With over $50 billion in revenues, Pfizer is one of the largest pharmaceutical companies in the world . Its products include widely used drugs such as Lipitor (indication for cholesterol) and Advil (ibuprofen) . To serve customers in over 125 countries, Pfizer manages a highly complex and regulated infrastructure which includes over 60 manufacturing sites, approximately 100,000 employees , and more than 200 supply partners .
Evolving Need for A Digital Supply Chain
As Pfizer’s products evolve in complexity, the company’s supply chain will become increasingly taxed, rendering the ability to track inputs and products along the supply chain more important than ever.
Pfizer’s products are highly complex. As an example, a single dose of its Prevnar-13 vaccine to prevent pneumococcal bacterial infection requires the input of 1,700 employees working with 400 raw materials across 580 steps over 2.5 years. Not only does Pfizer master this process, but it does so at a massive scale – the company recently produced its billionth dose of Prevnar-13 .
A growing number of new drugs contain biological ingredients such as proteins which must be produced, stored, and transported at precise temperatures to ensure efficacy. In addition, these products require highly stringent documentation to meet regulatory requirements with government bodies such as the FDA.
Pfizer’s Highly Orchestrated Supply Network Initiative (HOSuN)
Acknowledging these evolving business needs, Pfizer began in 2015 a formal initiative called Highly Orchestrated Supply Network (HOSuN) to digitize its supply chain by (i) collecting data along its supply chain; (ii) use this data to track its products throughout its network and to enable real-time visibility into products’ location and status; and (iii) leverage its data assets to extract necessary documentation for regulatory compliance .
To do this, Pfizer has begun leveraging cloud technology, not only by collecting data internally from within the Pfizer ecosystem but by going externally as well. To that end, Pfizer has begun tapping into the IT systems of its more than 200 supply chain partners .
This initiative essentially creates a real-time virtual map of its supply chain and transportation system, allowing Pfizer to track each supply input and product across its complex network and quickly respond to evolving customer needs or shocks to its systems.
Pfizer facilities and suppliers transmit information about shipments based on customer requirements. Pfizer’s IT system then allows supply chain participants to track when cargo is ready for pickup, where cargo is at any point in time, and to be notified if there are any supply interruptions.
This also offers efficiencies for acquisitions. As a highly acquisitive business who has purchased 9 companies over the past three years, Pfizer must ensure its supply chain is flexible enough to ‘plug & play’ acquired supply chains into its existing infrastructure .
In the medium term, Pfizer is looking to build on its data assets to better anticipate and predict customer demand patterns relative to its supply capabilities . For example, Pfizer could identify a customer need and in real time push the product from the optimal production facility, through its supply chain, and into the customer in record time.
In addition, the use of analytics will allow Pfizer to generate significant cost savings as it better understands its supply chain and finds opportunities to streamline its infrastructure, for example by consolidating multiple batches of products into fewer shipments.
What’s Next for Pfizer’s Digital Supply Chain?
A number of evolving digital technologies could prove highly valuable to Pfizer as it seeks to build on its foundational technologies and data assets.
In particular, it is critical that Pfizer adopt breakthrough Internet of Things (IoT) technology to further streamline its supply chain and ensure patient safety and regulatory compliance. IoT consists of internet-connected devices that are able to collect data using embedded sensors  which, in the pharmaceutical industry, would deliver significant advantages across manufacturing, warehousing, and distribution, as summarized in Exhibit 1 . As an example, a particularly compelling use case would be the transportation of drugs that require refrigeration or ‘cold chain’ supply chains, where sensors would monitor the conditions of the shipments at all points in time, as summarized in Exhibit 2 .
How Will Smaller Pharma Companies Adapt To This Evolving Market?
While Pfizer is leading the industry in terms of its digital supply chain initiatives, many smaller pharma companies lack the scale, resources, and leverage over their supply chain partners to be able to introduce similar efforts. What actions should smaller competitors undertake to evolve and be able to compete with the likes of Pfizer who are building massive competitive advantages relative to their supply chains?
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