The Nexus of Healthcare Policies and Supply Chain Challenges

by 4C Insights | Jul 3, 2024

The upcoming general election and new government’s policies will undoubtedly have some impact on the landscape of supply chains and logistics for the next four years. Conversely, it will be important to examine how the efficiency and resilience of supply chains can influence the new government’s ability to deliver on its policy promises. One of the primary objectives of any incoming government will be to improve the service of the NHS, and achieving this goal partially relies on solving the underlying issue with pharmaceutical supply chains and medicine shortages.

Rising Frequency of Medicine Shortages

The NHS has seen a doubling of medicine shortages in the past three years with older, off patent, generic medicines being the most affected. This compromises patient care and puts pressure on healthcare professionals. Resolving these supply chain issues is crucial to improving healthcare delivery.

Changing Demand

Significant changes in demand signals for medications have occurred in the last five years due to factors such as an ageing population and increased recognition of conditions like ADHD and perimenopause. Such changes can be predicted with advanced data analysis and pharmaceutical companies would then be better prepared to adjust their supply in response.

Supply Constraints

The pharmaceutical industry has become more cost-sensitive due to patent expirations and the shift to generics. Companies have offshored manufacturing to reduce costs and have streamlined operations to lower costs further.

The COVID-19 pandemic starkly exposed the vulnerabilities associated with overly lean and geographically dispersed pharmaceutical supply chains, as rapid change is difficult in this highly regulated industry strict regulations.

Balancing Efficiency, Resilience, and Sustainability

The pandemic made many companies rethink the balance between network efficiency and resilience – and there is no doubt that a little complacency had crept into pharmaceutical supply chain thinking. However, it is critical not to make a knee jerk reaction to a pandemic that was extraordinary. Mitigating something which is probably never going to be repeated is not what resilience is about. The business case for resilience is always difficult to mount. It may be a judgement, but it should be fed with sound analysis and evaluation that supports that decision and informs the judgement as fully as possible. It is also a decision that needs to be traded-off against the company’s other strategic objectives, and the optimal infrastructure for the business will exist somewhere within a decision space bounded by cost, resilience, and sustainability considerations. Reviewing the supply chain infrastructure strategy every five to ten years is common, but in the pharmaceutical industry more frequent reviews, at least every five years, are recommended due to changing demand signals and the slow speed of instigating change. A thorough review is essential for long-lasting competitive advantage.

Future Directions for Policy and Supply Chain Strategy

To make substantial progress in improving the NHS, the next government needs to promote and monitor the changes pharmaceutical supply chains should be making to enhance resilience and ensure a reliable supply of medicines. By addressing these areas, the incoming government can enable the much-needed improvement of the NHS’s service delivery, and build a more resilient healthcare system capable of meeting the needs of its population both now and in the future.