Net Zero, Cost Control, and Supply Chain Resilience – Can Pharma Achieve It All?
Pharma companies are now facing a rising, triple-pronged challenge to improve operational performance, achieve sustainability goals, and reduce costs. These interconnected issues demand a re-evaluation of traditional strategies and frameworks.
First, although many pharma companies have set their sights on net zero, the carbon footprint of the industry continues to rise year on year.
This is largely driven by Scope 3 emissions (indirect contributions across the supply chain) which are significantly higher than both Scope 1 and Scope 2 emissions combined. Reducing these emissions requires a fundamental rethink of supply chain strategies, as current approaches struggle to reconcile operational needs with sustainability goals. Without significant changes, the industry's environmental impact will remain a pressing concern.
Second, the industry is grappling with escalating costs driven by a combination of high inflation, global crises, geopolitical uncertainties, and persistently high manufacturing expenses.
As a result, cost optimization has become a cornerstone of many pharmaceutical companies’ strategic plans. However, these efforts often fall short when attempting to balance cost-efficiency with their sustainability targets.
Third, with growing disruptions in supply chains and rising temperature extremes, delivering pharmaceutical products safely and efficiently to patients has become even more challenging.
Ensuring the integrity and timely delivery of sensitive pharmaceutical products demands highly resilient supply chains that can adapt to unpredictable global events, regulatory pressures, and mounting risks.
The Path to Integrated Solutions: Reducing Cost, Risk, and CO₂
Despite having extensive experience in managing the cost and risk of shipments, factoring in sustainability can create new issues for many pharmaceutical companies.
For example, carbon credit schemes—once seen as a straightforward way to offset emissions—are becoming increasingly costly.
At the same time, cost-saving measures such as single-use packaging, while practical in reducing expenses, lead to increased carbon footprints and risks. Route adjustments based on high temperatures can help protect medicine, but the increased airfreight can lead to higher costs and emissions.
These conflicting priorities highlight the urgent need for a more holistic approach to address the industry's evolving demands. Traditional frameworks like the Total Cost of Ownership (TCO), which typically accounts only for cost and risk, must be re-examined.
By considering emissions as part of the decision-making process, pharma companies can take steps to balance these three elements. Then armed with the right information and solutions, pharma companies can actually reduce costs, mitigate risks, and minimize environmental impact together across their supply chain operations.
This evolution in the TCO formula not only supports sustainability goals but also enhances supply chain resilience—a critical factor in today’s volatile environment.
The Path Forward
As the findings of this report will show, pharma companies are now recognizing the importance of tackling rising costs, risks, and CO2. Integrating CO2e into TCO calculations represents not just a shift in methodology, but a broader alignment with the industry's goals of sustainability, resilience, and efficiency.
The report also delves into how pharmaceutical companies are navigating these challenges, from embedding sustainability into logistics planning to leveraging digital transformation and risk management to build resilient supply chains.
By exploring the latest trends, strategies, and technologies, it provides a comprehensive view of how pharmaceutical companies are aligning cost, risk, and environmental considerations in today’s complex supply chain landscape.
