1. INTRODUCTION
This
paper is motivated by the changes that the pharmaceutical industry is
undergoing to cope with new challenges of the global economy. Intensive
globalization processes, increased competitiveness, fast changing structure of
competitors, complex strategic positioning, shrinking pipelines, expiring
patents, counterfeit drugs, increased regulatory scrutiny on profits and a
fight for global market share, are some of the factors giving the
pharmaceutical companies new challenges (PAPAGEORGIOU et al. 2004; REUTERS,
2009; ALMOR, 2009; EDWARDS, 2010).
Complex
requirements are forcing pharmaceutical manufacturers to adopt more formal
business processes and stricter reporting methods (SOUZA et al. 2005);
Pharmaceutical companies undergo strong regulations dictated by the FDA (Food
and Drugs Administration) and EMA (European Medicines Agency), for example.
Even small irregularities in product or processes can lead to the elimination
of the whole production batches and in the worst case enormous civil penalties
(GRAUNAEUR et al. 2009). Furthermore, as John Avellanet (2010) suggests ‘as
long as the industry fails to take a holistic cross-functional view of
regulatory compliance, risk management and operational excellence, it will
continue to see consent decrease, product recalls and tremendous waste.
The
pharmaceutical industry as a whole has traditionally been very profitable. On a
global scale, the total size of the global pharmaceutical market has been
forecasted to experience grow 4 to 6% exceeding $825 billion. The global
pharmaceutical market sale is expected to grow at a 4 to 7% rate (CAGR) through
2013. Global pharmaceutical market value is expected to expand to $975+ billion
by 2013 (IMS HEALTH, 2010). Besides, total pharmaceutical sales from the top 10
companies accounted for more than 4% of the total market. Additionally, the US
pharmaceutical market grew by 3.0% in 2009 to $300.3 billion with highest
growth in mail services and clinics; the major five Germany, France, Italy
Spain and the UK, together accounted for over 60% of all European
pharmaceutical sales in 2009 (PHARMACEUTICAL MARKET TRENDS, 2010). Conversely,
product recalls in the pharmaceutical industry are becoming extensive and
increased radically, according to CNN (2010) in 2009 alone, the Food and Drug
Administration reported more than 1,984 recalls comparing to 379 from 2008,
from that more than 1,000 was from a contract manufacturer; with an estimated
$5 billion dollars and more than $700 million in fines since 2001 and billions
more in lost revenues (KUMAR et al. 2009, SOUZA et al. 2007). Industry sources
have estimated the total of returns cost to be 3 to 6% of the annual
pharmaceutical sales (HUNTER et al. 2005). Product recalls has increased with
ranges from 5 to 10% (ABBOUD & HENSLEY, 2003) with an estimated $5 billion
dollars (KUMAR et al. 2009).
Despite
of the industry focus on quality, pharmaceutical manufacturing has failed to
keep up with other industries in terms of efficacy and productivity. Therefore,
all stages of the business value chain are affected, from development of new
drugs to the management of the manufacturing and supply networks (PAPAGEORGIU et
al. 2001; ALMOR 2009; EDWARDS 2010). Organizations that cannot show a clear
ethical conscience in supply risk significant tend to see their customers change
their preferences to rival companies over time (HOWARD & HUMBY, 2008).
These drivers show how organizations are facing increasing pressures from a
wider range of stakeholders to engage with social and environmental corporate
responsibility activities (REUTERS, 2009).
Phama
Co. develops manufacturers and market generic and in-licensed pharmaceutical
products within three core business. The operations span 49 countries and focus
on key therapeutic areas such as anti-infectives, cardiovascular, alimentary tract
and central nervous system. The injectable business markets 120 branded and
non-branded injectable products in 215 dosage, strengths and forms, including 7
in-licensed products. Why Pharma Co. was selected? The 2010 revenue was $731m;
by region: 61% MENA, 28% from the US and for Europe and the rest of the world
accounts for 10.9%. Selecting it by segment, 23.9% are generics; 21.5%
injectable drug products and 54% are branded. It has more than 400 products
marketed in 2010. And an operating cash flows over $140.0m. It is the second
largest generic injectable supplier by volume in the US with combined market
share of more than 15%. Comparing to the beginning of this introductory
section, one can expect that it is a good fit of the current pharmaceutical industry
scenario.
