Knowledge Sharing Barriers Affecting Pharmaceutical Supply Chain Performance

Introduction

The pharmaceutical industry can be stated as a systemic network of a set of complex processes, operations and organizational structure which is involved in the discovery, development, and manufacturing of medications. It comprises the part of the healthcare sector that deals with medications and comprises of drug manufacturers, drug marketers, and biotechnology companies (Benson, 2015). Over the years, the pharmaceutical industry has played a vital role in facilitating business operations and societal growth of a country. The origin of the pharmaceutical industry stems from two important sources – the apothecaries and that moved into wholesale production of drugs and the chemical companies that established research labs and discovered medical applications for their products starting in the late nineteenth center (Chemical and Engineering News). With time, the pharmaceutical industry had undergone major transformation and innovations, and have become one of the leading revenue generating sectors of business. The global pharmaceutical industry was worth an estimated $1 trillion in 2014 and currently, the worldwide pharmaceutical sales have amounted to $963 billion (Statista, 2018). Additionally, the value of the global prescription drug market was estimated to be $816 billion in 2016 and the US market, which was a key driver of the growth, accounted for $320 billion in 2016 (Hardman&Co, 2017). Therefore, the importance of pharmaceutical industry had been acknowledged by academicians and practitioners alike, and have highlighted the need for further investigation in this sector.

In spite of its heightened importance, globalization, the complexity of new pharmaceutical drugs and equipment, and diminishing protection by patents have affected all stages of the business value chain – from drug development till distribution and networking (Papageorgiou et al., 2001). This, therefore, has compelled the pharmaceutical organizations to revisit their business model and often come up with new business strategies. Furthermore, the complexity of the pharmaceutical industry and healthcare, in general, has highlighted the need for efficient management of its supply chain. However, in spite of the utmost importance of supply chain in the manufacturing (and service) domain, the pharmaceutical industry was one of the late adopters in the application of modern supply chain and practices. A possible reason for this can be the fact that the profitable heritage of the pharmaceutical industry, coupled with the low cost of goods sold (COGS), might have been responsible for its lack of impetus on designing and managing efficient supply chain (Singh, 2005). However, during the past decade, the pharmaceutical supply chain has started gaining rapid prominence in the market, mainly as a weapon to combat the huge complexity and heterogeneity associated with it. This situation has been further complicated by the interplay of fundamentally different types of key stakeholders, such as drug manufacturers, wholesale distributors, retail pharmacies, hospitals, managed care organizations, and insurance companies (Singh, 2005), thereby elevating the importance of pharmaceutical supply chain in the process.