The pharmaceutical industry and its supply chain have both undergone considerable upheaval due to the COVID-19 pandemic. The closure of factories in Asia producing the bulk of the world’s supply of active pharmaceutical ingredients (APIs) during the first lockdown in Q1 2020 caused considerable disruption to drug manufacturers across the globe, leading to acute shortages of key medicines .
Meanwhile, over the last 12 months, there have been shortages of key commodities, from primary packaging, such as glass vials, to materials for key production line components.
All of this has exposed the fragility of the globalised pharmaceutical supply chain, and we are seeing the industry and national governments taking steps to enhance resilience in future.
Several governments, including the US and India, for instance, are incentivising their nations’ pharmaceutical companies to onshore their supply chain, not just for APIs, but for packaging and single-use (SU) production line components as well . In response, a number of drug companies have already begun to localise their supply chain, and suppliers are investing in their facilities within key target markets to expand their capacity in order to meet fast-growing local demand.
This localisation trend for essential manufacturing supplies will have a number of repercussions for pharmaceutical companies. It will increase production costs, particularly in Europe and North America, due to the relative expense of local suppliers compared with those in Asia. However, the boost in internal demand will also stimulate further sector growth in markets around the world, as new suppliers are established locally and existing domestic producers expand their operations.
In addition to the trend towards on-shoring, going forward, I think we will see greater efforts on the part of pharma companies to build stocks of essential commodities – whether APIs, packaging or disposable manufacturing equipment. This is vital to mitigate against the impact of future peaks in demand for these commodities, to ensure the continued smooth operation of pharmaceutical manufacturing.
The suppliers of these commodities have a key part to play not only in inoculating themselves against future supply disruptions, but customers too, by stockpiling the essential materials they need to manufacture their products.
ChargePoint Technology, for example, already had stocks of materials for its SU ChargeBags and split butterfly valves (SBVs) in place prior to the initial COVID disruption that enabled it to continue to supply customers throughout the pandemic. It is currently working to expand these stocks in order to provide an even greater safeguard against any potential future shortages.
Other approaches are being taken by suppliers, such as ChargePoint Technology, to help customers build and maintain effective stocks. Many are innovating their products to allow them to be kept in storage for longer without impacting on their useability. A number of efforts are being undertaken, from creating packaging capable of storing finished product or API for longer, to devising SU components with extended shelf lives. Such innovation is vital to help the global pharmaceutical industry protect itself against supply shocks like COVID-19 in the future.