The
purpose of this paper is to combine the findings of previous literature reviews
conducted by the authors. In particular, explore the links between
pharmaceutical drugs quality, reverse logistics, and sustainability. After
introducing the group where the case study is applied, a few critical aspects
are considered. The organization of this paper is as follows. After this
introductory section, the relevant literature of Pharmaceutical applications
these three main topics has been reviewed. In section 3, discussion has been
presented with implications to management. Section 4 discusses limitation,
conclusions and the next steps in this research.
2. LITERATURE
REVIEW
2.1.
Pharmaceutical Recalls
We
shall first start to comprehend the process behind drug products approval. No
pharmaceutical product can be placed on the market without receiving prior
authorization from the regulatory authorities, upon successful completion of a
lengthy procedure for evaluating the quality, safety and efficacy of the
product. Moreover; regulators around the
world have become more sophisticated in ensuring that drugs are safe and
effective (LEVIS & PAPAGEORGIOU, 2004; SOUZA et al. 2007). The evaluation
goes primarily against the drug manufacturing regulations which are based in
the FDA Good Manufacturing Practices (GMP). These regulations have been
improved through a management of system approach, in particular with the
harmonization between risk analysis and quality systems. These changes have
improved the approach to GMP compliance, marketing compliance more
comprehensive, integrated, and focused on areas of the greatest impact (ICH
2011; PLUTA & POSKA, 2010; SOUZA et al. 2007).
Changes
made within an operation should be made for a reason with positive business outputs,
or else quality improvements would not exist (DALE, 2003). Then again, in
pharmaceuticals, any change that a company wants to make is always going to be
subject to the pervasive requirements of safety, efficacy, quality and cost.
This approach is making some companies to remain locked into an ancient mindset
that says that providing outcome meets specifications, all is well (MCCONNEL et
al. 2009). However, this type of methodology has been demonstrated fallacious,
and to be likely to increase deviations and recalls (MAHBOUBIAN-JONES, 2009),
as demonstrated in the introduction section.
Table
1 highlights the parallels between the types of recall classification by the
FDA (Food and Drug Administration) and EMA (European Medicines Agency), as can
be seen high similarities can be identified.
Table 1 – Recall
classification comparison
|
|
FDA |
EMA |
|
Class I recall |
A situation in which there is a reasonable
probability that the use of or exposure to a violative product will cause
serious adverse consequences or death |
The defect presents a life threatening or
serious risk to health |
|
Class II recall |
A situation in which use of or exposure to a
violative product may cause temporary or medically reversible adverse health
consequences or where the probability of serious adverse consequences is
remote |
The defect may cause mistreating or harm to
the patient or animal, but is not life threatening or serious |
|
Class II recall |
A situation in which use of or exposure to a
violative product is not likely to cause adverse health consequences |
The defect is unlikely to cause harm to the
patient, and the recall is carried out for other reasons, such as
non-compliance with the market authorization or specification |
Source: FDA and EMA
(2011)
The
decision to recall a product may be due to comprise issues related mix-ups,
volume, potency, tampering, quality of dosage forms, questioned generic
substitutions, labeling defects, lacking therapeutic effects, question
formulations, dispenser malfunction and container defects, for example (CHEAH et
al. 2007; EMA 2011; FDA 2011). A comparison of the most common incidents
registered by both FDA and EMA for the 2007 period can be found in table 2.
Table 2 -
Reported Drug Quality Defects
|
CDER |
EMA |
||
|
Category |
Incidence (%) |
Category |
Incidence (%) |
|
Product Defects |
27% |
Product defects |
15% |
|
Formulation/ Substitution |
24% |
Deviation from Manufacturing
Authorization |
15% |
|
Labeling |
13% |
Product information
literature |
23% |
|
Packaging |
6% |
Packaging material |
14% |
|
Fill Problem |
5% |
Ancillary materials |
14% |
|
Delivery |
13% |
OOS |
12% |
|
Other |
12% |
GMP findings |
7% |
Source:
CDER (FDA), 2007 & EMA, 2007
Although
increasing, the recall or removal from the market of pharmaceutical products is
not a regular event. When the product involved is a drug which is being
dispensed to hospital patients, a product recall has to be carried out quickly
and effectively (AUTRY, 2005; BOWERSOX & CLOSS, 1996; RITCHIE et al. 2000),
the replacement with a new one should also be done promptly. Ritchie et al.
