The statistic is stark. Nearly 30% of Canadian businesses that deal with pharmaceuticals report struggling to maintain inventory or acquire supplies. That number comes from Statistics Canada data, and it reflects a problem that has been building for years. The pandemic made it worse, but the issues were there long before COVID-19.
If you work in pharmaceuticals in Canada, you probably already know this. You’ve seen the delays, the backorders, the last-minute scrambling to find alternatives. You’ve dealt with vendor issues, regulatory complications, and the constant pressure to keep medications moving through the system.
This blog looks at why so many Canadian pharmaceutical companies face supply chain problems, what makes the Canadian situation different, and what can actually be done about it. Not theoretical solutions, but practical steps that companies are taking right now.
The 30% Number and What It Really Means
When Statistics Canada reported that nearly 30% of Canadian businesses struggle with supply chain issues, that included wholesale trade businesses, many of which handle pharmaceuticals. The number reflects companies that reported maintaining higher inventory levels than before the pandemic, facing difficulty acquiring supplies, or expecting these challenges to continue.
That’s not a small segment. It’s nearly one in three companies. And for pharmaceutical companies specifically, the stakes are higher than in most industries. A delayed shipment of electronics is inconvenient. A delayed shipment of critical medications can be life threatening.
The same data showed that around 29.9% of wholesale trade businesses were keeping more inventory on hand than they did pre-pandemic. On the surface, that might sound like a good thing. More inventory means more buffer against disruptions. But it also means higher costs, more capital tied up, more storage space needed, and more risk of expiration for time-sensitive products.
These companies aren’t holding extra inventory because they want to. They’re doing it because they’ve learned they can’t rely on just-in-time delivery anymore. The supply chain has become less predictable, so they’re building in cushions wherever they can.
Why Canadian Pharmaceutical Supply Chains Are Under Pressure
The Canadian pharmaceutical supply chain faces pressures that come from multiple directions. Some are unique to Canada. Others are global issues that hit Canada particularly hard.
First, there’s the import dependency. Canada produces only about 16% of the pharmaceuticals it consumes domestically. The rest come from other countries, primarily the United States, Europe, India, and China. That’s a high level of reliance on international supply chains, and it creates vulnerability.
When a manufacturer in India has a production problem, Canadian companies feel it. When shipping routes get disrupted, Canadian orders can be deprioritized because the market is relatively small. When trade policies shift, Canadian companies have to adapt quickly.
Second, there’s the complexity of regulation. Health Canada oversees drug approvals and manufacturing standards. The agency requires detailed documentation, quality checks, and compliance with Good Manufacturing Practices. These standards exist for good reasons, but they add time and complexity to the supply chain.
If a pharmaceutical company wants to switch suppliers for an active ingredient, that change needs regulatory review. If there’s a quality issue with a batch, the entire lot might be held while Health Canada investigates. These processes are necessary for safety, but they can create bottlenecks when speed is needed.
Third, there’s the structure of the Canadian market itself. Canada is geographically huge but has a relatively small population. Delivering medications to remote communities in northern Ontario or rural British Columbia is logistically challenging and expensive. Pharmaceutical companies have to balance the need to serve all Canadians with the economic reality of operating in a dispersed market.
Fourth, there’s competition for supply. When a global shortage happens, manufacturers allocate their limited inventory across markets. The United States, with its much larger population and higher prices, often gets priority. European markets with strong purchasing power also compete for the same supplies. Canadian companies sometimes find themselves at the back of the line.
According to research from the Canadian Generic Pharmaceutical Association, Canada experiences a high rate of drug shortages compared to other developed countries. The reasons vary, but supply chain fragility is a consistent factor.
The Role of Single-Source Dependencies
One specific problem that affects many Canadian pharmaceutical companies is single-source dependency. This happens when only one manufacturer makes a particular drug, or when a company relies on only one supplier for a critical ingredient.
In theory, having multiple suppliers should be standard practice. In reality, it’s often not feasible. Manufacturing pharmaceuticals requires specialized facilities, regulatory approvals, and significant investment. Many drugs, especially generics, have thin profit margins. If only one manufacturer finds it economically viable to produce a particular drug, that’s all the market gets.
When that single manufacturer has a problem, whether it’s a quality issue, a facility shutdown, or a business decision to stop production, there’s no immediate backup. The drug goes on shortage. Healthcare providers scramble for alternatives. Patients may have to switch medications or go without.
Canada has seen this happen with essential medications. Injectable anesthetics, certain antibiotics, and chemotherapy drugs have all experienced shortages due to single-source problems. The Health Canada drug shortage database lists hundreds of medications in shortage at any given time, many due to manufacturing or supply issues.
