Insights

Unravelling complexity

The challenge of compliance in the life sciences supply chain

In an environment driven by increasing complexity, product diversity and regulatory scrutiny, what are the major compliance risks impacting the entirety of the life sciences supply chain? What opportunities exist to transform compliance from a burden to a source of competitive advantage?

Introduction

The life sciences industry operates in one of the world’s most regulated environments. Global life sciences supply chains are lengthy and complex, shaped by many internal and external factors. They are the golden thread linking discovery to delivery hence why an efficient and compliant supply chain can be a source of competitive advantage for organisations. 

The latest report from the Deloitte UK Centre for Health Solutions, which follows Deloitte’s 2015 report on enterprise-wide compliance in life sciences, is an in-depth analysis of the supply chain risk domain. Our report proposes that life sciences companies can transform compliance from a burden to a source of competitive advantage by focusing on a series of actions to drive better supply chain performance and better patient outcomes.

Challenges facing life sciences supply chains

The key challenges are:

  • measuring supply chain compliance - measuring compliance is complex and lacks comprehensive metrics to achieve visibility of compliance status and risks across the end-to-end supply chain
  • the complexity of global life sciences supply chains - this highly complex environment is driven by the impact of intellectual property, tax structures and changing market access needs, as well as a growing reliance on third-party business partners, requiring effective governance and risk management 
  • the complexity of new product types and therapies - increasingly diverse products with shorter product lifecycles, and an increasing emphasis on outcomes and new models of delivering healthcare, contribute to complexity
  • remaining compliant when implementing changes within existing regulatory frameworks - the management of regulatory and technical change presents a significant cost and operating challenge for life sciences companies
  • new and emerging regulations and the increased pace of regulatory change - the proliferation of new regulations is set to continue, and regulators are increasing their compliance oversight and enforcement activities.

Addressing the challenge of compliance

Key actions to drive better supply chain performance and better patient outcomes include:

  • develop an ethics driven culture through effective leadership and governance - life sciences companies should take a proactive approach to diagnosing the core values and behaviours and develop a vision and roadmap that leads to a high-performing sustainable culture committed to improving compliance
  • extract greater value from data - ‘Big data’ and analytics will be a key enabler in unlocking the potential of disparate data and should improve the ability of companies to identify and quantify new and emerging risks. Data analytics could be used more effectively to drive compliance and enable a better understanding of key supply chain risks
  • understand the costs and benefits of investment in supply chain compliance, talent development and outsourcing - many life sciences companies maintain large and growing compliance functions at significant operational cost to ensure they maintain regulatory compliance. Companies are now beginning to examine these costs more closely and are exploring alternative approaches to performing these operations such as using third parties
  • build a balanced relationship with regulators including supporting regulators to develop greater regulatory harmonisation - greater harmonisation between regulators is a key enabler in maintaining compliance while securing supply to markets. Industry can help by developing collaborative relationships with regulators, working with them to predict and manage regulatory risk and compliance proactively
  • adopt digital technology, including robotic process automation - there is significant potential for life sciences companies to take advantage of the exponential growth of data analytics, cognitive computing, connectivity and new technologies to transform the traditional linear and siloed supply chain processes into ‘Digital Supply Networks’ to reduce costs but also improve the accuracy, resilience and the reliability of supply chain compliance.
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