To be able to understand the topic, we first need to understand the Pharmaceutical (Pharma) Industry. One of the most unique features of this industry is that this is one of the highly regulated industries in the world. Initial discussions throw some more light on the industry. (the scope of discussion is the drug manufacturing portion of the industry).
Pharmaceutical Industry Overview:
From a market standpoint, the Pharma Sector can be classified as:
1. Innovator companies: also known as research-based or originator companies, are at the forefront of drug discovery and development. They invest heavily in research and development (R&D) to create new and original pharmaceutical products. Innovator companies typically hold patents for their drugs, granting them exclusivity for a specified period.
2. Generic companies: these produce and sell generic drugs, which are bioequivalent to the original brand-name drugs. They enter the market after the expiration of patents held by innovator companies. Generics are cost-effective alternatives, as they do not incur the same research and development costs. These companies focus on manufacturing high-quality, affordable versions of existing medications.
3. Biologics companies: these specialize in the development and production of biopharmaceuticals. Unlike traditional chemical-based drugs, biologics are derived from living organisms or cells. They include monoclonal antibodies, vaccines, and therapeutic proteins. Biologics companies invest in advanced technologies and complex manufacturing processes to produce these innovative and often targeted therapies.
4. Formulation companies: have focus on the development of drug formulations, which involve combining active pharmaceutical ingredients (APIs) with excipients to create a final dosage form. These companies play a crucial role in optimizing the delivery, stability, and bioavailability of pharmaceutical products. Formulation expertise is essential for creating various dosage forms, including tablets, capsules, injectables, and topical formulations.
Let us have a quick look at the lifecycle of a typical drug:
It is estimated that the effective investment in producing a new drug can range from USD 1-3 billion.
Market Regulators and Risks:
Some of the prominent market regulators for this industry, besides India include:
A pharma company is typically structured as shown in the picture below:
The top risks for a pharma company are listed below:
Supply chain-Third-Fourth Party
Innovation including the use of Machine Language and Artificial Intelligence in Automation
Challenges in the Pharma Industry - 2024 (McKinsey Insights):
A McKinsey article (https://www.mckinsey.com/capabilities/operations/our-insights/emerging-from-disruption-the-future-of-pharma-operations-strategy) shows the following challenges for Pharma companies in 2024:
It is worth full reading.
Business Continuity in Pharma Companies:
The highly regulated nature of the industry makes the Pharma companies highly dependent on written-down processes and procedures. These not only need to be UpToDate but in use too – on a daily basis. This brings robustness in their operations automatically.
Business Continuity in Pharma companies is increasingly proving to be as important as in any other company or industry. Also, the global standard for Business Continuity Management such as ISO 22301:2019 can apply to the Pharma industry.
Unique Characteristics of Pharma Business Continuity:
A typical Pharma company setup is that a particular plant is approved to manufacture a particular drug for a particular geography. This makes it unique.
Another unique feature is that a pharma company needs supplies from its vendors, and at the same time its output is to be supplied to its customers. So, there is double dependency. And some drugs may need storage and transportation at controlled temperatures.
Building a Business Continuity Plan (BCP):
A Business Continuity Plan is typically built around 6-7 strategies i.e. People, Building, IT, Supplies, Information, Utilities, Plant & Equipment etc. The following table is a comparison across many other industries and the Pharma industry (how it is different):
The following Resilience Roadmap may be used by any Pharma Company:
Implementation of Business Continuity Management System (BCMS):
The standard implementation approach can be adopted for BCM Program in Pharma companies also. This is shown in the diagram below:
Establish a Policy and Manual containing scope, objectives, interested parties, and the Context of the organisation
Conduct Business Impact Analysis (BIA) and Risk Assessment (RA)
Develop continuity strategies
Develop BCM Plans (business continuity, incident-crisis management, crisis communication, emergency, IT Disaster Recovery, cybersecurity, information security etc.)
Test plans, and maintain plans through reviews and audits
Ensure appropriate competencies exist and
The plans and arrangements are improved continually
The certification to ISO 22301:2019 is optional but is recommended as it would provide higher assurance to all stakeholders, including the government, shareholders, investors customers, employees, and the general public.
