The Top 5 Risks Facing Pharmaceutical Companies

What are the biggest risks and security threats to pharmaceutical companies and how can security teams help prevent them?

January 2, 2024 · READ

With the global pharmaceutical market expected to reach over $258.6 billion by 2027, pharma and biotech industries face escalating threats worldwide. For security professionals, this means planning for a wide range of potential scenarios and developing and executing plans that align with identified pharmaceutical industry security risks for each critical facility across their organization’s enormous footprint.

A single pharmaceutical company often operates globally, with various facilities like corporate headquarters, manufacturing plants, and warehouses, plus research and distribution centers across continents, each presenting unique threats. Thus, a tailored approach to protecting company assets and IP, combining proactive and reactive strategies, is essential. 

In this post, we’ll explore the critical challenges to global pharma security and safety and advances in safeguarding your pharmaceutical operations and facilities with innovative solutions to protect your brand, profits, and public health.

1. Counterfeit pharmaceuticals

The pharmaceutical industry’s exponential growth has inadvertently given rise to the production and distribution of counterfeit drugs — creating, perhaps, the biggest risk to drug safety. Counterfeit pharmaceuticals can contain incorrect ingredients, incorrect dosages, or even harmful substances, creating serious challenges for healthcare professionals and patients. [Source: Public Safety Canada] The impacts are far-reaching, from financial and reputational blows to larger ethical and public health tragedies.

Counterfeit drugs: The staggering financial impact

Recent high-profile cases, such as the $230 million counterfeit scheme involving life-saving HIV medications, underscore the alarming scope and sophistication of these criminal enterprises. This real-life example illustrates the pressing need for robust pharma supply chain security and anti-counterfeit measures.

Pharmaceutical Outsourcing states that “Counterfeiting is viewed as a serious public health menace promoted by criminals with little regard for the health and safety of patients, which requires a combined public-private sector response.” The counterfeit medicine market is more lucrative than the narcotics business, with the World Health Organization estimating that it costs the global pharma industry $431 billion USD a year.

Pharmaceutical companies invest substantial resources in anti-counterfeit measures, including research, development, and deployment of technologies to detect and prevent counterfeit drugs. These investments translate into significant financial burdens, diverting funds that could otherwise be channeled into life-saving research and development efforts. In addition to lost revenue, counterfeiting imposes other costs, including increased costs to secure the supply chain, investments in anti-counterfeiting technologies, potential reputational damage, and risk of liability.

Ethical and public health impacts of pharma fraud

Pharmaceutical risks raise critical questions about patient safety, corporate responsibility, and the well-being of society. Patients, often unknowingly, face significant risks when they receive ineffective or harmful substitutes for their essential medications. Counterfeit drugs can lead to treatment failures, worsening of conditions, or even life-threatening consequences. The public health impact extends beyond individual patients, as ineffective treatments can contribute to broader issues like antibiotic resistance.

Counterfeit pharmaceuticals raise significant ethical concerns, particularly as they often target vulnerable populations. In 2023, children in Cameroon tragically lost their lives after consuming contaminated cough syrup. In addition, the United Nations reports, “Fake or substandard antimalarial medicines kill as many as 267,000 sub-Saharan Africans every year. Nearly 170,000 sub-Saharan African children die every year from unauthorized antibiotics used to treat severe pneumonia.” These incidents emphasize the need for stringent quality control and regulatory oversight to safeguard public health and the supply chain.

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2. Drug supply chain disruptions

After prescription drugs leave manufacturing facilities, they go through a number of wholesale and retail drug distributors before ultimately reaching the local pharmacy or hospital. Although the shipping and handling of the drugs takes place under secure, controlled, and oftentimes regulated conditions, every step along the pharmaceutical supply chain presents an opportunity for tampering or diversion by criminals.

The COVID-19 pandemic further exacerbated these vulnerabilities. As the global demand for certain medications surged, supply chains were disrupted due to lockdowns, trade restrictions, and various other factors. This created an opportunity for counterfeiters to fill the gaps with fake or substandard products. The urgency and desperation for COVID-19-related treatments and vaccines have opened up new avenues for criminal activities, making the pharmaceutical supply chain more susceptible than ever to infiltration by counterfeit drugs.

3.  Insider threats: Theft of assets and IP

The pharmaceutical, biotechnology, and drug industries face significant risks from insider threats, with over 75% of security breaches attributed to insiders, of which more than 80% result from human error rather than malicious intent. 

