www.who.int/medicines/services/counterfeit/impact/ImpactF_S/en/index.html, accessed Aug. 15, 2010.

2. J. Irish, "Customs Group to Fight $200 Billion Bogus Drug Industry," Reuters, June 10, 2010, www.reuters.com/article/2010/06/10/us-customs-drugs-idUSTRE65961U20100610, accessed Aug. 15, 2011.

3. A. Keteyian, "Inside the World of Cargo Hijacking," CBS News (New York, Oct. 25, 2010), www.cbsnews.com/video/watch/?id=6990685n, accessed Aug. 15, 2010.

For additional insight from Brian Johnson on supply-chain security, see "Addressing Ways to Improve Supply-Chain Security" in the September 2011 issue of Pharmaceutical Technology.