Shoring up the pharma supply chain in 2021 and beyond

As a result of the ongoing pandemic, the pharmaceutical supply chain has faced undeniable pressure. Amid a deluge of expectation, recent events have revealed weak links that must be overcome to meet the planet’s increasingly complex healthcare demands, reports Melaye Ras-Work, founder and Vice President, Melaye Ras-Work, founder and Vice President, Efficio Consulting

The ongoing ramifications of COVID-19 have been widespread. It has seen some sectors left redundant in the wake of national lockdowns, whereas others have needed to scramble to keep up with demand unlike anything they have witnessed before.

The pharmaceutical industry is one that has needed to pivot and flex to support the nation through its darkest hour — joining forces in a global effort to diagnose, treat and prevent infection from spreading.1

Whilst highlighting the industry’s strength and stamina, the pandemic has also revealed substantial vulnerabilities within the pharmaceutical supply chain.

Certain aspects urgently need addressing to build resilience in the months ahead. With hope of a return to normality hinged on the effective vaccination of the public, resilience in the UK pharmaceutical supply chain has never been more vital.

A need for resilience and agility

What the previous year has most critically demonstrated is the need for resilience and agility. Yes, hindsight is a wonderful thing, but the modern procurement infrastructure needs to be responsive to demand anomalies on an international scale.

On a wider industry note, this shortfall was exposed as China and India — two of the world’s most active producers of pharmaceutical ingredients — went into lockdown.2

Although the Big Pharma moniker is rightly attributed to heavyweights based in the US and Europe, their ingredients often emanate from China and India. So, what happens when one of more of those regions is cut off and shut down? Inevitably, the status quo is thrown into turmoil and disarray.

Fortunately, although China experienced the first cases of coronavirus, it also responded quickly. However, “pharmacy in the developing world” is dominated by India, the third largest producer of pharmaceuticals.3

Melaye Ras-Work

The country has the largest number of FDA-approved facilities outside the US and is estimated to supply 40% of the generic formulations in America. Having these two hubs out of commission at a time when the pharmaceutical industry was, perhaps, never more needed, was less than ideal.

It exposed many companies’ lack of supply chain agility that, in turn, hindered their ability to react to demand effectively.

A risk of protectionism

This challenge has a knock-on effect, too. A recent book documenting America’s reliance on China for pharmaceuticals by Rosemary Gibson and Janardan Prasad Singh, suggested that: “If disruptions occur for an essential ingredient made in China, the United States will wait in line along with Europe, India and other countries to obtain it.”4

The authors also stated: “If a global public health crisis occurs, China will likely keep its domestically produced medicines at home and stockpile them to secure access for its citizens before seeing to the needs of other nations.”

Although this hasn’t come to fruition, yet, the lack of variation across American and European procurement channels does bring this challenge into play. Almost understandably given the localised impacts of COVID, we are witnessing an increased sense of protectionism.

This can lead to the stockpiling of both pharmaceutical raw materials and finished products. Rather than being a contributor to the global cause, those products being manufactured on the other side of the world have the potential to become strategic national assets.

In the UK, the impact of Brexit will likely compound any pressure on public and private spending power as we move into the next phase of the pandemic.

The role of the CPO

With the mass vaccine rollout under way, the general population is relying on the healthcare industry to be its saviour.5 And it will be the Chief Procurement Officer (CPO) that must be the hero in this trying time.

The role of the CPO will be to work with the wider organisation(s) to review the current state of their supply chains — uncovering weaknesses or any rigidity that might jeopardise supply in the event of future global lockdowns.

Although it is impossible to prepare for all eventualities and challenges, being aware and prepared to mitigate the impact of future turbulence will be essential. This requires a more nimble, resilient supply chain.

The success of the industry and the future of our health depends on it. Below are just a few steps that pharmaceutical companies should be taking now to build a more robust and primed procurement function:

  • Collaborative planning and forecasting: pool your collective intelligence with suppliers to forecast likely requirements before locking in prospective purchases or options
  • Risk sharing: in volatile environments, be prepared to proactively manage and share risks with suppliers
  • Supplier diversification: keeping the pool too small restricts resilience; take this opportunity to find and qualify additional suppliers, incorporating the above two steps in this formulation phase
  • Scenario planning: run “what if” scenarios to offset elements of surprise and to embed a problem-solving mentality across the discipline.

By putting these steps in place and incorporating the right team and skills, the CPO will be able to able to foster a more dynamic supply chain. In doing so, pharmaceutical and healthcare organisations will be able to work proactively — rather than reactively — to build greater resilience in the face of future adversity.

References

  1. www.abpi.org.uk/medicine-discovery/covid-19/what-are-pharmaceutical-companies-doing-to-tackle-the-disease/#76abd472.
  2. www.ft.com/content/8630c51c-4cc0-11ea-95a0-43d18ec715f5.
  3. www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Pharma%20and%20Medical%20Products/PMP%20NEW/PDFs/778886_India_Pharma_2020_Propelling_Access_and_Acceptance_Realising_True_Potential.ashx.
  4. www.amazon.com/China-Rx-Exposing-Americas-Dependence/dp/1633883817.
  5. https://news.sky.com/story/covid-19-over-65s-to-start-receiving-vaccine-letters-next-week-as-rollout-moves-on-12215882.

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