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How do you build future supply chains to best serve patient needs?

In the wake of global disruptions, EY research aims to map out the future for supply chain transformation in the pharmaceutical industry.

Three questions to ask

  • How have pharma’s supply chains dealt with the disruptions caused by the pandemic?
  • What measures will governments and other policymakers take to secure pharma supply chains at national and regional level in the future?
  • Does localization offer the best approach to greater supply chain resilience, or could other alternative approaches prove more effective?

Since its worldwide emergence in 2020, COVID-19 has impacted global supply chains, with effects that are still being witnessed today. Like other sectors, the pharmaceutical industry has had to absorb the impact of recent events on its supply chain operations. Throughout the pandemic, pharma has stood on the front line of the public health battle to develop and deliver vaccines and antivirals against COVID-19, working closely with governments and regulators. To their credit, these stakeholders have recognized the need for an unusual degree of regulatory flexibility during the pandemic, embracing a level of close collaboration with the pharma industry which will hopefully continue into the future. But while acknowledging the industry’s achievements during the crisis and the potential longer-term benefits it may yield in terms of improved collaboration, we must also recognize that COVID-19 was a serious challenge for the industry’s supply chains. The new EY paper “Pharma supply chains of the future” (pdf) aims to understand how pharma supply chains have coped with the pandemic and what measures the industry will take to build greater resilience in future.

To explore these questions, EY teams conducted original research and analysis, including discussions with 17 global heads of manufacturing and supply chain operations at member companies of the Pharmaceutical Manufacturing Forum (PMF). This group comprises technical operations and supply leaders of global research and development based pharmaceutical companies. The ultimate goal of these discussions and analysis was to understand what the future for pharma supply chains will look like.

Protecting public health: supply chain policy interventions in the pandemic

In recent decades, we have seen the increasing globalization of pharma supply chains. Now, we may be witnessing the start of a countertrend towards increased localization of supply chains and greater emphasis on regional or national self-reliance. This trend to continue over the coming decade.

This expected shift reflects the growing importance of pharma in national strategic calculations. During the pandemic, governments demonstrated their willingness to intervene to ensure the supply of medical and pharmaceutical products. Since early 2020, the three main economic and political global centers and trading blocs, the US, EU and China, have all implemented wide-ranging measures, aimed at securing regional or national pharma supply chains. We can expect continued interventions from policy makers, as securing sufficient volumes of pharma products to support public health objectives becomes an increasing priority worldwide. Indeed, governments are likely to explore a broader range of interventions in industry supply chains in the near future.

Already, pharma companies themselves are exploring multiple initiatives to increase supply chain resilience. For example, a number of companies have implemented multi-sourcing and leveraging of local contract development and manufacturing organization (CDMOs). These measures can benefit resilience and are relatively simple to implement. Certain other possible approaches may have a greater impact but will require longer-term investment and commitment to realize. At this point, the industry and its stakeholders need to evaluate what measure, or combination of measures, can deliver the results they seek.

What measures will best secure future supply chain resilience?

The pharma industry and its stakeholders have a range of viable options available to them to increase supply chain resilience. Among these options, they can consider:

  • Pursuing varying degrees of localization and other complementary or alternative approaches, including establishing a hub-and-spoke manufacturing model
  • Setting up joint manufacturing, a procurement clearing house, or a joint physical warehouse (where antitrust regulations permit)
  • Improving end-to-end supply chain visibility and transparency
  • Optimizing regulatory requirements such as introducing regulatory notification principle instead of product approval

Each of these measures carries associated costs and benefits, and as companies consider their options, it is clear there won’t be one single approach adopted industry-wide. However, although different companies will pursue different specific supply chain strategies, we can anticipate certain broader general trends.

The most significant of these will be the transformation of the fully globalized supply model to a hybrid model, balanced more strategically across global, regional and local sites. This hybrid model will aim to enhance supply resilience through companies building redundant capabilities with multiple suppliers, working with CDMOs and developing internal sites or holding more inventory.

Because of these and other resilience-boosting measures likely to be implemented, the supply chains of the future will be more expensive to operate, at least until the introduction of newer enabling technologies. In the long term, these increasingly complex supply chains will need to be supported by increased digital capabilities, including automation, artificial intelligence (AI), and end-to-end supply chain systems and process integration.

Conclusion and outlook

Greater collaboration and cooperation between pharma and its stakeholders will be key to successfully building resilient and sustainable supply chains for the future — and delivering the outcomes sought by patients and by all parties in the ecosystem that serve them.

It is important to emphasize that there will not be a single or simple path forward from this point. The pharma industry, and the stakeholders it serves, have a range of viable options for increasing supply chain resilience. Strategic decisions on how to proceed will require a dialogue for mutual education between pharma and politicians. It is therefore imperative that all parties commit to a deeper and more effective conversation at national and supranational levels.

The industry needs to understand their ecosystem partners’ intentions: will governments focus primarily on securing supplies of essential drugs, or will their planning consider a broader range of products? Working in collaboration with pharma, governments can set parameters and priorities for future discussion. Governments in turn need to recognize the level of complexity and specialist expertise integral to pharma supply chains. They must also acknowledge the industry’s need for a commitment to a sustainable reimbursement model that can support its future operations.

Ultimately, improved collaboration and cooperation will be key to successfully building resilient and sustainable supply chains for the future. This level of reciprocal, structured and ongoing engagement between pharma and its stakeholders has not existed in the past; but if all parties commit to it now, it can form the basis for a strategic approach to future pharma supply chains that can work to the benefit of all partners in the ecosystem. 

As you plan for the future, ask these five questions:

  • How will you prioritize your supply chain investments to optimize resilience?
  • How will you optimize your global footprint to maximize resilience against future shocks?
  • As pharmaceutical supply chains become more agile, how do you flex to mitigate cyber risks?
  • How will you consider tax efficiencies when new supply chains aiming at increased resilience are designed?
  • When ecosystem partners take an increasing part of operating your supply chain, how do you select for best fit?


Pharma and its stakeholders have the opportunity to rethink and improve supply chain operations. EY teams are seeking to help further the conversation between the industry, policymakers and other ecosystem partners, as they aim to improve supply chain resilience for the future.

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