(2000) also state that due to the potential severity of using expired or
ineffective drugs, it is critical that pharmaceutical companies get the reverse
logistics right from the beginning. Companies must react quickly to problems,
as well as clear the supply chain of non-conforming material, so that an
appropriate supply chain can be reissued to those waiting for their medications
(KUMAR et al. 2009).
Summing
up, no effective medicine is without risk and the benefits of a medicinal
product always needs to be weighted up against its risks. The challenge to
regulators is to find the right balance between timely availability of new
medicines and the fact that knowledge on the safety profile is limited at the
time of marketing authorization (EMA, 2011). The next section will discuss the
best approaches when dealing with returns of recalled pharmaceutical products.
2.2.
Pharmaceutical Reverse Logistic
Nowadays,
pharmaceutical companies are multi-product, multi-purpose and multi-site
facilities operating in different countries and dealing with a global-wide international
clientele. It is very often the case that multi-national companies operate in
many geographically distributed manufacturing facilities while dealing with an
international business located in different customer zones. Therefore, the
issues related to the trading structure of the company have to be taken into
account when deciding on the optimal multi-site investment strategy of the
company (LEVIS & PAPAGEORGIOU, 2004); consequently, the return of the drug
products can be very complex. Returns from the pharmaceutical industry are
mainly, end of shelf life drugs and recalls.
When
dealing with a recalled product, the same system as a forward logistic cannot
be applied, as the reverse supply chain is not a symmetrical image of the
forward supply chain, due to the difference in the flows of materials and
information demanded by either of them as stated by de la Fuente (2008). Plus,
forecasting and planning in reverse logistics also differ from that of the
forward supply chain mostly because of the high level of uncertainty concerning
returned products and waste materials. With this in mind, companies who work in
collaboration, become more effective and efficient with the integration within
the supply chain. Graphic 1, illustrates a general pharmaceutical supply chain,
highlighted are the items where our case study is reflected.
Graphic 1 –
Reverse logistic for a pharmaceutical drug product
It is
possible to reduce the possible transportation costs of returned materials by
taking possession when delivering newly manufactured products in the area or to
the same client. In this case, it is convenient to design transport to
facilitate the delivery of the new products with collection of used materials
and products to recover; in this case the coexistence between forward and
reverse materials is possible, moreover the incorporation of reverse logistics
in the existing supply chain means benefits the manufacturing company, both
with regards to quality, by improving customer assistance and product delivers
and collection with regard to quantity (DE LA FUENTE et al. 2008; STOCK, 1998).
In
summary, product recalls are generally viewed unfavorably by investors, and a
failure to their systems quality (CHEAH et al. 2007; KRUMWIEDE et al. 2002). In
the same line, product returns can present a significant challenge for
manufacturing firms whose primary objective is usually geared towards producing
and selling products to customers. The impact of returns is sometimes
disregarded, or at least, not well-understood in most firms. In others, returns
are often considered just a necessary cost-of-doing business (MOLLENKOPF et al.
2011), like the pharmaceutical. During a drug product recall the company must
rely on the distributors or wholesalers distribution information (KUMAR et al.
2009), such as customer service, depot repair, end-of-life manufacturing, IT
management, recycling, refurbishing/screening, replacement management, returns
authorization, spare parts management, transportation, warehousing and warranty
management (KUMAR & PUTMAN, 2008). In addition, reverse logistics leads to
an increase of customer satisfaction and recovery of value; as well as reduces
pharmacy costs, maximizing manufacturer credit benefits and/ or reduce cycle
times (FASSOULA, 2005; BIEDERMAN, 2010).
2.3.
Pharmaceutical Sustainability
Pharmaceutical
companies are being accounted as more responsible towards sustainability. As
the industry experiences an increasing pressure from regulation markets in the
demand for more sustainable products, the need to become more sustainable
increases, and the responsibility of its activities should be expanded from the
production site to the whole product chain (JORGENSEN, 2008; LINTON et al.
