Strategic capabilities management for supply chain in response to challenges in the global pharmaceutical industry

Summary

Abstract

The article comprises an analysis of key challenges and trends in the pharmaceutical sector and identifies the desired capabilities of pharmaceutical companies in the coming years. In this paper, the identified factors were grouped in the political, economic, sociocultural, technological, legal and environmental areas (PESTLE analysis) based on statistical and socioeconomic data, and the potential desired capabilities to be reinforced or developed by pharmaceutical companies in the next years were described.

Keywords: pharmaceutical industry, supply chain, operations, global trends, health system, biosimilars, artificial intelligence, generic pharmaceuticals, CMNN diseases, non-communicable diseases (NCDs), procurement, innovations, R&D, health expenditures, out-of-pocket health expenses

Introduction

Over the last 100 years, healthcare, which is part of the pharmaceutical industry, has been a continuously growing sector of the global economy. In recent decades, the development of pharmaceutical companies has remained relatively intact in regards to the global crisis, and the many challenges faced by the industry rather served as catalysts for further growth. The progress of innovative medicine was a driver for the entire business. This growth was protected by patent law, where the development of one drug would secure a pharmaceutical company for many years. The pharmaceutical industry, which is characterized by very long product life cycles, regulations, knowledge, intensive product developments and huge budgets, has created a unique environment where companies acquire unique sets of skills. However, in the face of current and future challenges, these skills might not be enough to remain competitive in long run. There are some unprecedented changes in the environment which will transform the supply chain, operations, and the way in which pharmaceutical companies will conduct their business.

The aim of this article is to analyze and segment the pharmaceutical sector's environment using the PESTLE method, resulting in a diagnosis and forecast of the dynamics, direction, nature and implications of changes that await this sector in the coming years. A better understanding of these changes is essential for elaborating strategies for the supply chain as well as the development of operational capabilities. In the first section, the authors attempted to identify key global challenges faced by the pharmaceutical industry as well as essential management capabilities for companies, with special attention to the practices in supply chain management.