PwC warns of pharmaceutical outsourcing problems

PricewaterhouseCoopers has some stern words for pharmaceutical companies looking to move their supply chain operations overseas. The practice, which is becoming increasingly prevalent as emerging economies look to purchase a bigger share of commercial medications, creates a "risky supply chain environment," analysts warn.

According to a recently commissioned study from PricewaterhouseCoopers and healthcare analyst firm Axendia, half of pharmaceutical and life sciences executives said they see raw materials sourced outside of the U.S. as the greatest vulnerability to the supply chain, with 61 percent reporting that contaminated or nonconforming raw materials are the top threat to the industry.

Emerging economies in countries such as China, India, Mexico and Brazil are becoming the most attractive places in which to sell medicines, the report found, and companies are looking to move overseas to capitalize on these markets.

"With manufacturing, sourcing and the sale of medical products expected to increase dramatically in the emerging markets, the geographical expansion of the supply chain will make it more difficult to manage, as will the industry's changing product mix," explained Wynn Bailey, pharmaceutical and life sciences advisory services partner at PwC. "In order to meet the demands of globalization, the pharmaceutical supply chain will need to become much more flexible, with different manufacturing routes and distribution channels for different kinds of products. Companies will need to implement new strategies, processes, and technology to proactively reduce and control risks."