Despite typically high safety stock levels and buffer inventory across the biopharma supply chain, there are signs that the sum and magnitude of supply chain disruptions could impact the industry’s ability to get treatments to patients. In the last two months since the pandemic began, 15 new drugs have been added to the FDA drug shortage list.
Indeed, disruptions have moved from a regional to a global focus. While India recently lifted export bans on many of the active pharmaceutical ingredients (APIs) and raw materials needed for treatments, availability remains a challenge. Given that most APIs and generics are manufactured in China and India, global supply continuity is key. However, global air capacity, is 35% lower than last year, according to Seabury Consulting.
Given this backdrop, how can biopharma mitigate the impacts of Covid-19 disruption?
Responding to the challenge requires decisive leadership to prioritize critical resources (from human to capital assets to partner networks) to assure supply for patient treatments. In order to reach fact-based decisions and mitigate risk, end-to-end value chain visibility and insight–based scenario planning is essential.
What to do now
By now, most biopharma companies should have assessed employee protection procedures to keep employees and operations safe. It’s imperative to protect the workforce. This means supporting their mental health and emotional and physical needs as well as their physical safety.
According to US Census data, about 20% of the industry workforce performs activities which require full on-site physical presence to ensure the business continuity, production and release of drugs. Such activities range from material and inventory handling to production processes, testing and maintenance. These workers are required to keep sites up and running and for this reason, it is critical to build and enhance business continuity plans to prevent an outbreak from stopping operations completely.
Another 60% of the industry workforce performs activities requiring partial on-site presence, such as production and quality managers, scientists, technicians, or engineers. Enhancing these workers with remote collaboration tools to limit their on-site presence is key to minimizing the risk of an outbreak.
If companies haven’t already, they should prepare for increased disruption. The focus has shifted from mitigating supplier issues in specific regions to addressing global supply chain challenges from logistics disruptions to supply delays. Mitigating these challenges requires fact-based decision making enabled by end-to-end visibility of the supply chain and resource prioritization.
Building simulation models that consider inventory levels, demand patterns, and supplier lead times will not only enable a comprehensive view of operations and value chain risk now, but it will also help executives anticipate if interventions are needed as disruption continues and/or becomes more severe. This includes addressing the impact of additional logistic challenges – such as pricing in increased freight costs — export restrictions and reduction in freight options on lead times that could result in changes to inventory position.
In practice, this means setting up a risk analytics cloud platform to enable live monitoring of the supply network. It will require a dedicated crisis team to assess and recommend actions based on the data. It could include establishing “digital twins” of the supply chain to mirror operations digitally across the entire supply network to uncover risks that were previously hidden. It amplifies the importance of predictive modelling and applied intelligence. This is all useful for an emergency, as now, but also for more resilient supply chain in the future.
What to do next
There will unquestionably be extreme surges in demand for potential vaccines or treatments for Covid-19, especially if proven effective through clinical trials. According to the World Health Organization, as of April 20, there were five candidate vaccines in clinical evaluation and 71 in preclinical evaluations.
In the near term, continue to identify immediate risks and act to mitigate. This means working with critical suppliers and contract manufacturing organizations to jointly build business continuity plans with an increased level of collaboration. There needs to be a blueprint for how to address shortages for medicines at risk while also scaling operations for Covid-19 therapeutics and vaccines.
If required, quickly address shortcomings in scenario planning capability to allow for ongoing simulations. And expand access and training so that, for example, while in the short-term risk analysis may be performed by a response team, longer-term more people within the organization should be trained on how to monitor, assess and implement agile solutions.
What to do in the future
Longer-term, biopharma companies need to assess structural changes. New regulations are calling for assessments of domestic supply bases and require the industry to develop plans for addressing vulnerabilities. This could lead to reducing dependency on specific sites or suppliers and restructuring the supply network.
Don’t allow the crisis to distract from the need to build digital capabilities that will pay dividends in the long term. Post-pandemic, automated capabilities and intelligent analytics will be essential for delivering necessary speed and resiliency.
Fundamentally, biopharma companies must remain laser-focused on developing, producing and distributing the therapies that will allow us to prevail over this pandemic. Supply chains are indispensable to this cause.
What life sciences companies choose to do now will be scrutinized, but so will their actions six months and a year after the pandemic is over. The integrity and trust in life sciences companies are under a spotlight on a global stage – this is a time to take a long-term view of re-setting how the industry can and should be helping improve peoples’ lives.