This week we launched our report Unravelling complexity: The challenge of compliance in the life sciences supply chain. This report is a follow-up to our previous report The challenge of compliance in Life Sciences: Moving from cost to value, which we published in November 2015. Our new report focuses on the compliance challenges life sciences companies face in their supply chains and suggests actions that companies can take to maintain safety, reliability and cost-effectiveness across these dynamic, interconnected systems.
Across the life sciences industry, companies rely on lengthy and complex global supply chains to procure, manufacture and distribute products. Indeed, the supply chain is the ‘golden thread’ that links discovery to delivery within the life sciences value chain. The life sciences industry operates in one of the most regulated environments in the world, and failing to comply with the complex set of rules and regulations that define the industry can be hugely disruptive to operations. The consequences are immediate loss of revenue and/or delayed product launches, costly remediation programmes and long-term reputational damage for the company. More broadly, compliance failures can have an adverse effect on patients’ lives, stemming from medicine and other key product shortages and, in the case of product quality issues, result in adverse events such as patient harm. Without compliant and efficient supply chains, life sciences companies will struggle to remain competitive.
Our report is based on literature reviews and in-depth interviews with senior industry leaders, supplemented with insights gained from our own life sciences supply chain and regulatory specialists. Our research identified five key challenges for supply chain compliance. These are:
- measurement needs to be meaningful, yet measuring compliance is very difficult, and the metrics involved are often not comprehensive
- supply chains are incredibly complex, and they require effective governance and risk management in order to function
- new product types and therapies are more complex and have shorter product life cycles, with a growing emphasis on demonstrating outcomes
- implementing regulatory and technical changes within supply chains is time consuming and expensive
- an increase in the pace and scale of new regulations is transforming the regulatory landscape, with regulators increasing their compliance oversight and enforcement activities.
To address these compliance challenges, we suggest five key actions that life sciences companies can take to maintain safe, reliable and cost-effective supply chains:
- develop an ethics driven culture through effective leadership and governance – the culture of a company must be driven from the top down and effectively demonstrated by the Board and senior management, so that all employees are passionate about eliminating mistakes and improving quality. Changing culture can take time, so companies must be proactive in diagnosing the core values and behaviours that underpin their culture and take action to embed an effective compliance culture throughout the organisation
- extract greater value from data – life sciences companies produce vast amounts of data around the efficiency and effectiveness of their supply chains, yet many large life sciences companies have highly complex reporting systems and platforms that only manage discrete parts of the supply chain rather than its entirety. Utilising ‘big data’ and analytics to join up disparate sources of data could identify and quantify new and emerging risks, thereby driving compliance
- understand the costs and benefits of investment in supply chain compliance, talent development and/or outsourcing – the difficulty in measuring compliance often results in life sciences companies unable to understand the full cost of compliance. Understanding these costs and determining when to invest and when to outsource compliance activities can lead to leaner and more effective supply chains
- build a balanced relationship with regulators including supporting regulators to develop greater regulatory harmonisation – demands on regulators are increasing, forcing them to re-think their role and approach to regulating the industry. Life sciences companies can develop collaborative relationships with regulators, working together to optimise the management of the large volume of documentation that regulators receive to predict and manage regulatory risk and compliance proactively. With increased harmonisation, new regulations for innovative treatments can be developed using enhanced regulatory pathways proactively rather than retrospectively
- adopt digital technology, including robotic process automation – life sciences companies can utilise digital technologies to transform linear and siloed supply chains into ‘Digital Supply Networks.’ These can reduce the cost of supply chain compliance and improve accuracy, resilience and reliability. Additionally, many routine supply chain compliance processes could be optimised through robotics (software algorithms) and machine learning.
Our research acknowledges that supply chains evolve over time and that the next few years are likely to bring revolutionary change due to the widespread adoption of innovative technologies and more dynamic business and operating models. At the same time, life sciences supply chains are likely to become ever more complex due to increased product diversity and new models of healthcare delivery. In response, scrutiny from national and international regulators will likely increase still further. Life sciences companies will need to evolve to keep up with these changes, but regardless of the approach taken, a well-designed programme for supply chain compliance will help companies maintain their ability to discover, prepare, analyse and respond to existing and emerging supply chain compliance risks and requirements. Adopting scalable and flexible solutions which leverage advanced analytics and robotics, will enable companies to adapt and proactively manage their compliance functions, develop and deliver safe and reliable products to patients, and remain competitive.