Pharmaceutical, biotechnology, and life sciences companies are facing increasing risks as well as market and regulator scrutiny. Supply chain delays, global events like COVID-19, reputational risks, and new initiatives like ESG place increased pressure on these organizations who, all the while, are balancing the need to deliver better quality of life. Adopting robust TPRM for pharmaceuticals that can help manage these risks is critical to staying afloat.
Both the public and regulators have increased pressure on pharmaceutical companies to demonstrate process, sourcing, distribution, and financial transparency across their operations and those they conduct business with. This demand for better practices and reporting extends across their supply chain and partner ecosystems, driving pharmaceutical companies to GRC and TPRM solutions that can manage tens of thousands of third parties, and enable detailed assessments, tracking, auditing, and reporting.
These capabilities are integral to ensuring pharma can focus on their mission and vision – solving complex healthcare challenges and delivering better quality of life to people around the world. An inconsistent, polluting, socially unbalanced, overly-concentrated, or otherwise broken supply chain is not acceptable and only detracts from this vision.
In a world of long product cycles, pharmaceutical and life sciences organizations need to bring products to market while efficiently navigating logistical, reputational, and compliance pressures. In order to focus on their own operations, organizations need to balance managing and mitigating third-party risks related to:
From component shortages to logistical delays to global disruptive events, supply chain interruptions are some of the biggest risks facing this industry. Any delay in these complex supply chain processes can not only disrupt an organization’s core operations but potentially lead to life-threatening situations where medicines or technologies may not be available to those who need them.
Concentration risk is direct or indirect exposure(s) that have the potential to lead to large losses that threaten an organization’s ability to perform its core business. This can be the result of dependence on a geographic area, single vendor or fourth party, or portfolio of investments. Organizations need to ensure that they are avoiding over-concentration to build resilience against unexpected threats and disruptions.
According to the Regulatory Affairs Professionals Society, changes in regulations are one of the top three disruptive trends facing pharmaceutical companies. Regulations are enacted, changed, and updated frequently, and this industry is expected to innovate and respond even faster than legislation demands.
In addition, other stakeholders like consumers and investors are paying more and more attention to safe and ethical business practices, as well as any reputational risks that arise. Pharma organizations need a consistent, controlled, transparent process documented through audit trials to meet the demands of global regulations and stakeholder demands.
Global operations, the overlap between healthcare or charity contacts and government officials, and strict regulatory guidelines like FCPA require pharma and life sciences organizations to be especially vigilant when it comes to bribery and corruption risk.
Taking social and environmental factors into sourcing and procurement outcomes is important to ensuring compliance, quality, and trust. ESG (Environmental, Social and Governance) forms a core component of this, and organizations must embed this into their programs. Key areas pharmaceutical and life sciences organizations are expected to engage in ESG initiatives include sustainable sourcing, reducing carbon emissions, and eliminating unethical, unsafe practices from their manufacturing operations and supply chains.
As pharmaceutical organizations engage in more third parties, the potential for third-party risks also grows. A greater reliance on outsourcing increases the risk of security breaches that threaten IP, operations, and other data assets. Breaches can lead to severe disruptions, regulatory fines, and loss of trust.
In addition, GDPR, HIPAA, and the ethical mandates to maintain confidentiality of patient data become more difficult as PHI and other personal data are shared across third-party outsourcers, such as clinical trial partners. Ensuring this data is secure is critical for organizations in this industry.
Pharma depends on critical partnerships with companies that:
Ensuring drug safety extends across the third-party ecosystem is critical. Certifying that clinical trial investigators are reporting accurately and ensuring that HCO and HCP partners avoid non-compliant communications, activities, and off-label usage is essential to ensuring quality, safety, and protecting the brand.
Vendor performance management is a risk management area that measures how vendors and suppliers are performing against contract SLAs, meeting objectives/KPIs, and other measurement tools. Pharma and biotech companies deal with a huge amount of third parties for critical operations, and any dip in vendor performance can cause delays or damage. Today, pharma risk teams must take a microscope to vendor performance, as including this in TPRM data will heighten security and reduce vulnerabilities posed by third parties.
There are several key areas third-party risk and compliance teams within pharmaceutical organizations can prioritize in order to boost their resilience and improve their TPRM programs.
There will always be unknown variables when it comes to engaging with third parties, and it is impossible to avoid every possible risk. Despite this, there are program improvements and efficiencies that can be made in order to reduce the likelihood of risks occurring, reduce the severity of a loss, and make improvements for the future.
There are a lot of eyes on the pharmaceutical and life sciences industries. In addition, this industry has had reputational ups and downs in the last few years. There is increasing scrutiny on organizations’ business practices, transparency, and reporting. Several areas to focus on include:
Pharma depends on critical partnerships with companies that validate pharmaceutical assertions, conduct clinical trials, provide independent validation to government agencies, and promote new drugs at hospitals and healthcare organizations.
Pharma and life sciences need TPRM solutions for third-party vetting, onboarding, due diligence, and continuous monitoring. These capabilities protect against bribery & corruption, conflicts of interest, and unethical and irresponsible practices across market-facing partnerships.
Aravo’s cloud-based solution is designed to help pharmaceutical and life sciences firms manage third-party relationships in accordance with increased and expansive regulatory expectations. Our products are designed to help pharmaceutical companies modernize and mature their third-party risk programs that extend across their supplier networks, and demonstrate a commitment to ethical, compliant, and defensible supply chains.
Aravo’s comprehensive third-party risk management platform helps pharmaceutical companies effectively manage their tens of thousands of third parties in a scalable, automated way. Enhanced risk mitigation workflows, performance management, and risk intelligence functionality give assurance that risks are managed proactively.
In addition to our core TPRM capabilities, Aravo also offers applications tailored to the needs of these industries, including Supply Chain Resilience, ABAC, ESG, and more.
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