The supply chain for healthcare and pharmaceutical providers is a complex one, but DHL has some solutions to simplify the process.

Pharmaceutical Supply Chain-Boss MagazinePharmaceutical and life sciences organisations in Australia are under mounting pressure. Increased demand for highly specialised medications, consumer autonomy in care, and the growth in generics and substitution alternatives are all posing separate challenges. In order to adapt and thrive in this radically changing market, manufacturers must look at different opportunities to reduce costs and improve margins without compromising on quality or service. For many, the supply chain can be a significant starting point. As scientific advances shift the industry from a “one size fits all” approach to care, to one of segmentation, personalisation, and holistic wellness, a flexible, responsible, and reliable supply chain is more important than ever.

Up until a few years ago, terms like ‘temperature controlled transport’ (TCT) and ‘radio frequency identification’ (RFID) tracking were relatively unheard of in the healthcare industry; now, they’re the mainstay. Ushered in part by legislation—which requires uninterrupted temperature control across
the entire supply chain, not only in storage—healthcare companies are taking a step back and assessing how their end product gets in the hands of patients. In DHL’s experience working with many leading life sciences and healthcare manufacturers globally, old and new challenges have thrust the industry into action resulting in logistics management innovation, and ultimately more efficient ways of doing business.

What follows is an outline of what we perceive to be the major challenges facing our customers, and how supply chains can respond.

The Growth of Highly Specialised Medications
Recent reports show that the future of healthcare lies in high-value, specific medications that target niche markets. Referred to as ‘biologics’, these medicines are projected to account for 23 per cent of the total pharmaceutical market by 2016, and 48 per cent of top 100 products in the same time frame. Biologics demand significant capital outlay for production, the highest levels of quality assurance to minimise waste, and require closer proximity to hospitals and pharmacies. So how can a supply chain partner assist organisations in better navigating supply and (often urgent) demand while retaining product integrity?

Accurate forecasting and intelligence.
Leveraging data from across the industry, manufacturers can anticipate patient patterns and consumer habits. With greater actionable insights, they’re able to plan output more accurately, prevent biologics waste, and even missed sale opportunities as a result of underestimating demand.

Minimise waste with product integrity.
At a recent DHL customer forum in Sydney, it was revealed that over 53 per cent of life science and healthcare manufacturers prioritise quality assurance when selecting a supply chain provider. With robust temperature controlled storage and transportation, constantly monitored, customers can be guaranteed that the integrity and safety of their end-product is upheld at all times. DHL has developed a cutting edge packaging solution to maintain the temperature of the pharmaceutical products between 2 and 8 degrees whilst in transit from the warehouse to the clinic. Known as the Cool Green Cell (CGC), the patented technology is as sustainable as it is reusable, and incorporates an RFID tag to provide visibility of the shipment throughout the delivery. In an industry provisioning life-saving products, not to mention high-value biologics, this level of accuracy and control is vital.

Keep costs low with shared infrastructure.
DHL is responsible for storing and/or moving approximately 70 per cent of Australia’s originator pharmaceutical product and 50 per cent of medical, surgical, and consumer healthcare products. The delivery network spans more than 5,000 pharmacies and every major hospital in Australia. Collaboration with other manufacturers or products can minimise warehousing and transportation costs and overheads and maximise profits and market exposure; particularly advantageous
for products like biologics which are required in lower quantities.

The Increase in Generics and Substitution Alternatives
Today, Australian community pharmacists recommend generics for 96.4 per cent of medications eligible for substitution. Originators therefore not only have to compete with generics providers to sway prescriber habits, they also have to cut costs and create efficiencies that enable them to stay in the competition. So how can manufacturers ensure their product is always on the shelf?

Shorten the path to market.
To improve stock availability, some manufacturers choose a direct-to-market (D2M) approach which removes the wholesaler from the supply chain equation. In this way, the manufacturer takes full, direct control of distribution to the customer. D2M offers a wealth of benefits including improved margins, visibility into daily sales data, complete ownership of the customer relationship, improved product security, and the capacity to tap into the growing e-commerce channel. Although a
D2M approach may be a significant strategic decision, the time is certainly now to consider it.

Pharmaceutical Supply Chain-Boss MagazineOutsource non-core activities.
To keep the total cost to serve down, a 3PL provider can fufil activities such as clinical trials, product rework, point of sale materials, and delivery of samples and patient starter packs to doctors, allowing manufacturers to focus on their core business of research and development and product marketing.

Consumerisation of the Healthcare Industry
The Google effect has worked its way into healthcare, whereby patients are becoming actively more in control—or so they think. In this new health economy, patients are “consumers” first, with both the freedom and responsibility that come with making more decisions and spending their own money. According to the National Institute of Complementary Medicine, consumers spent around $3.5 billion in 2014 on vitamins, minerals, and supplements. This growing figure demonstrates a new societal emphasis on maintaining good health and wellbeing generally, rather than treating sickness as it arises. So how can manufacturers aid pharmacies in the customer education process to ensure they’re informed about medication options, and encourage pharmacy loyalty?

Focus support on pharmacies with highest volume of patients.
A supply chain partner can consolidate and leverage data to support alignment with pharmacies and pinpoint the most strategic of those to a manufacturer’s business. From there, manufacturers can target those locations as priorities.
Provide direct to home services.
Rising patient autonomy has meant that many are turning to more convenient purchasing options online, and at the same time, prioritising price over quality. To adapt to this behaviour, supply chain partners can innovate and provide direct to home services on behalf of manufacturers.
Become an education champion.
Supply chain partners can support manufacturers with Point of Sale integration (to associate related medications with proactive health programs) and distribute patient materials with medications. This supports rising customer service based models of pharmacy care and maintains customer loyalty.

The healthcare industry in Australia is shifting rapidly. The trend towards more complex biologics, coupled with increases in regulation, consumer autonomy in care, and the implications of the patent cliff have all prompted a re-think of how supply chains operate. According to DHL’s Supply Chain Maturity Index, the industry is behind the likes of the automotive and technology sectors in supply chain development and response to these new challenges has been slow and disjointed. There are ways around the issues however, and with the right intelligence and innovative systems and strategies for market competitiveness, the life science and healthcare industry can and will thrive in the 21st century.


Pharmaceutical Supply Chain-Boss MagazineIn his previous role as Vice President of the Life Sciences and Healthcare business for DHL Supply Chain, Saul was instrumental in growing his sector by more than 100 per cent and bringing global best practice solutions to Australian customers.
Saul is now responsible for leading a complex organisation of over several thousand staff, serving customers across healthcare, retail, consumer, airlines, technology, and energy. Prior to joining DHL, Saul was the Managing Director of a bulk logistics supply chain organization in South Africa