NEW YORK, Oct. 27 /PRNewswire/ -- Global pharmaceutical outsourcing has become increasingly prevalent, but is creating a complex and risky supply chain environment that has pharmaceutical and life sciences executives on high alert, according to a major study co-sponsored by PwC US and published today by Axendia, Inc., a life science and healthcare analyst firm. In the report, 50 percent of pharmaceutical and life sciences executives surveyed said they see raw materials sourced outside of the U.S. as the greatest vulnerability to the supply chain, and 61 percent view contaminated or nonconforming raw materials as the top threat in the next five years.
According to the report, titled Achieving Global Supply Chain Visibility, Control & Collaboration in Life Sciences: Business Imperative, Regulatory Necessity, the emerging economies of China, India, Mexico and Brazil are becoming the most attractive places in which to sell medicines. In the drive to lower costs, these countries also are playing a more prominent role in the manufacturing and sourcing process. Yet, outsourcing drug development to manufacturers in developing nations carries significant operational risks. Moreover, it is more difficult to manufacture and distribute biologics, which are more sensitive to the elements, than chemical entities.
Against this backdrop, Axendia's survey of 112 industry executives from pharmaceuticals, medical devices, and biotechnology companies around the globe found:
According to the report, all of these forces are driving the industry to develop a supply chain that is more extended, globally dispersed and virtual. However, the ability to control the safety, efficacy and effectiveness of products will continue to be a challenge until the industry implements systems that can provide real time, global visibility into the supply chain, including practices and information from suppliers, distributors, shippers, and contract manufacturers.
"With manufacturing, sourcing and the sale of medical products expected to increase dramatically in the emerging markets, the geographical expansion of the supply chain will make it more difficult to manage, as will the industry's changing product mix," said Wynn Bailey, Pharmaceutical and Life Sciences Advisory Services Partner, PwC. "In order to meet the demands of globalization, the pharmaceutical supply chain will need to become much more flexible, with different manufacturing routes and distribution channels for different kinds of products. Companies will need to implement new strategies, processes, and technology to proactively reduce and control risks."
The report provides a road map for pharmaceutical and life sciences companies to achieve real-time visibility of and control over the supply chain, and serves as a call to action for better collaboration with suppliers, distributors, shippers and regulators. Because of the size and complexity of global supply chains, the most cost-effective option to oversee the supply chain end to end involves the sharing of information to facilitate the safety, efficacy and effectiveness of products.
"As the results of our research revealed, the life sciences industry must gain tighter control over the complete supply chain, from ingredient to the consumer, to succeed in the global economy," said, Daniel R. Matlis, President, Axendia. "We are delighted to collaborate with PwC on this global research initiative, and help the life science industry prepare to take the significant steps needed to achieve visibility, control and collaboration in the global supply chain."
Axendia (www.axendia.com) surveyed 112 individuals from 75 different companies from 12 countries. Eighty-six percent of respondents were decision makers with a title of Manger, Director and Senior Executive and nearly 60 percent where at the Senior Executive level. Respondents' companies provide a variety of products and services and are involved in pharmaceuticals, medical devices and biotechnology. Nearly half of the respondents represent large organizations with annual revenues exceeding $1 billion. The remaining respondents represent organizations with revenues below $1 billion.
About PwC's Health Industries Group
PwC's Health Industries Group (www.pwc.com/healthindustries) is a leading advisor to public and private organizations across the health industry, including payers, providers, academic institutions, health sciences, biotech/medical devices, pharmaceutical companies, employers and new non-traditional market participants in the dynamic healthcare space. PwC has a network of more than 4,000 professionals worldwide and 1,200 professionals in the U.S. dedicated to the health industries.
PwC's Health Industries' clients include 40 of the top 100 hospitals in the U.S. and 16 of the 18 best hospitals as ranked by US News & World Report; all 20 of the world's top pharmaceutical companies; all of the top 20 commercial payers in the U.S.; municipal, state and federal government agencies and many of the world's preeminent medical foundations and associations. Follow PwC Health Industries at http://twitter.com/PwCHealth.
PwC (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 161,000 people in 154 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
© 2010 PwC. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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