What impact will coronavirus have on pharma supply chains?

23 Mar 2020

The worldwide interdependency of pharmaceutical manufacturing is highlighted by the ongoing coronavirus situation. How can the global supply of diagnostic kits, APIs and finished dosage form therapeutics, medical supplies and equipment be sustained to treat patients in the face of supply chain disruption?

In late December 2019, the Chinese health authorities reported a cluster of pneumonia cases in Wuhan city, Hubei Province, China. The causative agent was subsequently identified as a novel coronavirus named COVID-19, which has spread rapidly worldwide to cause a concerning number of fatalities.

What impact will coronavirus have on pharma supply chains?

On March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak to be a pandemic, prompting governments globally to implement increasingly strict measures in attempts to save lives. The race is now on to develop a vaccine as a frontline defense to reduce the spread of COVID-19, however this is a major undertaking estimated to take at least 12-18 months. Designing a therapeutic such as a commercialized form of RNA interference (RNAi) promises considerably faster delivery to market, yet efforts may be hampered by the fact that the virus now is believed to have evolved into two separate strains. In the meantime, alternative approaches to tackle COVID-19 include the evaluation of various anti-retroviral drugs for their efficacy in combating the infection, and repurposing of rheumatoid arthritis medications to treat patients with serious lung damage resulting from uncontrolled immune response. Both diagnosis and treatment are currently symptomatic.

Although global focus has so far been mainly on the immediate impact to public health, it has become apparent that COVID-19 has significant potential to disrupt pharmaceutical supply chains. With the number of confirmed new cases continuing to rise, ongoing restrictions could not only limit the production of essential medications but could also severely affect the business of companies engaged in multifarious drug manufacturing activities. By prompting discussion around how best to manage supply chains within a globally interconnected system, COVID-19 may pave the way to future-proofing pharmaceutical development and manufacture.

Understanding supply chains is key to sustaining drug production

According to Hamilton J. Lenox, Senior VP, Business Development at LGM Pharma, the COVID-19 outbreak has shown that China’s importance to the global pharmaceutical industry should not be under-estimated.

“China is a main source of APIs and finished dose forms, as well as providing many essential intermediates and raw materials,” he reports. “Understanding China’s dominance in the market is therefore vital when it comes to establishing and de-risking pharmaceutical supply chains.”

Indeed, China’s reach is clearly illustrated by the FDA’s efforts to monitor the COVID-19 situation, with approximately 20 drugs having so far been identified which solely source their APIs or finished drug products from China.

“It makes economic sense to look at multiple sources,” notes Dr. Sundar Narsimhan, Senior VP, Supply Chain Management at Neuland Laboratories Limited. “Distributing market share across several geographies helps to avoid creating a shortage situation that could put patients’ health at risk. Moreover, detailed mapping of chemicals is fundamental to sustain long-term supply.”

Elaborating on this last point, Lenox explains that using multiple API suppliers does not necessarily guarantee uninterrupted drug production. “If all of your suppliers are buying one key intermediate from the same source, continuous drug manufacturing cannot be guaranteed,” he says. “COVID-19 has really shone a spotlight on the need for thorough due diligence when it comes to qualifying pharmaceutical supply chains.”

For many pharmaceutical and healthcare companies, the supplier network is vast. In addition to ‘tier 1’ suppliers, wherein, the relationship is often clear and direct, there are ‘the suppliers to the suppliers’ - tiers 2, 3 and beyond, where ensuring transparency about business practices and reliability is less known.

“The criticality of responsible supply chain management has moved into sharp focus in recent years, and never more so than during the current global COVID-19 emergency,” said a representative from the Pharmaceutical Supply Chain Initiative (PSCI), whose 40+ member companies from across the pharmaceutical and healthcare industries work collaboratively to advance responsible supply chain practices. “Investing in supply chain responsibility ensures a more resilient, dependable supply chain in challenging times, focusing on what we know works best: safe and sanitary working environments, responsible environmental stewardship, fair labor practices and ongoing, open dialogue with suppliers.”

Switching suppliers is not an immediate solution to tackle shortages

In recent years, countries such as India have made concerted efforts to shift more manufacturing activities internally. But despite these moves promising to mitigate risk by providing drug manufacturers with a greater choice of suppliers across the globe, a major hurdle remains in place.

“Switching a source typically takes from 7 months to a year,” explains Narsimhan. “Samples must be brought in house, processes qualified, and approval granted. Only then can a new supplier be fully integrated into drug manufacturing processes.” Unfortunately, this means that changing suppliers will not be a quick-fix solution during the COVID-19 pandemic should a specific source suddenly become limiting, yet it seems highly likely that the pandemic will promote a dramatic change in mindset when it comes to identifying supply lines in future.

Any restrictions must be implemented sensibly

One area that has raised concern during the COVID-19 outbreak is the possibility that governments may ban the exportation of key materials such as APIs. Indeed, India’s Directorate General of Foreign Trade did restrict the export of 26 APIs in early March, prompting the Indian Pharmaceutical Alliance (IPA) and the Indian Drugs’ Manufacturer's Association (IDMA) to seek withdrawal of that notification.

Mr. Sudarshan Jain, Secretary General of the IPA, notes that API stocks are robust and currently predicted to last well into May or mid-June. “The restrictions imposed by the DGFT were intended to balance domestic demand and global commitment,” he notes. “Through exhaustive analysis and continual monitoring of the supply situation in China, we’ve taken steps to prevent disruption to supply, and we remain in a strong position to adapt as the situation evolves.”

The race to develop a coronavirus vaccine

The way the coronavirus outbreak will play out remains largely unknown at this time. One possible scenario is that seasonal change will limit the spread of the virus to allow daily life to return to normal. Another potential outcome is that the situation will worsen, with infection rates and morbidity continuing to rise. Either way, attempts to develop a vaccine must continue relentlessly in order to save lives and promote further discovery.

“If SARS-CoV-2 shares similar traits to other viruses, it may be unable to survive for an extended period outside the host in warmer temperatures and elevated humidity,” reports Lenox. “If this isn’t the case, we may see expedited approval pathways and a loosening of regulations to help drug manufacturers in delivering on this unmet medical need.” In fact, clinical trials of a coronavirus vaccine are already underway in the US, demonstrating the commitment of the pharmaceutical industry to resolve the crisis. Whatever happens next, it is vital that we learn from this situation to better protect ourselves in the future.

Emma Easthope

The Impact of Coronavirus: Latest updates

For the latest updates on coronavirus and the impact on global pharmaceutical supply chains, stay informed through our CPhI COVID-19 Pharma Tracker: https://www.cphi-online.com/updated-covid19-pharma-tracker-news082415.html
With the impact of coronavirus on the global economy already apparent, stay up to date on the latest approaches to vaccine development, and securing the long-term supply of essential raw materials, intermediates, APIs and finished dosage forms.