APICS is the leading professional association for supply chain and operations management.
News Landing Page


Walking the Pharmaceutical Tight Rope

By APICS CEO Abe Eshkenazi CSCP, CPA, CAE | 0 | 0 | September 07, 2012
APICS Operations Management NowWhile researchers experiment with delivery of targeted doses of drugs to different parts of the body, supply chain professionals can be vexed by the complex system of delivering supplies and drugs from manufacturers to patients. It’s a complicated balancing act because of differing regulatory bodies around the world, unregulated and illegal drug ingredients, substandard and counterfeit drugs, and much more. The system is further complicated by the needs of the end customer, who isn’t merely waiting for a new mobile phone or the latest jeans; but, in fact, could be waiting for life-saving cancer medications or anti-malarial drugs.

Last week, Reuters ran a special report describing the pharmaceutical supply chain in China. Chinese drug companies faced questions four years ago after contaminated heparin, a blood-thinner, caused 149 deaths in the United States. The contaminated heparin was traced back to China, but only after it was discovered in Australia, Canada, Denmark, France, Italy, Japan, the Netherlands, New Zealand, Germany, and the United States.

“An examination by Reuters has found that unregulated Chinese chemical companies making active pharmaceutical ingredients (API) are still selling their products on the open market with few or no checks,” write Melanie Lee and Ben Hirschler. “Interviews with more than a dozen API producers and brokers indicate drug ingredients are entering the global supply chain after being made with no oversight from China’s State Food and Drug Administration, and with no Good Manufacturing Practice certification, an internationally recognized standard of quality assurance.”

Unregulated drug ingredients not only create risk in the supply chain, but they ultimately put people’s lives in danger. The Reuters article states this is particularly true in poor countries, where pharmaceutical controls are nominal. Medicines with faulty active ingredients, improper labeling, or incorrect dosages can play a part in the spread of life-threatening, drug-resistant diseases, such as malaria.

Here’s where it gets even trickier: Experts estimate that about 70 or 80 percent of APIs around the world originate in China. That business is worth about $22 billion a year. “If China for some reason decided to stop exporting APIs, within three months all our pharmacies would be empty,” says Guy Villax, CEO of Hovione, a Portugese-based API firm with factories in China, the United States, and Ireland.

Sharing ideas and solutions

Solving the problems related to pharmaceutical manufacturing and delivery requires the expertise of the supply chain and operations management community. Sure, it isn’t going to be as straightforward as adding safety stock or implementing sales and operations planning, but this is an important quest__one worth your time and energy.

That’s why APICS is proud to host a Pharmaceutical Supply Chain Town Hall on Monday, October 15, during the 2012 APICS International Conference & Expo. In this session, moderated by APICS Executive Vice President Sharon Rice, participants will examine the current state of medicine and API shortages, counterfeiting, mislabeling, and other risks associated with the pharmaceutical supply chain. This is a follow up to a Drug Information Association town hall Rice attended in June related to pharmaceutical supply chain security, and now she brings that discussion to the APICS audience. Together with an expert panel, the audience will explore first steps and potential solutions to the challenges that face this demanding supply chain. Your attendance and participation is essential to the success of this first-ever APICS event.

In other news

Related APICS education

  • Get Well Soon
    The APICS Interview with Rick Seibert
    May/June 2012, APICS magazine

  • Crack the Code
    By Peter L. King, CSCP
    July/August 2011, APICS magazine

Not an APICS member? Join today.


  1. Ganesh September 11, 2012, 04:33 PM
    Great article! I've just started working on a school project looking at where process analytical tools can be introduced into pharmaceutical manufacturing as quality control checkpoints for securing the drug supply chain. Does anyone know of any resources or organizations that could answer further questions on the feasability of introducing new sensor technologies into the process? Thanks!