The pharmaceutical industry is an integral and crucial sector that plays a vital role within healthcare, innovation and economic development. It has an extensive impact on worldwide health with its focus on research and development, and the production and distribution of medications. But it is not without its challenges and difficulties especially in the last few years, a recent report by McKinsey & Company looks at the disturbance these have caused and what the pharma industry is doing to emerge from disruption.
Recent challenges
In recent years, the pharma industry has been faced with many challenging trends including the covid pandemic, inflation, geopolitics and new therapeutic modalities.
The covid-19 pandemic caused an unprecedented demand for vaccinations creating additional pressures whilst continuing to undertake overall requirements. The pandemic has in turn caused a peak in inflation costs causing further issues on labour, raw materials and transportation costs.
New modalities, such as cell and gene therapy, have increased in the fastest growth ever seen in the sector – in turn generating new supply chains adding to a current global trend of supply chain pressures.
The pharma industry is also facing talent shortages linked to broader labour market trends, including a 20 percent increase in demand for STEM-related roles across the life sciences industry.
Opportunities for growth
These trends have resulted in major considerations for the pharma industry: rising operational complexity, increasing risk, shifting capability requirements, higher capital expenditure requirements, variable-cost increases, and opportunities for savings
Pharma companies are also undergoing a surge of new innovations: new treatment modalities, smart machines, advanced analytics and digital connectivity.
These implications are challenging, but also can represent possible opportunities for a reduction in costs.
To rise to these challenges, the pharma industry needs to look at longer term transformative solutions, for instance looking at more predictable and consistent supply chains. This will require substantial action focusing on putting strategies in place to combat the long-term impact the industry is facing. Acting on them also calls for a large investment of resources.
The report ends with four strategies the industry should look at to emerge from the disruption.
- Plan for and manage future resilience and reliability needs
- Scale end-to-end adoption of digital and automation
- Expand adoption of end-to-end partner ecosystems
- Embed talent strategy in operations strategy
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