It has been a few weeks since Supply Chain Matters posted our query commentary asking the question on why are pharmaceutical and drug supply chains are failing to deliver reliable supply to doctors, hospitals and patients.  Our purpose was to call attention to a significant problem that effects lives, and to motivate more commentary from industry participants and fellow bloggers as to what are the causes.

On the Spend Matters blog, Gregg Brandyberry, an industry veteran,  penned a response commentary concluding that the complexities of pharmaceutical global supply chains are greater than the capabilities of these companies to control.  The factors noted include offshored sources of supply from low-cost countries, mega acquisitions and headcount reductions. The theme of headcount reductions contributing to erosion of quality and control processes, specifically at Johnson and Johnson, was also reinforced in a recent report.

A statement from the U.S. Food and Drug Administration (FDA) points to shortages of critical drugs dating back to 2010 and attributing many of these shortages to quality and manufacturing problems, including a lack of raw materials, increased demand for certain drugs or drug manufacturer decisions to stop making older, less profitable drugs. A past article featured on the National Cancer Institute web site points to the continued shortage of chemotherapy drugs that dates back to 2007-2008, which worsened in 2010.  That article points to a discernable incidence involving sterile, injectable drugs that require complex and sterile production processes.

On the Wall Street Journal’s Health Blog, editor Katherine Hobson penned a commentary (metered view may be required) noting that the shortages of drugs in humans is also spilling over to medical care for pets. She references nearly 200 drugs approved for people listed as in short supply according to the American Society of Health-System Pharmacists. Supply Chain Matters drilled-down some of the key drugs listed and noted explanations of manufacturing problems, sole source, and in many instances, lack of definitive delivery information. The WSJ blog commentary also points to current problems outlined by the Institute for Safe Medication Practices indicating unavailability of raw ingredients, FDA enforcement actions that halt product (aka- a quality conformance problem), voluntary recalls, poor inventory practices or hoarding due to pending shortages, as current problems. Now, both people and pets are impacted.

Frankly, we still remained shocked that more visibility and more attention is not being placed on this current situation.  We candidly expected more commentary to our previous posting , especially from those in the healthcare industry who have to deal with the effects of these drug shortages every day. We again encourage such commentary and discourse.

The supply chain community sometimes has too much of a tendency to dwell on the designation of the top supply chains, the so-termed top 10 or top 25.  Certainly, it is not easy to dwell on supply chains that are struggling or failing customers.  However, since the problems appear to be systemic across this industry, all pharmaceutical and drug supply chains require scrutiny.

This discourse needs to continue.  We want to hear more about causes of the problem and where business process, organizational, regulatory and technology approaches have to be focused to resolve these problems both short and long-term.

If readers are uncomfortable in publically sharing of thoughts please send your thoughts to info <at> supply-chain-matters <dot> com. We also encourage pharmaceutical and drug companies to also reach out and outline their perspectives.

Lives are at stake and none of us can afford to allow these supply chains to continue to perform at their current rate of performance.

Bob Ferrari

©Copyright 2011 The Ferrari Consulting and Research Group LLC

The following commentary can also be viewed and commented upon on the Supply Chain Expert Community web site.

Financial media is abuzz with the announcement of Google’s intent to acquire Motorola’s cellphone business in a deal valued at $12.5 billion.  The acquisition of Motorola Mobility Holdings Inc. is being touted as a response to Apple’s momentum in the smartphone markets and eventual possession of an arsenal of 17,000 patents held by Motorola in mobile technology. The deal, if approved, is expected to close in early 2012.

Another important implication however is Google’s access to a global supply, channel and supply chain fulfillment capability to produce and distribute smartphones and tablet devices. Readers will recall Google’s previous stumbles in late 2009, when it attempted a direct entry into the smartphone distribution channel by announcing the availability of the then announced unlocked Nexus One phone via an Internet ordering web site.  In our Supply Chain Matters commentaries at the time, we characterized Google’s effort as an attempt to dis-intermediate existing smartphone distribution and selling channels.  As anticipated, Google ultimately experienced multiple issues related to consumer difficulties in purchasing, activating and servicing their mobile phone purchases.  Contract manufacturer HTC, whom Google coerced into playing the role of global supply chain distribution and fulfillment, was placed in a rather challenging position. Eventually, Google pulled the plug on the grand experiment and withdrew that version of the Nexus One.  The intent was noble and classic Google, but the execution was naive.

With the acquisition of Motorola Mobility, Google has the opportunity to strongly influence the design of Motorola smartphones and tablets for tighter integration with the Android operating system. The deal opens the door for more options for search and online commerce, along with mobile computing needs for consumers and business. The path of innovative product introduction directly to consumers and businesses has the potential to become a lot quicker. Google also gains a global channel distribution network of mobile carriers which can help it compete with the likes of Apple or other competitors.  Consumers may have the option of an alternative to the likes of an iTunes online ordering site. Motorola could also become the premiere provider of Android mobile devices, while other manufacturers are offered different versions.

Congratulations to Google and Motorola on a savvy deal.  Supply chain and fulfillment capabilities may well prove to be instrumental for the combined companies in the coming years.

Bob Ferrari