2007).
Pharmaceutical
companies are using the Global Reporting Initiative (GRI) as a way to implement
and measure their level of sustainability. The GRI guidelines have been
developed and revised through a process involving various stakeholders (GRI,
2011). As part of the standard sustainability report, the GRI guidelines suggest
the use of indicators to measure an organization performance in environmental,
social and economic areas. They list over 100 possible indicators for companies
to use, both generally applicable and organization-specific, such as total
water used and recycle material for example. The GRI guidelines act as an
educational vehicle and promote corporate social responsibility reporting for
integrating environmental, social and economic aspects, and promote
transparency and improved dialogue between business and stakeholders (VELEVA
& ELLENBECKER, 2001). In addition, due to the fact that financial and
social criteria are crucial parts, these truly differentiate ‘sustainability’
reporting from straight environmental reporting (MORHARDT & FREEDMAN,
2002).
The
sustainability Report from 2009 for the pharmaceutical industry revealed the
PSI scores (Pacific Sustainability Index (PSI) which uses two systemic
questionnaires: one base questionnaire for reports across sectors and a sector
specific questionnaire for companies within the same sector) for 26 largest
pharmaceutical companied in the world. The findings of the reports include:
·
Companies
in the pharmaceuticals sector place varying importance on sustainability
reporting transparency;
·
As in
many sectors, environmental performance was the most underreported section.
Fewer than half of the sector’s companies reported using environmental
accounting, green purchasing and chemistry, or concern for biodiversity, and
fewer than 60% of the companies mentioned climate change;
·
Across
the sector, social reporting scores were generally better than scores for
environmental reporting;
·
The
pharmaceutical sector certainly should continue to address social issues on
which it has a direct effect, such as health disparities, as well as the
important environmental challenges all corporations face;
·
Many
pharmaceutical companies have room for extensive improvements in their
sustainability reporting, although there are some leaders in the sector setting
a ‘stellar’ example. Ten of the 26 companies in the sample were GRI reporters,
all of which finished in the top half of the reports ‘Overall Grade’ list
(Sustainability Report 2009).
Summing
up, expectations on safety and health are increasingly, more and more due to
globalization. Firms in the pharmaceutical industry are now expected to be
responsible to economic, societal and environmental needs. Moreover;
environmental protection and sustainability cannot only be used to improve the
public perception of the manufacturing efficiency as costs for input and output
resources (STEGEMANN, 2010). The adoption of sustainable practices helps
business to distinguish them from competition through the reduction of
unnecessary risks, generation of waste, increasing efficiency of materials and
energy, innovating by new and environmental friendly products and services as
well as gaining operating licenses from local communities (SZÉKELY &
KNIRSCH, 2005), and as soon as any harm is discovered and brought to the
stakeholders attention, its root causes are identified and properly rectified (CAMPBELL,
2007). This type of approach leads to the increase business performance and
profitability, sustaining their activities longer (LINTON et al. 2007). From
the exposed above, one may see that very little literature merging
pharmaceutical supply chains and sustainability could be found. The adoption of
sustainable practices helps business to distinguish them from competition
through the reduction of unnecessary risks, generation of waste, increasing
efficiency of materials and energy, innovating by new and environmental
friendly products and services as well as gaining operating licenses from local
communities (SZÉKELY & KNIRSCH, 2005), and as soon as any harm is
discovered and brought to the stakeholders attention, its root causes are
identified and properly rectified (CAMPBELL 2007). This type of approach leads
to the increase business performance and profitability, sustaining their
activities longer (LINTON et al. 2007).
3. METHODOLOGY
In
studying the dynamic, complex and context-dependent problems, it is imperative
that researchers explore wider methodology options (CHASE, 1998; TRIM & LEE,
2004; KIRIDENA et al., 2009). Theory-building research in operation management
often requires in-depth analysis of data from real-world situations because the
knowledge base has not yet sufficiently developed to allow the use of
hypothetic-deductive approaches. In this study, both quantitative and
qualitative approaches have been used. There were also other issues, such time and
resource constrains as well as access to data that needed to be taken into
account.
