The pharmaceutical industry has been rising since the COVID era and has witnessed tremendo us growth in generating revenue all over. However, the relations between manufacturers, distributors, sellers, and end consumers are complex and highly competitive.
This has led to uncovering of some major threats that may slow down its growth.
In this article, we will explore the pharmaceutical industry, the challenges faced by them, and how to overcome them.
What is the pharmaceutical industry?
The pharmaceutical industry is all about drugs and vaccines. For instance, the discovery, development, production, and sale of pharmaceutical drugs are part of this industry.
According to Wikipedia, The pharmaceutical industry develops, produces, and markets drugs or pharmaceutical drugs for use as medications.
The global pharma industry is huge and companies like Pfizer, Merck, GSK, Sun Pharma, Glenmark, and AstraZeneca are some popular pharmaceutical companies. Most companies around the world operate in the private sector. They are commercial enterprises that are licensed to research, develop and market drugs.
During the last 50 years, this industry has expanded rapidly in North America, Europe, Asia, and Australia. According to Statista, its global revenues have reached $1.42 trillion in 2021 compared to $1.27 trillion in 2020.
However, getting new medications on the market is extremely expensive as billions are spent on R&D. A tiny fraction of hundreds of compounds that are developed end up in the market.
Let’s discover the threats and problems of this industry to understand it better.
7 Challenges Faced by Pharma Sector
There are many challenges that may overshadow the growth of this industry and these challenges arise due to some known and uncertain factors.
1. Rising competition from generic pharma
There have been many changes in this industry and one of them is the merger of two big companies like Pfizer and Merck. Many pharma companies are facing threats due to the increasing demand for generic drugs among consumers, the government, and third parties.
Earlier companies were able to maintain large margins between the cost and selling price because of their complex pricing model and static demand for drugs.
Big pharma companies are getting tough competition from these generic manufacturers and suffering losses in their sales. One of the main reasons is that generic drugs are cheap and easily affordable by all sections of society.
How to overcome: To overcome this, the pricing model of drugs needs to be reviewed and some consumer-friendly strategies should be developed to counter this threat. Other options could be OTC drug production, reformulation, or mergers and acquisitions.
2. Pharma Frauds
One of the major challenges in this sector is pharmaceutical fraud which includes illegal drug switching, off-label marketing, unlawful kickbacks to doctors, clinical trial manipulation, mass compounding, etc.
These frauds have increased during COVID times due to the shortage of some high-demand drugs. Illegal drug supplies are almost impossible to track down.
How to overcome: To reduce these frauds, strict monitoring is needed. Frauds should be reported under the False Claims Acts and rigorous laws can be implemented.
3. Supply chain disturbance
Every industry faces this issue and the pharma sector is no exception. Even though many solutions are provided, still some technical contingencies are posing a threat to this sector. The six main reasons for this disturbance are:
- Overstocking of drugs
- Delay in the distribution channel
- Difficulty in identifying potential disruptive events
- Failure of On-time in-full (OTIF) delivery
- The problem with real-time visibility and tracking
- Inventory management
How to overcome: Change the strategy to make the best use of resources and companies should invest in monitoring software to increase efficiency and improve accountability.
4. Lack of qualified workforce
The productivity of any company heavily relies on its workforce. Therefore, it’s important to build a team of technical and intellectual experts in pharma to develop better drugs with minimum cost.
How to overcome: Invest in hiring individuals who have sufficient knowledge and experience. Mandatory training should also be provided to improve their skills.
5. Data management
Managing data is important to control all aspects of a company. In this industry, data management means keeping records of all the information generated by technicians or machines. These data help companies to perform analysis and make better decisions.
The pharma sector needs a proper data management system to track drug approval, quality control, supply channel, and global practices. Digitalization is required to keep these data safe and secure. It should be well-planned to save time. However, pharma companies are still struggling with this issue due to the unavailability of such trustworthy tools.
How to overcome: Proper data management software should be developed and used by the pharma companies so that they can keep track of their production, quality service, and maintenance.
6. Lack of transparency
There should be transparency between teams and the company to avoid any conflict and due to this lack of transparency, it is difficult to track problems from their source. The whole process is complicated and without a trusty and reliable network, companies would fail.
In the pharma sector, there is an urgent need to have faster and more transparent operations in all sections. In this way only, the end product will meet its standard.
How to overcome: Flexible work environment should be established so that proper planning can be done. Involve customer feedback in the production of drugs.
7. Digitalization & workforce optimization
Digitalization is required in the pharma sector for documentation and other standardized process but still, companies are struggling to transfer it. This process needs time, robotics, a skilled workforce, and automation solutions. This industry is facing problems with digitalization due to the complexity of development and manufacturing processes.
However, it is important to get this sector completely digitalized to control fraud and keep records of all the processes. A proper ERP system should be there to manage inventory and other aspects.
Workforce optimization means modifying all strategies so that the efficiency of employees would increase. They should be given proper employee benefits and continuous training.
These two are major challenges that are present in this industry and need to be resolved soon.
Conclusion
Every industry has its challenges, and those challenges help them to realize the problem and find a solution. The Pharma industry is no exception, it also has some threats that occur from time to time but the focus should be on reducing them and implementing the best options.