For pharmaceutical companies, this creates a difficult situation. They can’t control what manufacturers decide to produce. They can try to maintain relationships with multiple suppliers, but if those suppliers all source from the same API manufacturer, the diversity is an illusion.
What Went Wrong During COVID-19
The pandemic exposed weaknesses that were already present. Suddenly, borders closed. Flights were grounded. Export restrictions went into place. Manufacturing facilities shut down due to outbreaks among workers. Demand for certain medications spiked unexpectedly.
Canadian pharmaceutical companies that had been operating on thin inventory margins found themselves unable to restock. Shipments that normally took days took weeks or months. Products that were usually readily available became scarce.
Personal protective equipment was the most visible shortage, but medications were affected too. There were shortages of sedatives needed for ventilator patients, antibiotics for secondary infections, and even basic medications for chronic conditions as people stockpiled supplies.
The problem wasn’t just about quantity. It was about unpredictability. Companies couldn’t forecast demand accurately because the situation changed so rapidly. They couldn’t rely on their usual supply sources because those sources were dealing with their own disruptions.
Canada’s reliance on international supply became a serious concern. According to a 2021 report from Norton Rose Fulbright, the pandemic highlighted how dependent Canada is on foreign manufacturing for essential drugs. The report noted that increasing domestic production would require significant investment and policy changes.
That dependency hasn’t gone away. The pandemic receded, but the underlying structure of the supply chain remains the same.
Why Inventory Management Is So Difficult
Managing pharmaceutical inventory is harder than it looks. Medications have expiration dates. They require specific storage conditions. They’re subject to strict regulatory tracking. And demand can be unpredictable.
A company that orders too much risks having inventory expire before it can be used. The cost isn’t just the purchase price. It’s the disposal cost, the lost opportunity cost, and potentially regulatory complications if expired medications aren’t handled properly.
A company that orders too little risks stockouts. In pharmaceuticals, that’s not just a customer service issue. It’s a healthcare issue. Patients depend on consistent access to their medications.
Traditional inventory management assumes relatively stable demand and reliable supply. The Canadian pharmaceutical supply chain doesn’t offer either. Demand fluctuates based on seasonal factors, disease outbreaks, changes in prescribing patterns, and shifts in patient populations. Supply fluctuates based on manufacturing schedules, regulatory approvals, shipping logistics, and global allocation decisions.
Many pharmaceutical companies still use manual processes or legacy systems for inventory management. Spreadsheets, phone calls, and email chains are common. These methods worked when supply chains were more stable, but they’re not designed for the level of volatility that exists now.
According to data highlighted in Medoptix’s analysis of Canadian pharmaceutical supply chain challenges, nearly 30% of wholesale businesses struggle with inventory levels that are higher than optimal, which ties up capital and increases risk.
The Vendor Selection Challenge
Choosing suppliers is another area where pharmaceutical companies face difficulties. The decision isn’t just about price. It’s about reliability, quality, regulatory compliance, lead times, and capacity to scale.
A vendor that offers the lowest price might not be the best choice if they have a history of quality issues or inconsistent delivery. A vendor with excellent quality might not have the capacity to meet demand during peak periods. A vendor that’s reliable domestically might struggle with international shipments.
Pharmaceutical companies need to evaluate vendors across multiple dimensions, but they often don’t have the data or tools to do so effectively. Vendor performance tracking is often informal. Companies rely on institutional knowledge, personal relationships, and reactive problem-solving rather than proactive data analysis.
This becomes particularly challenging when companies need to onboard new vendors quickly, which happens when existing suppliers can’t meet demand or when diversification becomes necessary. The due diligence process for pharmaceutical suppliers is rigorous, as it should be, but it takes time. A company can’t just switch suppliers overnight.
The regulatory aspect adds another layer. Any supplier of APIs or finished drugs needs to be approved by Health Canada. Foreign manufacturing sites need to be inspected. Documentation needs to be reviewed. This process can take months, which makes it hard to respond quickly to supply disruptions.
Regulatory Compliance and the Supply Chain
Health Canada’s regulatory requirements affect every stage of the pharmaceutical supply chain. Drug approvals, manufacturing standards, labeling requirements, reporting obligations, and quality controls all have supply chain implications.
For example, if a pharmaceutical company wants to source an ingredient from a new supplier, that requires filing a supplement to the drug’s approval. Health Canada reviews the change to ensure it doesn’t affect safety or efficacy. This review takes time, during which the company is stuck with its existing supplier.
If there’s a quality issue with a batch, Health Canada might issue a hold or require additional testing. The company can’t release the product until the issue is resolved. If the problem is serious enough, an entire production run might be destroyed.
These regulatory processes exist for good reasons. They protect patients. They ensure drug quality. They maintain confidence in the pharmaceutical system. But they also reduce flexibility in the supply chain.