Case
study research can provide rich insights into complex phenomena, leading
towards an understanding of their deeper structures within naturalistic
settings (YIN, 1994). The contribution of these insights, particularly in the
early exploratory phase, to theory building is indispensable. However, the
findings of case-study research often challenged on the basis of their reliance
on retrospective accounts (internal validity), individual bias (construct
validity and reliability), and the idiosyncrasy (external validity) of findings
(EISENHART, 1989; MEREDITH, 1998; YIN, 1994). By comparison the later versions
of the grounded theory approach (STRAUSS & CORBIN, 1994; GOULDING, 2002)
have some inherent strength that can effectively negate most of these
limitations, but are faced with the difficulties associated with the
operationalization of the methodology.
For
example, entering the field with no pre-conceived ideas, achieving theoretical
saturation and the level of creativity and theoretical sensitivity expected of
the researcher – have all been challenges for many researchers (SUDDABY, 2006).
However, in terms of overall credibility, the grounded theory approach is
strongly guarded by its relatively structured and rigorous process of data
collection, analysis and theory generation. As such, this study decided of a
combined “grounded theory – case study” approach, informed by the
interpretivist school of thought, for studying the link between pharmaceutical
industry and hospital concerns towards quality issues. The methodological
approach adopted is consistent with the objective of the study.
Towards
the understanding of the major complaints of the organization, semi-structure
interviews were applied not only to the company in question, in the main
injectable manufacturing and distribution sites, but also to several hospital
pharmacies in different countries of action. With this approach it is expected
to link both parties in the application of a Quality by Design (QbD) which is a
“systematic, scientific, risk-based, holistic and proactive approach to
pharmaceutical development that begins with predefined objective and emphases
product and processes understanding and process control” (YU, 2008), risk
management approach as well as reduce variability and risk of noncompliance.
Subsequently, a more sustainable pharmaceutical supply chain is expected to
flourish, reducing waste, and increasing corporate social responsibility.
Product
complaints were evaluated from 2006 until 2011 and patterns were identified and
grouped in categories. The selected categories underlined the two main
regulatory agencies in the world: the USFDA and EMA. The drug product quality
defects reported by the two agencies shown in Table 2 are now compared with the
ones observed in Pharma Co. (table 3), in this table the identified groups of
Pharma Co. are also included and a correlation can be done.
Table 3 -
Reported Drug Quality Defects and correlation with Pharma Co.
|
CDER1 |
EMA1 |
Pharma Co. |
|||
|
Category |
Incidence (%) |
Category |
Incidence (%) |
Category |
Incidence (%) |
|
Product Defects |
27% |
Product defects |
15% |
Container closure |
6% |
|
Formulation/ Substitution |
24% |
Deviation from Manufacturing Authorization |
15% |
Formulation (color/ dissolution/ particles) |
34% |
|
Labeling |
13% |
Product information literature |
23% |
Labeling/packaging |
11% |
|
Packaging |
6% |
Packaging material |
14% |
Delivery |
2% |
|
Fill Problem |
5% |
Ancillary materials |
14% |
Fill volume |
4% |
|
Delivery |
13% |
OOS |
12% |
ADE |
11% |
|
Other |
12% |
GMP findings |
7% |
Other |
<1% |
1Source: CDER (FDA), 2011 & EMA, 2007
The
principal method of data collection was semi-structured interviews (KVALE,
1996; SEIDMAN, 1998), drawing participants from different hierarchical levels
of the organization was backed up by a limited document analysis. The key
players for the semi-structure interviews were selected in a three step
process. First, the analysis of the five years of complaints received by the
pilot site and the identification of the key issues rose. Second, the
identification from which main distribution countries those came from. Third,
from where the complaints were reported.
Semi
structured Interviews were conducted with management staff representing quality
assurance, regulatory affairs, and quality compliance, from the industry side
and procurement from hospitals. Each interview took about 45 to 90 min
duration. Where allowed, all semi structured interviews were recorded and
transcribed into text. The action of interviewing, compiling and analyzing data
took around 3 months to accomplish. Participant-observer study also took place
during the data collection. The use of multiple sources of evidence in case
studies allows an investigator to address a broader range of historical and
behavioral issues, but most importantly the developing of covering lines of
inquiry, a process of triangulation and corroboration (YIN, 2009).