The following table presents various outputs from a BCMS:
It is also prudent to understand that a BCMS has linkages with other management systems. This is shown in the diagram below:
Benefits of a Well-Implemented BCMS:
A Pharma company will gain through BCMS (business continuity management system), like any other company as detailed next.
Enhancing Disaster Preparedness
1. Better preparedness for facing and managing disasters – assurance through Business Continuity Tests
Effective Disaster Management
2. Better management of disasters if they happen to control impact and duration
Elevated Stakeholder Satisfaction
3. Enhanced stakeholder satisfaction:
b. Customers (NPS – Net Promoter Score, has gone up)
c. Regulator/ government
d. Shareholders/ investors
e. Special interest groups
g. General public
i. Positive movement on top and bottom lines
j. Better insurances
Gaining a Competitive Edge
4. The robust resilience framework will provide a competitive advantage within the marketplace.
Positive Image Boost
5. The organization's enhanced resilience and adept crisis management will elevate its public image.
Strengthened Corporate Governance
6. The comprehensive BCM approach will fortify corporate governance, demonstrating Pharma company’s commitment to responsible operations.
Specifics to the Pharma Industry:
A company will have to conduct its own cost benefit analysis of having alternates like plants and equipment or living with the risk. The risk of going down can further be downgraded by investing more in risk management with an attempt to reduce the likelihood of going down due to any reason. The nature of the industry demands a lot of focus on Public Relations too. Pharma companies may like to spend more on building their reputation and brand. They will also have to look at their supply chains more critically and go down to fourth-fifth-sixth parties from the third party. So, once again more investment in TPRM (third party risk management) is envisaged by a Pharma company. So, a lot of focus and investment in GRC (Governance, risk, and Compliance), ESG (Environment, Social, Governance), EHS (Employee Health and Safety), Reputation Management, and CSR (Corporate Social responsibility) etc. may be required with an intention of reducing the likelihood of going down and being able to manage incidents well within the industry constraints.
Conclusion: Ensuring Resilience in the Pharmaceutical Landscape
In the dynamic and highly regulated landscape of the pharmaceutical industry, the imperative for robust Business Continuity Planning (BCP) cannot be overstated. As we navigate the unique features of this industry—ranging from the diverse types of pharmaceutical companies to the intricacies of drug development and stringent regulatory oversight—it becomes clear that ensuring continuity in operations is not only a business necessity but a critical responsibility.
The pharmaceutical sector, with its innovator, generic, biologics, and formulation companies, faces an array of risks that demand a comprehensive and tailored approach to Business Continuity Management (BCM). From cybersecurity threats to supply chain vulnerabilities, environmental concerns, and the complexities of global regulations, the industry's resilience is continuously tested.
The investment of billions in the development of a single drug underscores the magnitude of the pharmaceutical
enterprise. This financial commitment, coupled with dependencies on suppliers and customers, necessitates a meticulous Business Continuity Plan (BCP) that goes beyond standard practices. The ISO 22301:2019 standard, designed for such exigencies, aligns seamlessly with the industry's need for structured processes and procedures.
A notable challenge in the pharmaceutical sector lies in its unique setup—plants approved for specific drugs in designated geographies create a double dependency on suppliers and customers. The need for controlled temperature storage and transportation adds another layer of complexity. Yet, the industry's dependency on established processes and its adherence to regulatory standards create a robust operational foundation that aligns seamlessly with the principles of Business Continuity.
As we peer into the future, the challenges outlined in the McKinsey article for 2024 serve as a compass, guiding pharmaceutical companies toward strategic resilience. The global standard ISO 22301:2019 provides a roadmap for the implementation of a Business Continuity Management System (BCMS), offering a comprehensive framework that encompasses People, Building, IT, Supplies, Information, Utilities, Plant & Equipment.
The benefits of a well-implemented BCMS extend beyond disaster preparedness. Elevating stakeholder satisfaction, gaining a competitive edge, bolstering corporate governance, and positively impacting the organization's image are just a few of the advantages. In essence, a resilient pharmaceutical industry is not only better prepared for disasters but is also poised to excel in the face of uncertainties, delivering on its commitment to responsible and uninterrupted operations.
In conclusion, Business Continuity Planning is not merely a compliance requirement; it is the cornerstone of a pharmaceutical industry that thrives on innovation, precision, and the unwavering commitment to the well-being of global communities.