During COVID-19, Health Canada implemented some temporary measures to speed up approvals and facilitate emergency imports. These helped, but they were exceptions. Under normal circumstances, the regulatory timeline is what it is.
Some industry observers argue that Canada’s regulatory processes could be streamlined without compromising safety. Others argue that the current system is necessary and that companies simply need to plan better around regulatory timelines. Either way, it’s a factor that affects how the supply chain operates.
What Happens When Things Go Wrong
When a pharmaceutical supply chain breaks down, the effects are immediate. Pharmacies can’t fill prescriptions. Hospitals run low on essential medications. Doctors have to prescribe alternatives that might not work as well.
The response usually follows a pattern. First, the company tries to find alternative sources. They contact other vendors, check with distributors, and reach out through industry networks. If that doesn’t work, they notify Health Canada and healthcare providers that a shortage is imminent or underway.
Pharmacists and doctors then start managing the shortage. They might ration the medication, prioritizing patients with the greatest need. They might substitute a different medication. They might contact other pharmacies to see if anyone has stock they can share.
In some cases, Health Canada approves emergency imports of medications that aren’t normally sold in Canada. This happened frequently during the pandemic and continues to happen for critical shortages.
But all of these responses are reactive. They happen after the problem has already occurred. The goal should be to prevent the problem in the first place, or at least to see it coming early enough to mitigate the impact.
What Some Companies Are Doing Differently
Some Canadian pharmaceutical companies have started taking a more proactive approach to supply chain management. Instead of reacting to problems after they occur, they’re investing in systems and processes that help them anticipate and prevent disruptions.
One approach is better data analytics. Companies are implementing systems that track inventory levels in real time, monitor supplier performance, and forecast demand more accurately. This gives them visibility into potential problems before they become crises.
Another approach is supply chain diversification. Instead of relying on a single supplier for critical components, companies are establishing relationships with multiple vendors in different regions. This reduces the risk that a problem with one supplier will cause a complete disruption.
Some companies are also investing in closer vendor relationships. Instead of treating suppliers as interchangeable commodities, they’re building partnerships that include information sharing, joint planning, and collaborative problem-solving.
Technology is playing a bigger role. Platforms like Medoptix’s AI-powered supply chain solution help pharmaceutical companies forecast demand, optimize vendor selection, and monitor regulatory compliance. These tools don’t eliminate supply chain challenges, but they make them more manageable.
The key insight from companies that are handling supply chain challenges better is that prevention is more effective than reaction. Investing in better systems and processes upfront costs money and requires organizational change, but it’s less expensive and disruptive than constantly dealing with shortages and expedited shipments.
The Case for Domestic Manufacturing
One solution that gets discussed frequently is increasing domestic pharmaceutical manufacturing in Canada. If Canada produced more of its own medications, the argument goes, it would be less vulnerable to international supply disruptions.
There’s logic to this, but it’s not as simple as it sounds. Building pharmaceutical manufacturing capacity is expensive. A facility that meets Good Manufacturing Practice standards requires significant capital investment. It takes years to build and certify. And it needs a skilled workforce that Canada doesn’t necessarily have in sufficient numbers.
There’s also the question of economic viability. Canada’s market is small. A manufacturer that produces only for Canadian demand might not achieve the economies of scale needed to be competitive. To justify the investment, Canadian manufacturers would need to export to larger markets, which brings its own complications.
The federal government has recognized this challenge and has started investing in domestic biomanufacturing. Funding has been announced for facilities that can produce vaccines and biologics in Canada. But these are long-term projects, and they focus on specific types of products, not the full range of pharmaceuticals.
Some provincial governments are also offering incentives for pharmaceutical manufacturing. Quebec and Ontario have both implemented programs to support the sector. But again, these are long-term plays that won’t solve immediate supply chain problems.
Domestic manufacturing will be part of the solution, but it can’t be the entire solution. Canada will continue to rely on imports for the foreseeable future, which means the supply chain issues aren’t going away.
Practical Steps Companies Can Take Now
So what can pharmaceutical companies actually do? Not five years from now, but in the next six to twelve months?
First, they can improve their data. Many supply chain problems stem from lack of visibility. Companies don’t know what inventory they have, where it is, or when more is coming. They don’t have good data on supplier reliability or demand patterns. Investing in better inventory tracking and forecasting systems pays off relatively quickly.
Second, they can diversify suppliers. This doesn’t mean switching suppliers entirely, but it does mean establishing backup relationships before they’re needed. When a company has a crisis and needs an alternative supplier immediately, it’s too late. The due diligence and regulatory approvals take too long. Companies need to build these relationships proactively.
Third, they can improve communication with suppliers. Many supply chain problems are caused or worsened by poor information flow. If a supplier is having difficulties, the earlier a pharmaceutical company knows about it, the more time they have to respond. Regular communication, joint planning, and transparency make a difference.