4. DISCUSSION
Even
though is well known what type of returns the pharmaceutical industry receives,
like end of shelf life drugs, and recalls, pharmaceutical companies need to
identify the product attributes that most affect quality so that operation
managers can tap internal resources, including sales, marketing, product
development and technical staff. Integration of QA (Quality Assurance)
processes is also a critical success factor.
The
other option could be the type of policy companies are making business, in
particular the use of more risk management approaches through the application
of techniques such as pharmaceutical Quality by Design (QbD), for example. Part
of this should involve the joint development and maintaining of performance
metrics between the service provider and their business partners.
Building
performance metrics into the service agreement should also be given consideration,
with on-going measurement of results taking place (SARTORI, 2011), as global,
green and social capital, can have in a firms overall economic security. In
addition, direct interaction with supply chain partners can enable a company to
reduce total inquiry levels, decrease product obsolescence, lower transaction
costs, react more quickly to changes in the market, and respond more promptly
to customer requests.
Managers
can improve their materials management performance by first understanding how their
decisions affect the purchasing, storage, handling, and asset recovery
activities throughout their organization (MARKEY & DAVIS, 2007). From the exposed analysis, one could see
that, the major paradigm change the industry is facing, i.e. the increase of
recalls, is making companies to understand their process better, from the
research and development phase by designing the products beyond compliance
regulations until the end user, in this particular case the hospital patient.
With this approach it is expected that drug product recalls and returns will
decrease. It is also expected the reduction of wasted revenues in reverse
logistic operations and an improvement of more sustainable pharmaceutical
supply chains.
The
impact of returns is ignored, or at minimum, not well-understood in many firms.
In others, returns are often considered just a necessary cost-of-doing business
(BLACKBURN et al. 2004). With such perspective, firms focus on cost
minimization at an operational level, missing opportunities to recapture value
for themselves and their customers, and build customer loyalty (MOLLENKOPFT et
al. 2007). Managing costs as well as customer relationships highlights the
strategic role that both marketing and operations functions can perform in
returns management. Effective returns processing can contribute to customer’s
perception of value in dealing with a supplier firm.
Much
of the value created through these activities relates to the physical flow of
returned product, and the timeliness and accuracy of the operations group in
processing such products. Linked to the operational processing is the ability
to the accounting group to reconcile physical flows with financial and
information flows in order to issue credit in a timely and accurate manner (STOCK
& MULKI 2009). On the reverse logistics side, if the company performing the
returns function on behalf of the manufacturer has adopted the right systems
and technology to perform those tasks, there are a number of efficiencies that
can be gained. Moreover, firms that effectively manage the reverse flow of
goods benefit through decreased resource investment levels and cost reduction.
It has been predicted that firms that choose to formalize their reverse
logistics programs may be rewarded in two ways, via improved management of
liberally following returns and subsequently, increases in overall reverse
logistics effectiveness (AUTRY, 2005).
Product
quality can affect a customer’s sense of value in multiple ways. Ultimately,
consumers or end users will evaluate the value they receive from the use of a
product, and will evaluate cost/benefits associated with the price paid (BOWMAN
& AMBROSINI, 2000; GRONROOS 2008). Poor quality products will create
excessive return situations for retailers, creating operational and
profitability concerns for them. Similarly poor packaging quality can induce
transit damage or product degradation when in storage or on the retail shelf.
Retailers may perceive customer value through supplier efforts to certify
product quality and to ensure compliance with industry or regulatory standards
(MOLLENKOPF et al. 2011).
Organizations
of any size increasingly stress their efforts at cost reduction and continuous
improvement of customer satisfaction, which are the main parameters of competiveness.
