By Louis Garguilo, Chief Editor, Outsourced Pharma
Darkened pharmaceutical supply-chain prognoses encircle us, and proliferate in tandem with the coronavirus. No one should fear a diminution of fears of drug shortages.
That virus – already a human tragedy of historic level in China, and a hovering pandemic throughout the rest of the world – has surfaced every latent or overt global drug supply chain fear we’ve ever harbored.
We see manifestation of a global shortage of ingredients to process drugs, and of vaccines, antibiotics, and common generics needed daily. There’s concern over contaminated and unsafe products, and a geopolitical condition where one country cuts off supply chains to other countries.
I take no solace in having quickly pointed out – see Coronavirus: Pharma To The Rescue Too Simple – that early, sanguine pronouncements regarding the coronavirus were wrong (and dangerous), and that we were in for a global conflux of human and economic repercussions of startling scale.
If you need a stark example of how those two will meet on that stage, I can’t see anyway this summer’s Tokyo Olympics takes place as scheduled.
My point: There has been no underestimation from these quarters on the unfolding tragedy befalling us. I’m compelled to offer that statement to readers because of this next statement.
Drug supply chains – those so many of us have decried are disparagingly reliant on China – are at this writing holding up.
If readers have specific, quantifiable evidence this is not the case as you read this, please let us know.
Global pharmaceutical companies themselves have reported no current supply-chain issues when it comes to providing the U.S. market and patients with drugs. Global CDMOs also currently report business as usual, although both sponsor and provider say publically they are “monitoring the situation closely.”
So while important, critical “medical supplies” – most acutely and noticeably masks – are in fact being reported as reaching shortage levels, as of yet no appreciable shortage of bio and pharma starting materials or chemical ingredients, APIs, or finished drug products, seem at this writing to be directly impacting U.S. consumers or patients due to coronavirus.
Therefore, what happens – or continues not to happen – next is critical to the future contemplation, organization, and operations of the pharmaceutical development and manufacturing industry’s supply chains.
What Will We Learn?
On February 15th, a professor of epidemiology at Harvard is quoted in The Wall Street Journal as saying, “I think it is likely we’ll see a global pandemic.” He can envision 40% to 70% of humans worldwide likely infected within a year.
Rosemary Gibson, a respected contributor to Outsourced Pharma, and author of China Rx, is quoted in Breitbart as saying China could effectively shut down America’s healthcare system within months, given the “global chokehold” it has on the manufacture of medicines and medical supplies.
As noted above, there is no shortage of such analysis. This editor has also presented his own, similar opinions on the need for the bio/pharma industry to better utilize U.S.-based CDMOs for development and manufacturing.
However, could a beforehand quite unimaginable and counter-intuitive lesson be drawn from the blood of the coronavirus epidemic? It could if in fact global supply chains maintain a high level of sustainability throughout the course of this coronavirus outbreak.
Should that occur, would we be left to opine that global pharmaceutical companies have in fact known precisely what they are doing, and how to build safe and reliable supply chains?
Not a likely scenario, most of us still think.
First of all – although still hard to discern because of the closed (communist) system that is China today – we could continue, as the Harvard professor above intimates, to see major escalations of human suffering and continued widespread contractions throughout the world. Even if not advanced to such cataclysmic levels, this outbreak is not over by any measures.
It’s just a matter of time, then.
So many of us believe that sooner or later, the China-dependent pharmaceutical industry will face crushing shortages, and patients in the U.S. and elsewhere will suffer.
But that cannot be what anybody wants to happen during this coronavirus crisis.
The years of warning of the dangers in the reliance of offshoring to China were in fact not heeded. So we are left hoping these global supply-chains we are currently stuck with will hold up.
But if they do, what will we learn?
And What Next Steps?
Consider two scenarios post-crisis.
First: The U.S.-based biotechnology and pharmaceutical companies come to their sensibilities, and decide too much is invested in China, both supply-chain-wise and otherwise. We may have survived the coronavirus, but we saw the danger in our offshoring ways.
Where then can these drug companies now go for the raw materials, chemicals, reagents and other ingredients needed to make their medicines? Are there resources within the continental U.S. to fill the need? If not, where?
This would be the first, fundamental question on the path to bringing pharmaceutical production to the U.S.: material sourcing outside of China.
Additionally, we must ask whether more on-shoring of pharma processing and manufacturing operations would lead to more efforts and production of vaccines, antibiotics, and other categories of drugs that the U.S., by most every measurement published, is now nearly totally dependent on China (and India)?
That particular question needs answering before we end up with less production in China (and India), but no place picking up the development and production.
A second (opposing) scenario: Pharma decides it’s supply chains, more-or-less as they are today, are just fine.
Is there some mechanism to force companies to reshore and open new operations in the U.S.? For example, can the U.S. government somehow force supply-chain repatriation?
Along those lines, President Trump believes tariffs can be one effective measure.
Speaking to the Financial Times, his senior trade advisor, Peter Navarro, called the coronavirus outbreak “a ‘wake-up call’ to create American pharmaceutical supply chains.
He urges U.S. pharmaceutical companies to reduce reliance on imports from China (and the rest of the world).
“If we have learned anything from the coronavirus and swine flu H1N1 epidemic of 2009, it is that we cannot necessarily depend on other countries, even close allies, to supply us with needed items, from face masks to vaccines,” he said.
The policy of the U.S. government, congress and the administration, says Navarro, “is to ‘Buy American.’ The question is why aren’t we fully applying this principle to medical supplies.”
He added: “We are looking very closely at this now. By onshoring more of our pharmaceutical supply chain it will not only be more resilient. It will offer important opportunities to reduce drug prices through the rapid adoption of cutting-edge advanced manufacturing processes.”
The italics for emphasis are mine. As I wrote in an earlier editorial, we are sure to experience an overwhelming human and economic convergence in this horrible spread of the coronavirus.
More than we seem to have with past experiences, let’s hope we draw the right conclusions from whatever ends up transpiring with this one.