Supply chain & logistics
chain management market will be worth some $1.8bn by 2030. That’s reflected at the company level too. Johnson & Johnson, for instance, is rushing ahead with a plethora of changes worth millions, with everything from digital tags to delivery drones enjoying attention. Not to be outdone, Bayer last year announced it was throwing €2bn into its manufacturing and supply chain capabilities.
What’s possible with 4.0? Beyond these headline figures, how is the pharma supply chain being digitalised in practice? Let’s return to our hypothetical single molecule drug, the one about to be swallowed by some headache- stricken punter. Perhaps the most important thing to ensure is that it can actually be consumed – by no means certain if it was exposed to extreme temperatures or damp. Fortunately, IoT can help, as Zhao explains. “Wireless sensors along the supply chain can ensure the integrity of the supply chain – by using these sensors for temperature, for location, for all kinds of things.” That’s just as well: at higher than 30°C, simpler medications like paracetamol can fail, a threshold that’s much lower for certain gene therapies, which may need to be transported at -70ºC. At the same time, being able to remotely track shipments as they move from factories to patients can prevent theft, and as Zhao emphasises, spotting problems early can make recalls easier to handle. IoT, for its part, is clearly proving popular in practice. According to GlobalData, Q2 2023 saw a 23% rise in pharma company filings mentioning the term, compared to the previous three months. It’s a similar story with AI – and no wonder, given all it can do. For Zhao, the most exciting development here involves so-called neural networking, where algorithms can be trained on masses of data to make robust predictions about demand. In a field as uncertain as supply chain management, this can be a godsend. “Once you better forecast your demand,” Zhao says, “you can optimise your inventory levels, you can reduce your waste, and you can ensure timely availability of medication.” In a broader sense, meanwhile, AI can also forestall the many specific obstacles pharma logistics now faces. Imagine, for instance, that our imaginary pill had to get from Greece to Japan for secondary packaging – but a strike at the dock at Piraeus disrupted things, something which actually happened as recently as September 2023. With AI, Zhao suggests challenges like these could easily be overcome, as predictive models “optimise transportation routes” and help staff reroute shipments elsewhere. That’s even before you consider the potential of other 4.0-adjacent technologies, like digital twins, which allow manufacturers to test out theoretical supply routes from the comfort of their computers. Especially given the drug shortages affecting both sides of the
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Atlantic – in Europe alone, recorded deficits increased 20-fold from 2000-18 – Zhao is optimistic about what all these technologies can do. “They definitely are good things,” she says, “for the patients and also for the shortage problem.”
Human error We don’t have to take Zhao’s word to understand the impact 4.0 technologies can have on pharma supply chains. At Pfizer, to give one example, integrating a so-called digital cold chain into operations is just one of the tactics that’s seen the successful delivery rate soar to over 99%. All the same, we shouldn’t necessarily be envisaging the pharma supply chain at large in ‘4.0’ terms just yet. For Zhao, this fundamentally comes down to the human element of the process. No matter how powerful the AI, for instance, she contends that what really matters is “how people will use this information” in practice. A happy outcome here is by no means certain. As Zhao points out, rugged training is vital to make the most of complex algorithms, with some exploiting literally billions of individual data points. It hardly helps that global healthcare continues to suffer from a workforce shortage stretching into the millions.
“Once you better forecast your demand, you can optimise your inventory levels, you can reduce your waste, and you can ensure timely availability of medication.”
There are other human-centric issues here too. A bottleneck-busting AI is all well and good in theory, after all, but who owns the data it uses? Where is it stored? Which partners in the supply chain get access to it – hardly an immaterial question when one French pharma distribution company recently leaked 1.7 terabytes of confidential data. On these quandaries, Zhao is blunt, arguing each requires “agreements and human relationships” to be satisfactorily resolved. With all this in mind, at any rate, the Penn State professor is reluctant to ascribe the ‘Pharma 4.0’ label to the medical supply chain just yet. If the term encompasses “the convergence of people, systems, and data,” she argues that, though data and systems may be present and correct, those pesky flesh-and-blood humans are a little further behind. “As an industry,” Zhao suggests, “mentality” is as important as investment and resources. “So I think it probably requires some more time”. Especially given the questions not even AI can solve, from the potential of another pandemic, to rising geopolitical tensions in the Far East, such caution feels sensible – even if a digital- inflected future feels inevitable in the end. ●
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