PHARMACEUTICALS
A prompt response to a market movement will generally help the buying group negate all of the potential cost increases endured at these times.
For new development clinical API projects where the outsourced chemistry may be untried by the manufacturer and managed on a custom basis, effective internal process R & D and supply chain awareness are important to fully evaluate the supplier’ s ability to deliver the compound for the project. Here, procurement and technical teams must work together to ensure the correct outsourcing partner is selected to deliver the project’ s needs.
Often in these circumstances, the programme timelines are extremely tight, so a flexible strategy for initial material delivery should be employed. Different dual and seed sourcing strategies can be adopted for the laboratory quantity needs, to provide the internal technical teams with supply options, and reduce the risks associated with failure to supply, which can seriously impact timelines. Return to the West
Over the last decade the location of pharmaceutical development and manufacturing has seen significant change. Where previously much has been outsourced to lower-cost countries in the East,‘ nearshoring’ has become a priority for innovators and this trend seems to have become more prevalent over the last 12-18 months.
This change originally stemmed from concerns over the security of supply and IP. It was highlighted during the pandemic, where pharmaceutical supply chains were exposed to be over-reliant on overseas countries.
This has prompted some Western countries to prefer domestic production of medicines, which means that the monetary cost of manufacturing drugs is greater. In turn, this has put greater pressure on procurement teams to find ways to lower the cost of goods, while maintaining compliance and meeting the agreed programme timelines.
While the end manufacturer may be desirable to be in Western countries, Asia does remain a key part of supply chains. For procurement teams, being able to find the base manufacturers of raw materials is crucial to minimise the cost of the products. Alongside software and databases that can identify these, companies will maintain their own sourcing database and will have options for approved suppliers for each material.
This will typically include vendors across a number of geographic locations and will vary in number depending on the nature of the product. For specialised products, the number of potential sources may be more limited. To effectively manage and audit a global supply chain is a laborious process for procurement teams, so building up good working relationships and establishing mutually beneficial commercial agreements with suppliers is crucial to minimise potential issues.
Ideal sourcing strategy
So, what does an ideal sourcing strategy look like? The world is far more connected than it was 20 years ago, and the amount of information available to support decisions is enormous. However, it is crucial to understand and integrate all of this data to ensure that it provides useful intelligence and supports strategic decision-making.
Procurement teams need to combine both internal and external data to build a slick and efficient process that is forward-looking and effectively manages its external supply base. When used effectively, these tools can manage supplier performance, create data metrics and provide information to ensure efficiency in procurement management for future projects across the wider business. Alignment with production schedules across a global network allows the adoption of integrated buying power and building
close relationships maximises the value of supply chains.
There will always be issues that cannot be mitigated against. In circumstances such as force majeure, global markets can change instantly, and some products become incredibly difficult to source. Although rare, it can lead to the monopolisation of markets by vendors and costs have to be absorbed. However, by adopting strategies that can proactively look at stock levels and monitor global pricing trends, projects can remain within agreed timeframes and ensure economic viability.
Key to all of this is the innovator and CDMO working together in a transparent and collaborative way to leverage experience, knowledge and opportunities to smooth the path to market and ensure the supply chain strategy is beneficial for all parties. The most important aspect to all of this however, is the outcome, which is to ensure that patients can continue to have access to required medicines without disruption. ●
Chris Neasham
VP- GLOBAL PROCUREMENT
STERLING PHARMA SOLUTIONS k + 44 191 250 0471 J enquiries @ sterlingpsl. com j www. sterlingpsl. com
20 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981