Cost of quality, although it is not established as a component of the final
cost and is separately measured in all organizations, is a metric reflecting
the overall performance of an organization in relation to both those parameters
and it can be used as a progress indicator. Reverse logistics management can
provide a continuing and proactive commitment to delivering value for money, by
eliminating waste without in any way diminishing the quality level (Ritchie et
al. 2000). Through the reduction of unnecessary risks, generation of waste,
increasing efficiency of materials and energy, innovating by new and
environmental friendly products and service, as well as, gaining operating
licenses from local communities (SZÉKELY & KNIRSCH, 2005). As soon as any
harm is discovered and brought to the stakeholder’s attention, its root causes
are identified and properly rectified (CAMPBELL, 2007). This leads to the
increase business performance and profitability, sustaining their activities
longer (LINTON et al. 2007).
No
questions asked, sustainability is of relevant interest, research in this
subject has been dedicated on financial impacts of environmental behaviors (MARKEY
& DAVIS, 2007). Markey and Davis (2007) also refer that little work has
been made addressing the impact that a sustainable supply chain, has on the
protection of global, green and social capital, can have in a firms overall
economic security; as well as the potential development of a competitive
advantage using a sustainable supply chain as a base and securing stakeholder
approval (HART, 1997). Moreover, Hart (2003) states that it is of increase
importance for firms to evaluate the impact that a sustainable supply chain
strategy has on the triple bottom line (3BL), due to the challenging global
economy, in particular companies should begin to evaluate not only their supply
chains impact on their traditional financial bottom line, but also on their
social/ethical and environmental performance.
Companies
have been developing and using environmental sustainability indicators (VELEVA
& ELLENBECKER, 2000), as a manner to improve a company’s public image
gaining competitive advantage through product/service differentiation (PORTER,
1998, MAHLER, 2007). In addition, direct interaction with supply chain partners
can enable a company to reduce total inquiry levels, decrease product
obsolescence, lower transaction costs, react more quickly to changes in the
market, and respond more promptly to customer requests. Managers can improve
their materials management performance by fist understanding how their
decisions affect the purchasing, storage, handling, and asset recovery
activities throughout their organization (MARKEY & DAVIS 2007).
To
sum up, the strategic importance of effectively managing returns is evident as
firms seek to maximize the value they create for themselves and for customers.
When firms view returns as just a cost center or a regulatory compliance issue,
they miss potential value that can be created for themselves and their
customers. Mollenkopf and Closs (2005) point out this value can only be created
by understanding the multi-functional components of marketing, logistics,
operations and finance/ accounting functions which actively engage in managing
return products (MOLLENKOPF et al. 2007, SKINNER et al. 2008). This is also in
line with Souza et al. (2007) regarding the necessity for pharmaceutical
companies to identify the product attributes that most affect quality so that
operation managers can tap internal sources, including sales, marketing,
product development and technical staff. Integration of QA processes is also a
critical success factor. Part of this should involve the joint development and
maintaining of performance metrics between the service provider and their
business partners. Building performance metrics into the service agreement
should also be given consideration, with on-going measurement of results taking
place on a quarterly or yearly basis (SARTORI, 2011). No effective medicine is
without risk and the benefits of a medicinal product always need to be weighted
up against its risks. The challenge to regulators is to find the right balance
between timely availability of new medicines and the fact that knowledge on the
safety profile is limited at the time of marketing authorization (EMA 2011).
5. CONCLUSION
The
goal of this paper was to merge finding from previous work developed by the
authors in areas like pharmaceutical recalls, retains and sustainable
practices, challenges that the industry is facing not only to be accounted as
responsible, but also to keep up with other industries.
The
change in paradigm is obliging companies to gain more knowledge of their
process better from the research and development phase (R&D), by designing
drug products, generics or branded, beyond compliance to regulations until the
end user, in this particular case the hospital patient. As well as adding more
value to their products. This could be observed from the exposed analysis.
With
the application of a Quality-by-Design (QbD) Risk Management approach it is
expected a substantial decrease in drug product recalls and pharmaceutical
returns. Leading to a reduction of wasted revenues in reverse logistic
operations and an improvement of more sustainable pharmaceutical supply chains
as well as the increase of value added to all parties involved.
From
this study a country comparison can be done with regards to the health system
in place in each of the selected countries of this study. Moreover, a
cause-effect, action-reaction type relationship (ARA methodology
Activities-Relations-Actions) can be applied which is the next step of our
research project, identifying the patters and action taking with some causal
understanding (to make meaning of the observed patterns).
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