Distributors play a decisive role to improve sustainability in the supply chain for pharmaceutical companies

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It is often cited that the pharmaceutical industry is more emissions intensive than the automotive industry (1) and that global healthcare contributes to around 10% of all global carbon dioxide emissions (2,3). These are startling headlines indeed and they highlight the work that still needs to be done to reduce overall emissions and the contribution from the sector.
The establishment of industry groups such as the Pharmaceutical Supply Chain Initiative (PSCI) in 2006(4) has served to co-ordinate and articulate the needs of the industry to its suppliers. The activate program of ‘manufacture2030’ specifically focuses on the decarbonization of pharmaceutical API manufacturing through collaborative development of product carbon footprints (PCF)(5) and ‘Together for Sustainability’ has launched the PCF guideline for chemical manufacturers and suppliers, facilitating the development of accurate Scope 3 PCFs which can be shared with pharmaceutical manufacturers through the chemical supply chain(6).
External stakeholders are driving improvements as well. Legislation such as the EU Sustainable Finance Disclosure Regulation (SFDR) serves to promote the flow of capital to those organisations that can demonstrate the lowest sustainability risks. Younger consumers are also taking active steps to become more sustainable and the different storage requirements of COVID-19 vaccines served to raise awareness of pharma companies’ own and related greenhouse gas emissions as well as the societal impact of unequal access to the vaccine among the wider public (7).

 

MEASURING AND CERTIFYING SUSTAINABILITY

Targets for sustainability must be science based and rankings and ratings need to provide assurances of independence and transparency. Different industries have industry groups and methodologies but in order to reduce the pharma industry’s contribution to emissions it is essential to benchmark ourselves by using pan-industry initiatives and ratings.
Science-based targets provide companies with a clearly defined path to reduce emissions in line with the Paris Agreement goals. More than 5,000 businesses around the world are already working with the Science Based Targets initiative (SBTi)(8).
Many pharmaceutical companies have publicly committed to ambitious reduction targets(9,10), and collaboration between value chain partners is critical to build capability, get an accurate baseline, and take meaningful actions. 60% of global emissions are generated by supply chains, yet less than 15% are reporting on carbon due to lack of resources or capability to get started (11).
The ‘EcoVadis’ rating, founded in 2007 covers a broad range of non-financial management systems including environmental, labour & human rights, ethics and sustainable procurement impacts.
The company has rated over 130,000 companies across more than 180 countries and 220 industries plus9. Those organisations rated platinum by EcoVadis can count themselves among the top 1% companies across all industries and regions, as assessed by independent sustainability experts.
‘ISCC PLUS’ is an independent certification that is applicable to bioeconomy and circular economy ingredients for food, feed, chemicals, plastics and packaging, among others. It provides the purchaser of an ingredient with certainty that the ingredient they are purchasing falls into one of the three categories: Bio Feedstock, Bio-circular/Circular and finally Renewable Energy Derived (12). Measuring and increasing the proportion of a finished product that comes from these sources provides tangible reductions in an organisation’s sustainability impact.

 

WHERE DO DISTRIBUTORS FIT IN?

Partnerships with responsible distributors who know the needs of pharmaceutical customers facilitates not just an efficient supply chain but a reduction in risk and ultimately the development of bespoke solutions to meet sustainability challenges. Commitment to the goals, measurements and certifications referred to above demonstrates alignment between distributors and their clients and ensures everyone in the supply chain is ‘talking the same language’ when it comes to sustainability.
The primary improvement that working with distributors delivers is efficiency in the supply-chain.
Providing multiple raw materials, excipients, process intermediates and even APIs from centralised sourcing through to local GDP warehouses, results in fewer deliveries and fewer miles travelled per kilo. This can also increase climate resilience as a distributor can manage risk by holding stock for multiple customers in multiple locations that can be quickly moved or reallocated in case of extreme weather events or in case of failure of control measures like refrigeration.
This broader network places stock much closer to the end user resulting in reduced downtime and improved plant efficiency. Emissions per unit of the finished drug product are reduced and plant capacity is maximised.
Another major benefit that a responsible global distributor can bring to a pharmaceutical customer is buying power, and with this buying power the alignment of sustainability goals up and down the supply chain can be maximised.
Even a large pharmaceutical manufacturer may purchase far less than 0.1% of the annual production of a basic chemical used as a cleaning agent, solvent, or early-stage synthesis raw material. The distributor will purchase far more to serve multiple industries, and in turn the pharmaceutical manufacturer will purchase several different products from the distributor making each more valuable to their upstream partners. Aligning with a distributor that shares the Environmental, social, and governance (ESG) goals and values of the pharmaceutical company increases the speed of response to requests for information like a PCF, increasing reporting accuracy and giving a platform from which to improve product sustainability.
Any distributor committed to serving the pharma industry should invest in developing industry specific regulatory support, acting as an extension of both their suppliers’ regulatory team and that of their customers’. Supply chain transparency as well as full and fast responses to questionnaires, audit requests, change control management, complaints investigation and action close out are all benefits that will reduce out of specification products, waste, and manufacturing downtime, improving sustainability performance.
This purchasing power also reduces the likelihood that meeting ESG targets will come at the cost of supply chain security. The potential exclusion of suppliers is seen as a significant risk by pharma companies (13), and access to the extensive supplier portfolio of a global distributor along with a collaborative relationship, transparency, and shared goals can lead to the increase of viable options, and could even improve, supply security by adding better alternatives.
The most Pharma focused distributors are evolving to meet the needs of pharma companies and Contract Development and Manufacturing Organizations (CDMOs) by offering outsourcing of simple manufacturing steps, essentially expanding the capacity of their customer base by removing the first unit operation from the factory.
This could involve repacking of products into single batch quantities or into easier to handle packaging reducing waste where part of a drum or bag would have previously been discarded, and mistakes of overfilling.
Two or more raw materials that would be mixed in a reactor as a first step in the batch can be supplied premixed by a distributor under GMP conditions, or buffer preparation can be provided as a service for biopharma customers.
These types of service also include batch selection and additional analytical testing to ensure incoming raw materials meet all specified parameters prior to receipt, again reducing the risk of out of specification (OOS) raw materials and production interruptions. This reduces both batch times and lead times for end customers. These steps can be carried out under Current Good Manufacturing Practice (cGMP) if required with full regulatory support.
Finally, an additional direct sustainability benefits that a large distributor serving multiple industries can offer to a pharmaceutical customer is a circular economy approach. Whilst any pharma company is highly unlikely to accept recycled packaging, a distributor can recover and clean used packaging for supply into other industries, prolonging the life of the packaging and reducing the cost and volume of disposed packaging for the pharmaceutical manufacturer. Circular economy projects also include the reuse and regeneration of solvent and other byproducts from manufacturing, again this can be used in other industries a benefit of the distributor’s large supplier and customer portfolio. This can significantly reduce the cradle to grave carbon emissions of a solvent product to the benefit of all parties in the supply chain. In addition, leading distributors offer certified calculation tools like ‘CO2Xplorer’ providing accurate cradle-to-gate carbon footprints, considering the entire upstream supply chain. It empowers pharmaceutical customers to make informed, sustainable choices in the chemicals and ingredients they use. Beyond product calculations, these tools support Scope 1 and 3 calculations, supply-chain optimization, and regulatory compliance (14).

