Adapting to uncertainty: CDMOs and pharma supply chain issues

Pharmaceutical supply chains are becoming increasingly vulnerable to a range of disruptions. From geopolitical upheavals to natural disasters, the unpredictability of the modern world demands innovative strategies for maintaining stability in the face of disruption. 

Contract development and manufacturing organisations (CDMOs) play a critical role in navigating these challenges by ensuring the consistent production and delivery of life-saving medications. There is a pressing need for CDMOs to address these supply chain challenges in a volatile, uncertain, complex, and ambiguous (VUCA) environment, and to implement strategies for resilience in the face of global uncertainty.

The impact of global disruptions on pharmaceutical supply chains

Since 2000, the pharmaceutical industry has faced a series of global crises that have exposed vulnerabilities in supply chain operations. Major events such as the 2008 financial crisis, the COVID-19 pandemic, and the ongoing war in Ukraine have disrupted the production and distribution of critical materials, increased production costs, and created regulatory challenges.

For instance, clinical trials in Europe were significantly impacted by the Ukraine conflict. Between late 2020 and early 2022, 255 trials were initiated or completed in Ukraine. By comparison, from mid-2022 to mid-2023, this number plummeted to 33, an 87 per cent reduction. This stark drop underscores the ripple effects of regional instability on global pharmaceutical operations.

Navigating complexity: Challenges for CDMOs

Pharmaceutical manufacturing involves managing extensive, intricate supply chains. CDMOs – tasked with ensuring compliance with regulations, operational efficiency, and consistent product quality – face significant risks:

• International regulatory requirements: Different countries have unique regulatory requirements, complicating cross-border operations.
• Overdependence on certain geographic regions: Reliance on specific regions for raw materials and manufacturing makes companies vulnerable to localised disruptions.
• Batch manufacturing limitations: Traditional large-scale production methods can be inefficient, with longer lead times and risks such as workforce shortages and logistical challenges

These challenges were made more prominent during the COVID-19 pandemic, which caused widespread shortages of essential drugs and materials. For example, anaesthesia drugs saw severe shortages in 2020, peaking at 143 shortages of different medications in the U.S. alone – thus highlighting the urgent need for more resilient systems.

Building resilience: A framework for supply chain security

CDMOs are implementing proactive measures to strengthen supply chain resilience. A robust framework for resilience is built on four interconnected pillars:

1. Visibility
2. Real-time supply chain monitoring ensures early detection of potential disruptions. Tracking the flow of materials and production processes allows for swift corrective measures, minimising downstream impacts.
3. Flexibility
4. Adaptive strategies, including sourcing materials from a more diverse pool of suppliers and scalable manufacturing processes, enable CDMOs to respond to changing conditions effectively. This flexibility reduces dependence on single-source suppliers and mitigates bottlenecks.
5. Collaboration
6. Coordinated efforts among suppliers, manufacturers, and logistics providers equip the entire supply chain with the ability to manage disruptions more effectively. Strong partnerships build mutual trust and a shared commitment to maintaining resilience.
7. Control and Transparency
8. Clear communication, robust data management, and adherence to regulatory requirements also build trust across the supply chain. Transparency in operations ensures alignment with stakeholders and mitigates risks.

The role of technology and innovation

Innovative technologies are playing a pivotal role in reinforcing pharmaceutical supply chains. Tools such as predictive analytics and blockchain analytics are helping to improve traceability, streamline operations, and improve decision-making.

CDMOs are also seeing technological advancements in production methods, such as continuous purification, which promises greater efficiency and scalability. While traditional batch manufacturing methods remain commonplace, the integration of cutting-edge technologies is gradually reshaping the industry for the better.

Lessons for the future

The pharmaceutical industry must adapt to a world where disruption is the norm. Key strategies for navigating these challenges include:

• Diversifying supply chains: Reducing reliance on specific regions or suppliers to mitigate risks.
• Strengthening partnerships: Building robust relationships with stakeholders to promote more collaborative relationships.
• Investing in technological innovation: Leveraging new technology to improve operational efficiency and resilience.
• Improving agility: Developing flexible systems capable of responding to sudden changes in demand or supply conditions.

A call for resilience

As the pharmaceutical sector faces unprecedented challenges, the resilience of supply chains is paramount to ensuring the delivery of critical medications and patient safety. CDMOs must lead the charge by adopting comprehensive, forward-thinking strategies that address the complexities of a globalised industry.

By prioritising visibility, flexibility, collaboration, and transparency, CDMOs can navigate uncertainty and maintain stability in a VUCA world. In doing so, they safeguard not only their operations but also the health and well-being of patients worldwide.

Pascal Degen is the vice president of global supply chain management based in Bubendorf (Switzerland). He holds a Master’s Degree in Industrial Engineering and Pharmaceutical Management from the Swiss Institute of Technology (ETH) in Zurich. Pascal gained broad operations management experience in various industries and functions for almost 20 years before joining Bachem in April 2019.