Lessons for the pharma supply chain after COVID-19

1. Lessons for the pharma supply chain after COVID-19 The emergence of the SARS-CoV-2 virus – and the ensuing worldwide pandemic – triggered fears that the global and extended pharmaceutical supply chain would crumble. In practice, it has proved astoundingly resilient with drug shortages kept to a minimum. However, the pandemic has exposed some weaknesses in the supply chain that must be responded to as the world recovers and prepares for what the future holds. What has been viewed as a weakness of the pharma supply chain has truly proven to be one of its strong qualities. Lead times are regularly four to six months or significantly more, guaranteeing some short-term resilience. However, should disruptions in the manufacturing of raw materials or APIs last for more than a few months then the trickle-down impact could lead to catastrophic overall drug shortages over the coming months? The situation is considerably more intense for the global supply of medical products. For example, in China, industrial production had fallen by 13.5% in January and February, compared to the previous year. The following are a couple of lessons that all pharmaceutical and medical product manufacturing companies can learn from the COVID-19 pandemic. Combating hurdles and delays While the manufacturing, shipment, and delivery of pharmaceuticals are being prioritized over that of some other goods, this doesn’t mean pharmaceutical companies are without issues. Most, if not all, supply chains have a bottleneck, regardless of whether they are onshore or offshore. The key is to have successful emergency plans in place to battle hurdles. In most cases, particularly in the case of pharmaceutical companies, supply chains are created in a way that is so robust that they can endure the level of disruption we are seeing today. These measures could be as basic as keeping emergency stock on hand, or dual sourcing to defeat any slowdown in manufacturing or the delivery of raw materials. These fast and adaptable responses are fundamental to the pharmaceutical industry. For instance, picking the right suppliers paired with a strong communication process enabled the team to increase the production of a product rapidly in response to the swine flu outbreak. Because of the heavily regulated supply chains that accompany the development of a pharmaceutical product, it is a basic practice to stockpile resources in case of a circumstance such as Covid-19. Over-reliance on a few sources of supply Dealing with bottlenecks can be much riskier when we add in the physical overseas distance, particularly when a business depends on one region for a noteworthy portion of its

2. manufacturing. In spite of this, many pharmaceutical companies have been consistently moving the manufacturing and development of their products to countries like India and China in order to reduce expenses, resulting in these nations becoming the biggest worldwide manufacturers of active pharmaceutical ingredients (APIs). This has brought about breaks in a few supply chains and exposed weaknesses in certain businesses when dealing with a global shock. Any lasting disruption for these business sectors will have genuine effects further down the supply chain. It is massively instructive to take note of that this impact doesn’t generally come from direct disruption. For instance, India temporarily banned the export of some generic drugs as the government was stressed over shortages in its domestic market. COVID-19 has demonstrated exactly how genuine these supply chain risks are, and the need for pharmaceutical companies in India too, wherever possible, has multiple causes of supply spread across different geographies so they can rapidly change production from highly impacted to lesser impacted regions. Security of supply is a matter of national significance The pandemic has woken up regulators and world pioneers to the ongoing industry effort in Europe and the US to rebalance the pharmaceutical and medical product supply chains. In reality, this trend has been in progress for some time. Both the European Union and the US congress have debated the issues and have likely begun to legislate to address the imbalance. Both governing bodies had spoken transparently about the need to safeguard the world’s supply of medicines from the vulnerabilities inherent in depending on anyone region for a critical proportion of basic raw materials and APIs. The security of supply for medical and drug products will be a significant political issue and we can expect all governments to keep on developing local capacity and secure local supply. Supply chain resilience means more complexity Medical supply chains have been depicted as ‘exceptionally complex’ and have only grown more complex as they have integrated many various kinds of organizations within them. When different industries are hoping to streamline their supply chains, the need to rapidly choose between suppliers in various markets and regions and expand manufacturing into new territories to fulfill the increasing demand of governments and regulators will cause multifaceted complexity. Some companies have just started the process of complexifying their supply chains by recruiting two or three alternate suppliers, while others have begun to incorporate their supply chain much more closely with their customers and suppliers. Simultaneously, regulations such as the Drug Supply Chain Security Act (DSCSA) place an extra burden on how organizations work with distributors, partners, and logistics providers. Even though we’re seeing some DSCSA exemptions to manage the COVID-19 emergency, resilience is needed to meet track and trace, monitoring, and licensing prerequisites. This will help to

3. figure out where you have to double up on supplies or perhaps where you think to open a new factory for a specific stage of production to alleviate the impact of a crisis in the future. To accomplish this level of resilience, pharmaceutical companies in India need to work harder and smarter to deliver complete digitization to all aspects of their supply chain operations. Business agility requires increased supply chain visibility COVID-19 has demonstrated the ingenuity and the speed at which companies can move. We’ve observed numerous instances of pharma organizations quickly retooling manufacturing to start delivering medicines and products that are in high demand. This ability to repurpose capacity offers a model for business agility going forward. However, accelerating product innovation and manufacture requires more than identifying capacity; it additionally needs engineering, design, production, and distribution assets. End-to-end visibility across production and supply is significant. This includes real-time production monitoring systems and advanced planning and scheduling tools in manufacturing, as well as the ability to track and monitor products –from materials to final product – as it passes along the supply chain. This will require an enterprise platform that connects the organization with its suppliers, customers, and accomplices to empower the real-time flow of data and transactions to create flexibility and robustness.