Pharma Supply Chain: Basics and Challenges

Digital transformation

The pharmaceutical industry is a crucial part of the healthcare system, responsible for providing essential medicines to millions of patients worldwide. However, the process of bringing these drugs to the market is complex and involves multiple stakeholders, such as manufacturers, distributors, and healthcare providers. In this article, we will explore the basics of the pharma supply chain and the challenges faced by the industry. Delivery of appropriate medicines in the pharma supply chain in sufficient quantities is a strategically important issue nowadays. Medicines trade has increased six times in the first twenty years of the new millennium, which puts huge stress on the pharma supply chain. Therefore, new problems began to appear, as well as solutions to solve them.

The Basics of the Pharma Supply Chain

The pharma supply chain starts with the procurement of raw materials from suppliers, which are then manufactured into drugs in a pharmaceutical manufacturing plant. The drugs are then packaged, labeled, and distributed to wholesalers and retailers, who then sell them to patients through various channels, such as pharmacies, hospitals, and clinics.

One of the key challenges in the pharma supply chain is ensuring the quality and safety of drugs throughout the entire process, from the procurement of raw materials to the delivery of the final product to patients. This is done through various regulatory bodies, such as the US Food and Drug Administration (FDA), that monitor the industry and enforce quality standards.

Another important aspect of the pharma supply chain is ensuring the timely and efficient delivery of drugs to patients. This requires effective coordination between all stakeholders, including manufacturers, distributors, and healthcare providers, to ensure that the right drugs are delivered to the right patients at the right time.

Elements of the supply chain in pharmacy

Today, access to medicines and treatment is one of the fundamental human rights. Pharmaceutical companies are therefore under increased pressure to deliver a sufficient quantity of quality medicines on time and at an acceptable price through the pharma supply chain. Delays or errors in delivery negatively affect the company as well as the general health of the population. That is why good coordination of all elements of the pharma supply chain is extremely important.

The five elements of the pharma supply chain are the manufacturer, the wholesaler, the pharmacies and hospitals, the PBM, and the patient as the end user. The manufacturer predicts the demand for medicines based on data on stock and distribution speed and plans production accordingly.

The wholesaler distributes drugs to pharmacies and hospitals in coordination with PBM. PBMs (Pharmacy Benefit Managers) are companies that regulate prescription drug prices. They use their large purchasing power to get a bigger rebate and thus reduce fees.

Pharmacies and hospitals are the last elements before the patient. Their task is to ensure a sufficient amount of medicines in warehouses and provide instructions for their safe and efficient use to patients. Patients are the end users who bear the brunt of pharma supply chain costs.


A large part of the cost of the drug itself falls on the pharma supply chain. Any problems within it can significantly affect the price of the drug. Possible problems can be divided into those inside the chain itself and those outside it.

Pharma Supply Chain

Challenges within the pharma supply chain

It is an old saying that a chain is only as strong as its weakest link. That is why it is important to detect bottlenecks in the distribution of pharmaceutical products. Lack of coordination is probably the biggest problem within the distribution chain itself. Poor inventory management and insufficient supply control lead to incorrect information about demand, resulting in stockpiling or shortages of medicines. Humans are not infallible, so dependence on human resources is another big problem faced by the pharma supply chain.

Challenges outside the chain

The pharma supply chain is highly dependent on the distance between elements. Today, this is especially pronounced since production has moved to the far east. Trade routes have been stretched, and the time it takes for goods to reach the end-user has increased.

Cybersecurity in the pharma supply chain

Due to the large number of countries through which trade routes pass, the pharma supply chain is particularly sensitive to international tensions and natural disasters. Another big off-chain threat that is getting bigger is cyberattacks.


Modern problems require modern solutions, such as the introduction of new technologies. Since coordination is the problem that causes most others within the pharma supply chain, sophisticated computer programs can greatly reduce this risk. Each client has its characteristics, so programs are created specifically for each of them, according to their needs and specifications.

In this way, the visibility of the entire pharma supply chain is increased, which leads to easier detection of problems and their occurrence can be prevented. There are two types of software used in pharma supply chains and supply chains in general. These are on-premises software and Saas (software as a service).

On-premises software

This is software that is installed on the computers of a particular organization. They are tailored to fit the particular needs of one customer and can be accessed without the need for an internet connection.

On-prem software is generally more expensive than cloud-based mainly because of the initial cost of development for such specific software. The buyer is also responsible for maintaining the hardware and IT personnel needed.

SaaS software

Cloud-based Saas or on-demand model is a cheaper solution. It is licensed on a subscription basis and is centrally hosted. The customer needs an internet connection to access software but the initial costs of installing are lower. Also, the maintenance of software for the pharma supply chain is the responsibility of a developer.

SCMS (supply chain management software)

If not managed and optimized properly, a pharma supply chain can waste a lot of resources. That is why specialized software is used to maintain the chain and forecast the needs of all included. Most SCMSs use the following functions or modules:

  1. Customer-requirement processing
  2. Purchase-order processing
  3. Sales and distribution
  4. Inventory management
  5. Goods receipt and warehouse management
  6. Supplier management/sourcing

The complexity and price of software may vary. Small businesses need only to keep track of inventory and orders while big companies need more modules like pharma supply chain optimization and tracking.

Forecasting and timeline

The pharma supply chain is an essential part of the healthcare system, responsible for bringing essential medicines to millions of patients worldwide. However, the process is complex and involves multiple challenges, such as counterfeit drugs, drug shortages, and data integrity issues. The industry must continue to work together to address these challenges and ensure that patients have access to safe and effective drugs. Pharmaceutical products are very time and temperature sensitive. On the other hand, they must always be available to patients. SCMS must predict when is the best time to order products to be delivered on time and with enough space in a warehouse.

When talking about the pharma supply chain, people usually think of goods and means of transport. In today’s competitive environment, the most important thing about a pharma supply chain that saves a lot of money is information. Get an estimate for a pharmaceutical software solution.