Fourth, they can stress-test their supply chains. What happens if a primary supplier has a problem? What happens if there’s a shipping delay? What happens if demand suddenly spikes? Companies that have thought through these scenarios and developed contingency plans handle disruptions better than companies that haven’t.
Fifth, they can participate in industry initiatives. Organizations like the Canadian Generic Pharmaceutical Association and various provincial pharmacy associations are working on supply chain issues. Companies that engage with these efforts, share information, and collaborate on solutions benefit from collective knowledge and resources.
None of these steps are revolutionary. They’re straightforward, practical measures that many companies in other industries already take. But in pharmaceuticals, where margins are often thin and regulatory requirements are strict, these basics sometimes get overlooked.
The Role of Technology
Technology can’t solve every supply chain problem, but it can make a significant difference. The question is what kind of technology and how it’s implemented.
Some companies are investing in enterprise resource planning systems that integrate inventory management, purchasing, sales, and financial data. These systems provide a single source of truth and eliminate the data silos that cause many supply chain problems.
Others are using more specialized supply chain management software that focuses specifically on logistics, vendor management, and demand forecasting. These tools offer deeper functionality in their specific domains but require integration with other systems.
Cloud-based platforms are becoming more common because they’re easier to implement and scale than on-premise systems. They also facilitate collaboration with suppliers and partners who can access shared data and planning tools.
Advanced analytics and machine learning are starting to appear in pharmaceutical supply chain management, though adoption is still limited. These technologies can identify patterns that humans might miss and generate more accurate forecasts. Platforms like Medoptix use AI to optimize pharmaceutical inventory management, helping companies reduce overstock while avoiding shortages.
But technology is only useful if people use it properly. Implementation matters as much as the technology itself. Companies need to train staff, establish processes, and commit to using the systems consistently. A sophisticated platform that sits unused because no one understands it or has time to maintain it doesn’t solve anything.
What Government Can Do
While companies can take individual action, some supply chain challenges require government involvement. Policy decisions affect how the pharmaceutical supply chain operates, and changes in policy could make a difference.
One area is regulatory streamlining. Health Canada could potentially reduce approval timelines without compromising safety, particularly for situations where there’s urgency. The emergency measures implemented during COVID-19 showed that faster approvals are possible when necessary.
Another area is strategic stockpiling. The federal government could maintain reserves of essential medications, similar to how it stockpiles medical equipment. This wouldn’t prevent shortages, but it could provide a buffer during disruptions.
Investment in domestic manufacturing, as discussed earlier, is already happening but could be expanded. This requires not just funding for facilities but also support for workforce development, regulatory adaptation, and market access.
Better data sharing could also help. If Health Canada, industry associations, and individual companies shared more information about supply chain status, everyone would be better positioned to respond to problems early. Some of this happens already through the drug shortage reporting system, but there’s room for improvement.
Trade policy matters too. Canada’s ability to import pharmaceuticals efficiently depends on trade agreements, customs processes, and international relationships. Ensuring that these remain favorable for pharmaceutical imports is an ongoing policy priority.
Looking at the Next Five Years
The Canadian pharmaceutical supply chain will continue to face challenges. Global supply chains are becoming more complex, not less. Regulatory standards are getting stricter, not looser. Demand for medications is increasing as the population ages.
But the industry is also adapting. Companies are investing in better systems. Technology is improving. Government is paying more attention to supply chain resilience. The lessons from COVID-19, while painful, are being absorbed.
The 30% of companies struggling with supply chain issues today won’t necessarily be the same 30% in five years. Some will improve their operations and become more resilient. Others might struggle more as competition intensifies and margins compress.
What’s clear is that the status quo isn’t sustainable. The level of supply chain fragility that exists now, where shortages are common and disruptions are frequent, imposes costs on everyone. Healthcare providers spend time managing shortages instead of caring for patients. Companies spend money on expedited shipments and excess inventory. Patients face uncertainty about medication access.
The pharmaceutical industry in Canada has an opportunity to build supply chains that are more resilient, more efficient, and more reliable. It requires investment, collaboration, and sustained effort. But the alternative is continuing to deal with the same problems that have plagued the sector for years.
Final Thoughts
The statistic that prompted this article, that 30% of Canadian pharmaceutical companies struggle with supply chain issues, reflects real problems that affect real people. It’s not just a business issue. It’s a healthcare issue.
For companies operating in this space, the path forward involves both individual action and collective effort. Better data, better systems, better relationships with suppliers, and better planning all make a difference. But so does industry collaboration, government support, and a willingness to invest in long-term solutions rather than just short-term fixes.
The Canadian pharmaceutical supply chain won’t be fixed overnight. The challenges are structural and complex. But progress is possible, and some companies are already demonstrating what that progress looks like.