Insider threat incidents pose a substantial public health risk by limiting patients’ access to vital medications. The costs associated with addressing these issues, both in terms of finances and public relations, are exceedingly high. Executives and staff must prioritize addressing these dangers continually, as compliance requirements and evolving IT landscapes demand increased vigilance. To mitigate these risks, companies implement stringent access control measures, ensuring that only authorized individuals can access sensitive data and locations.

4. Regulatory and legal risks

The pharmaceutical industry operates in a highly regulated environment, with numerous regulatory bodies worldwide. Compliance with evolving regulations is crucial to maintaining a pharmaceutical company’s reputation and avoiding legal consequences. Violations of regulations can result in substantial fines, prosecution, and even imprisonment of individuals.

Pharmaceutical companies must continuously monitor and adapt to changes in regulatory requirements. The U.S. Drug Supply Chain Security Act, for example, requires pharmaceutical firms to add serial numbers to all packages, which should aid in tracking drugs through the supply chain. Some manufacturers have gone to great lengths to protect the pharmaceutical supply chain by introducing innovative security measures where they tag individual bottles of medication with small electromagnetic chips known as radio frequency identification (RFID) tags, which enable pharmaceutical manufacturers and wholesale distributors to more closely track products as they move throughout the distribution chain.

Regulatory bodies worldwide continue to update their guidelines to tackle the rising threats. For instance, the European Union’s Falsified Medicines Directive (FMD) implements safety features for packaging and a shared European database to verify drug authenticity. Keeping abreast of these changes and leveraging technology will be crucial for companies looking to safeguard their products and reputation. Security teams need a comprehensive tool that addresses security, brand protection, and regulatory compliance to help meet these new obligations.

5. Brand reputation

To ensure a secure pharmaceutical supply chain and to reduce counterfeit drugs, organizations must have an integrated brand protection strategy that incorporates all stakeholders. According to a study conducted by Pharma IQ, only 53% of respondents in the pharmaceutical industry state that their organization has a brand protection strategy in place.

Moreover, the pharmaceutical industry faces reputational risks when counterfeit drugs tarnish its image. Patients place their trust in pharmaceutical companies, believing that the medications they produce are safe and effective. When counterfeit drugs surface, public trust erodes, leading to reputational damage that can be challenging to repair. 

Innovations in technology, international cooperation, and public awareness are key to staying ahead in this relentless battle. Many companies are doing what they can to try and mitigate this risk. Among the leaders in the fight against counterfeit drugs is Gilead Sciences. Demonstrating a strong commitment to brand protection and patient safety, Gilead has taken significant legal action, filing lawsuits against parties involved in counterfeiting their medications. Their proactive stance and dedication to ensuring the integrity of their products set a commendable example for the industry. By joining organizations like the International Anti-Counterfeiting Coalition Inc. (IACC), a non-profit organization devoted to combating product counterfeiting and piracy, they are aiming to protect themselves against counterfeit incidents.

How leveraging corporate security software protects pharma orgs

As the risks to the pharma industry continue to grow, the need for advanced security measures has never been more critical. Security professionals need to look beyond traditional methods of securing the organization. They need full insight into all locations, both physical and online, that may be at high risk of incidents occurring. Security professionals in the pharmaceutical industry can’t rely on slow, out-of-date, inefficient tools when they are protecting something as critical as people’s health and safety.  

For a security team to be successful, they need to be able to actively monitor, report, and analyze data across multiple locations, time zones, and political climates in order to be both proactive and reactive to potential threats. To do so, they need a tool that gives them the ability to easily report incidents and review the data in a centralized location to make data-driven decisions on the next steps.

Shot pharma data insights

Obtaining a budget for this type of tool can be challenging. Security teams are asked to build the business case to prove the cost of what they are trying to protect and the ROI of investing in software to help do that. But while you’re busy protecting the organization, you don’t have time to research the true cost of a security failure, and in many cases, the real costs are not known or considered. A lack of understanding of security’s return on investment leads to a view that security is simply a cost with a limited positive contribution to the company’s net results.

Corporate security teams across industries have the same struggle. How do you prove the value of what your team is doing when, if you’re doing your job right, the rest of the organization doesn’t know that you’re doing your job?    

When a single incident can cause irreversible damage, it’s not enough to be reactive. Resolver helps reputable pharmaceutical companies like yours get clear insight into what’s happening organization-wide so you can be proactive in protecting your people, your brand, and the bottom line. Book your custom demo now and have our knowledgeable team walk you through Resolver’s flexible capabilities for meeting pharmaceutical and biotech industry needs for incident management, insider threat protection, regulatory compliance, and more.

This article was originally published on June 25, 2019, and was updated to ensure the latest information, statistics, and news were included.

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