 

CONCLUSIONS
Pharma companies have a part to play in this as well. Engagement cannot be through purchasing alone, sustainability, quality and operations teams must be open and prepared to engage with key distribution partners on the challenges they face and the targets they are working towards. They will find that by working with the right distributors, a problem shared is a problem halved.
The more distributors are invited to become an integral part of the value chain, the more synergies across sustainable raw materials, reuse and recycling options and other waste minimisation solutions can be developed. This can only drive further improvement across this essential industry sector.

 

REFERENCES AND NOTES

1. Belkhir L, Elmeligi A. Carbon Footprint of the Global Pharmaceutical Industry and Relative Impact of Its Major Players. Journal of Cleaner Production (Internet). 2019 Mar;214:185–94. Available from: https://www.sciencedirect.com/science/article/abs/pii/S0959652618336084
2. ‌Chung JW, Meltzer DO. Estimate of the Carbon Footprint of the US Health Care Sector. JAMA. 2009 Nov 11;302(18):1970.
3. Jayasree I.K World Economic Forum (Internet). Weforum.org 6 ways the pharmaceutical industry can reduce its climate impact Available from: https://www.weforum.org/agenda/2022/11/pharmaceutical-industry-reduce-climate-impact
4. About The PSCI – PSCI (Internet). pscinitiative.org. Available from: https://pscinitiative.org/about
5. Activate program – Manufacture 2030 (Internet). Manufacture2030.com. 2024 (cited 2024 Aug 28). Available from: https://www.manufacture2030.com/how-we-work/activate-program
6. Scope 3 GHG Emissions Programme (Internet). TFS Initiative. Available from: https://www.tfs-initiative.com/how-we-do-it/scope-3-ghg-emissions
7. Kleinman Z. How will we keep the Covid vaccine at a cold enough temperature? BBC News (Internet). 2020 Dec 8; Available from: https://www.bbc.co.uk/news/technology-54889084
8. Science Based Targets. How it works (Internet). Science Based Targets. 2024. Available from: https://sciencebasedtargets.org/how-it-works
9. AstraZeneca. Sustainability – Our Company – AstraZeneca (Internet). Astrazeneca.com. 2019. Available from: https://www.astrazeneca.com/sustainability.html
10. Climate Change Position Statement (Internet). Available from: https://cdn.pfizer.com/pfizercom/about/Climate_Change_Position_Statement_December_2022.pdf
11. Ecovadis. Business Sustainability Ratings (Internet). EcoVadis. 2023. Available from: https://ecovadis.com/
12. ISCC PLUS (Internet). (cited 2024 Aug 28). Available from: https://www.iscc-system.org/wp-content/uploads/2024/03/ISCC-PLUS_v3.4.2.pdf
13. Bade C, Olsacher A, Boehme P, Truebel H, Bürger L, Fehring L. Sustainability in the pharmaceutical industry—An assessment of sustainability maturity and effects of sustainability measure implementation on supply chain security. Corporate Social Responsibility and Environmental Management (Internet). 2023 Jul 11;31(1). Available from: https://onlinelibrary.wiley.com/doi/full/10.1002/csr.2564
14. Brenntag receives certification by TUEV Rheinland for product carbon footprint data calculation method | Brenntag (Internet). Brenntag.com. 2024 (cited 2024 Aug 28). Available from: https://corporate.brenntag.com/en/media/news/brenntag-receives-certification-by-tuev-rheinland-for-product-carbon-footprint-data-calculation-method.html