Supply chain disruptions are inevitable, and this couldn’t be more evident now, and during times of emergency, when medical devices and pharma products become a global necessity.
Medical and Pharma procurement gets heavily weighted toward global sources. Buyers rely on ‘all-out’ sourcing to provide a myriad of essential items such as:
- Surgical face masks and gloves
- Cotton balls
- Personal protective equipment (PPE)
- Sedation Drugs
- Pain Killers
Costs may come down, but supply chain problems increase at an exponential level. Despite the need for supplies being irrefutable, being able to meet demand becomes an increasingly arduous, if not almost impossible task.
In a report released by United States Senate – Committee Of Finance, Chairman Chuck Grassley states, “Unbeknownst to many consumers… Eighty percent of Active Pharmaceutical Ingredients get produced abroad, the majority in China and India.” And The Guardian, United Kingdom newspaper reported that India is one of the world’s largest producers and exporters of drugs, with the U.S. and Europe being heavily reliant on the supply, with India’s pharmaceutical companies sourcing about 70 percent of their ingredients from Chinese factories.
Furthermore, POLITICO, reports that, according to Commerce Department data, last year, China accounted for:
- 95% of U.S. imports of ibuprofen
- 91% of U.S. imports of hydrocortisone
- 70% of U.S. imports of acetaminophen
- 40 to 45% of U.S. imports of penicillin
- 40% of U.S. imports of heparin
It is little wonder then that even the slightest disruption can pose significant issues for societies relying heavily on these supplies, making it a risky proposition to depend heavily on only one or two regions.
However, the problems are not limited to pharmaceutical supplies. Numerous countries are the primary sourcing and manufacturing locations for medical supplies such as personal protective equipment (PPE) and even testing components and kits.
Across the globe, countries produce numerous essential medical commodities ranging from examination gloves from Malaysia to face masks getting produced in China and Taiwan, and swab kits manufactured in Northern Italy.
Escalating Demand Vs. Plunging Supply
Vizient’s report, shows the impact of COVID-19 on demand for pharmaceutical supplies during the March 2020 period:
These figures highlight the increased need for these essential drugs, in a time of medical emergency.
Prior to China reopening after the Coronavirus, COVID-19 lockdowns, Healio, a website that publishes news and research for medical professionals in the health care system, spoke with Michael T. Osterholm, Ph.D., MPH, director of the Center for Infectious Disease Research and Policy at the University of Minnesota. Healio wanted to learn more about what products could be involved in such a shortage. As well as the effect, and disruptions the outbreak will likely have on the medical supply chain. Michael T. Osterholm, Ph.D., MPH said, “Now, we have a situation where the supply chain in China, where these drugs are made, is severely compromised because people aren’t working and transportation isn’t operating. All of that will burden these very stressed supply chains even more. We’re going to see shortages around the world.”
So, is there an answer to the issues highlighted? The simple answer is, YES! We must come together as a world to source and ship healthcare products in a harmonized and synchronized manner.
Stepping Out From The Shadows
A critical component missing from the pharmaceutical and medical supply chain is often a lack of transparency and traceability. Healthcare supply chains are often unaware of where the raw materials required for making imported pharmaceuticals come from, making it challenging to transform current practices.
Enable The Value Chain
Value chains are an integral part of strategic supply chain planning, sourcing, and manufacturing decisions.
Leverage Technological Capabilities
Digitization of the supply chain allows for the identification of disruption ahead of the event. It mitigates the risks of shortages in supply through the analysis of vast quantities of validated data, creating one version of truth for all stakeholders throughout the flow of goods from the point of origin to end consumer – ultimately – the patient!
Balancing Cost And Risk
By sourcing through mixed nearshore and offshore basis, the initial increases in manufacturing costs get offset by replenishment and overall speed to market. Managing a value chain proposition gives far greater flexibility in planning to meet actual and predicted demands. Digital platforms connected throughout all the business units can easily predict demand as well as indicate capacities and planning to accommodate short and longer lead-time products.