The Australian pharmaceutical industry has certainly had its challenges in the past year. The ongoing effects of the global pandemic have continued to put pressure on the industry, while rising inflation, geopolitical instability and a shift in workforce behaviours have added to the already burdened sector.
Amid this growing list of challenges, pharmaceutical companies are looking for ways to build business resilience so they can continue to develop lifesaving solutions for patients both locally and around the world.
As we kickstart 2023, let’s take a look at the biggest challenges in the Australian pharmaceutical industry.
Challenge 1 — The skills shortage
The worldwide skills shortage is hitting businesses hard, with 31% of organisations in Australia struggling to find suitably skilled staff in 2022. In the pharmaceutical industry, there has been a surge in demand for STEM-related roles, but reports show the current talent pool is 14% less than demand.
Adding to this challenge is the shift in the way we work. The rise of remote working has caused a spike in employee expectations, with more people opting for organisations that offer flexible working arrangements, hybrid set-ups and remote opportunities.
Organisations are increasingly looking for ways to attract and retain skilled talent and are focusing on reskilling, upskilling and automation to solve one of the biggest challenges facing the pharmaceutical industry today.
Challenge 2 — Clinical trials playing catch up
For pharmaceutical companies running clinical trials for anything other than COVID-19 vaccines, the pandemic caused huge interruptions. And although the primary effects of the pandemic are receding, we’re still feeling the impact as we move into 2023.
Because new drug approvals depend on successful trials, this has meant the loss of a staggering amount of research, drug development and funding. As a result, both the industry and those who fund it have suffered financially, and many are still playing catch-up in their trial programs.
Companies in the pharmaceutical industry are now looking to technologies such as AI and virtual platforms to either restart or recreate trials with less face-to-face interaction. However, this new technology comes at a cost — significantly lowering or even erasing profit margins.
Challenge 3 — Supply chain disruptions
Although the pharmaceutical industry has historically been protected from supply chain disruptions because of high inventory levels, there have been widespread supply chain pressures across almost every sector, particularly over the past year.
ABS data from June 2022 shows that more than two in five businesses (41%) have faced supply chain disruptions, and the Australian pharmaceutical industry was no exception.
There continues to be a strong reliance on raw materials from abroad, with pharmaceutical companies relying heavily on imports from China while also looking to India for generic drug production.
According to the US Food and Drug Administration’s Center for Drug Evaluation and Research, China and India combined account for 31% of FDA-registered facilities around the globe. This heavily dependent supply chain continues to be one of the major challenges facing the pharmaceutical industry, with the drug shortages that peaked during the pandemic being more than likely to continue into 2023.
Many pharma companies are looking to supply chain innovations and circular supply chain models to tackle these challenges and build business resilience. Examples include establishing robust supply chain relationships and networks to better take advantage of market demand and moving to dual or multi-sourcing models backed by intelligent supply chain technology.
Challenge 4 — Cultural focus on prevention, rather than treatment
For humans in general, the cultural shift towards preventing rather than curing many diseases is great news. However, for the pharmaceutical industry, it means a serious drop in funding — both government and otherwise.
As new developments in ‘lifestyle cures’ such as elimination diets, improved sleeping conditions and increasing physical activity become commonplace, consumers are moving away from medication as the primary treatment for disease. With this trend comes lower medication turnover and more roadblocks to securing desperately needed funding.
Challenge 5 — Developing new cures for presently incurable diseases
Identifying cures for presently incurable diseases, such as cancer, Alzheimer’s and epilepsy, is a challenge that the pharmaceutical industry has always faced. Quick solutions are rare, and research and development is a long game.
Here in Australia, the Albanese Government is boosting stem cell research by offering $25 million in grants. This is part of a $150 million commitment over nine years, showing just how big a drive is needed in this area.
But developing new and innovative treatments requires continual and substantial investment. Without it, the goal of discovering cures that work well enough to earn strict regulatory approvals will be difficult to achieve.
Power your business growth with Octet
Although these challenges vary significantly in their origins, the solution to them is often to strengthen business cash flow. Exploring healthcare finance solutions could make a difference in addressing and overcoming all of these hurdles. Access to strong, diverse and reliable sources of cash flow can be a make or break for pharmaceutical companies.
Octet has a range of solutions to help your pharmaceutical business meet the current challenges and grow in 2023 and beyond. That way you can remain focused on serving your customers, not worrying about cash flow. These solutions include:
- Our Trade Finance facility, a flexible line of credit that you can use to pay your suppliers earlier at home and around the world, with up to 60 days interest free and 120-day repayment terms
- Debtor Finance, which allows you to convert up to 85% of your unpaid invoices into funding within 24 hours
- Supply Chain Accelerate, an unsecured, off balance sheet source of funding, which settles 100% of your supplier invoices upfront, while you can repay 30, 60 or 90 days later
Our team of working capital specialists has helped business owners around the country overcome financial challenges, explore new avenues for success and achieve sustainable business growth. Talk to us today about which finance solution is right for your fast-growing pharmaceutical company.
Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as at the date of publication and are subject to change without notice.