Merck and the machine: German pharma tests real-time platform to forestall drug shortages

With hundreds of drug shortages hitting the pharmaceutical industry each quarter, drugmakers are looking for novel ways to accurately forecast demand and control costs at the same time. For Merck KGaA, that search led to an experiment in machine learning.

The German pharma plans to launch a pilot project with TraceLink, using real-time data points in the company’s supply chain to more accurately predict future demand for its drugs.

Merck told the Wall Street Journal its current forecasts for global demand are about 85% accurate. Those predictions matter because drugmakers are forced to stockpile inventory that may expire or run out depending on rapid shifts in the supply chain, sometimes causing a big hit to the company’s financials.

TraceLink is developing the pilot platform specifically for Merck KGaA’s immuno-oncology business, Alessandro DeLuca, chief information officer for Merck’s health-care division, told the Journal.

“The value is going to be that every single patient will receive the drug that he or she needs at the right moment,” DeLuca said.

Drug shortages are no laughing matter for pharma: So far in the third quarter, there have been 212 FDA-reported drug shortages, according to the American Society of Health System Pharmacists. That figure is roughly in line with 150 to 300 U.S. shortages reported each quarter between 2014 and 2019, the Journal said.

On average, pharmas carry 156 days of inventory on average, with retailers typically holding around 78 days of inventory, the Journal said.

Merck KGaA hopes that the pilot platform will not only help it save in established supply chains like the U.S. but also allow it to expand into regions with less-reliable distribution, such as Africa and Southeast Asia.

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A platform that significantly improves supply chain forecasts could be a game-changer in an industry regularly plagued by shortages. Sometimes those shortages are tied to forecasting, but other issues are sometimes in play.

For example, on Monday, AstraZeneca said manufacturing problems would hinder U.S. supply of the drugmaker’s inhaled flu vaccine FluMist. The company said it would only ship three lots of the vaccine—or around 758,000 doses—to the U.S. in anticipation of the coming flu season. That’s about one-third the amount available during the last flu season and a small fraction of what AZ has shipped in years past.

RELATED: FDA temporarily retreats from impurity standards as losartan shortages loom

Meanwhile, “sartan”-based blood pressure drugs are still running short, after possible carcinogens in Indian and Chinese active ingredients triggered recalls last year. The FDA has allowed limited amounts of the drugs, including valsartan and losartan, on the market specifically to address the continued shortages.

Other shortages are simply outside a drugmaker’s control. Back in September, Germany’s Fresenius Kabi said it was limiting allocations of the blood thinner heparin, derived from pig intestines, after a swine fever outbreak in China. Earlier this summer, reports pegged China’s loss of pigs due to swine fever at 150 million of an estimated 440 million swine nationwide.