With the coronavirus pandemic exposing cracks in the global pharmaceutical industry’s weak supply chain, large drug companies are waking up to the facts; something needs to change and fast.
Western pharmaceutical companies have relied on outsourcing manufacturing to China and India for APIs, Generics, and raw materials for years. The alliance is significantly cheaper and more convenient than manufacturing drugs in the US and Europe.
However, with the unprecedented pandemic – which resulted in global lockdowns and travel restrictions – drug shortages were noticeable worldwide. With manufacturing sites in China and India forced to close temporarily (1, 2) to help curb the spread of the virus, drug manufacturing took a significant hit. Americans found themselves unable to access the most basic of drugs, from paracetamol to diabetes medication.
This dependency on China and India to manufacture everyday drugs means that when disruptions to the supply chain occur – like how we’ve experienced in the coronavirus pandemic – vulnerabilities are exposed.
The question is, how exactly do we ensure better access and control over the pharmaceutical supply chain?
We’ve already covered one potential solution to resolving the over-reliance on China and India for the manufacture of drugs, which involves reshoring and utilising existing, local CDMOs. Read the full article here: Are Local CDMOs Going To Save Pharma?
But is there another way of bringing manufacturing back to the US and bolstering pharma’s supply chain?
The solution lies in the construction of brand-new manufacturing facilities in the US, as well as the upgrade or expansion of existing facilities.
It’s a political issue
Conversations are already taking place regarding bringing manufacturing back to the US. These discussions have acquired interest and support from President Trump as he looks to secure the US’s pharma supply chain ahead of the US presidential election in November.
The pharma supply chain vulnerabilities have become not just an industry issue but a national security threat. While drug shortages were only noticeable for a short period, the initial panic was enough to send the US into a tailspin. What if everyday drugs and prescriptions were suddenly inaccessible for months? How would the US cope then?
If this were to happen, pharma would, of course, be left to deal with the fallout, but it’s the Government’s failure to future proof and manage its supply chain that would create distrust amongst US citizens.
Newly established pharma organisations are already beginning to crop up in the US, like Phlow Corporation, for example. Their sole mission is to manufacture their own generic drugs and APIs to end the over-reliance on foreign nations. While the Government isn’t funding these new organisations or US manufacturing facilities, they are incentivising it by making manufacturing in the US more attractive. A VP in my network said:
“Government’s are giving pharmaceutical organisations tax reliefs and grants to buy raw materials as a way to encourage pharma to reinstate manufacturing on home soil. This is in direct response to India’s decision to temporarily pause exports on raw materials to prioritise their own nation in March. Although India quickly retracted their decision, it came as a big shock to the US and highlighted the importance of having control over their own supply chain”.
With the Government’s backing, we’ll soon start to see more and more brand-new manufacturing facilities appear across the US and the gradual termination of outsourcing.
With national Governments pushing for approvals and building permissions to be authorised faster to keep up with the drug demand, what about the talent in charge of constructing these new facilities? Is there enough engineering talent in the US to deal with the increased demand for planning permissions, building design and construction?
With workloads already increased in response to the manufacturing demand for a COVID-19 vaccine, engineering organisations may feel overwhelmed with the number of new facilities needing to be constructed in relatively tight timeframes. There may be a talent shortage in certain geographical areas if engineering talent in the nation’s leading life science clusters such as Boston-Cambridge or the San Francisco Bay Area are already stretched thin.
At the end of the day, CMOs, Generics, and engineering and construction organisations – who are in high demand – will have a choice over which projects they wish to take on. It’s worth noting that this could create significant delays in the construction of vital manufacturing facilities.
I recently spoke to a VP in my network who stated that:
“A widespread concern is that not only will there be a shortage of Engineering talent to go around, but after offshoring for so long, will the US workforce be able to carry out basic manufacturing tasks? However, as manufacturing is brought back to the US and investments are made using the best technology, people will become more skilled and educated.”
Getting the balance right
Bringing manufacturing back to the US will create more jobs for the unskilled labour force. With more sites and facilities across the US, this will require the workforce to run them. After record-high unemployment levels and redundancies in the US following the pandemic, the creation of thousands of new jobs is particularly attractive to the Government ahead of the US presidential election later this year.
It’s also worth considering the quality of the drug products. APIs must stay between certain temperature ranges; if they go above or below this range, their quality dramatically reduces. When APIs are manufactured in China or India, they are then transported by ship or plane to the US. However, there have been occasions in which these APIs have been stored next to hot engines and exceeded their maximum temperature. According to my network, the quality of APIs and drugs manufactured in China and India can be hit and miss, but reshoring would mean that APIs would be more consistent.
Another solution is to adopt a hybrid approach to manufacturing, instead of manufacturing purely in China or purely in the US. A Senior Vice President in my network stated:
“COVID-19 moved around the world. When China was in lockdown, the US wasn’t, and when the US was in lockdown, China wasn’t. It could be damaging to the supply chain to have manufacturing centralised in one region or nation in the event of future, unknown events, or disruptions. For this reason, surely a hybrid approach would be better; having manufacturing sites in both the US and China. We shouldn’t completely cut off foreign imports, but we can resolve the overreliance.”
Pharma and the US Government are prepared to stop at nothing to save lives and take back control over their supply chain. This is evident in the increased speed of approvals; they know they can’t risk any further delays in finding a COVID-19 vaccine when people’s lives and the economy are at stake.
The pandemic has exposed the weak supply chain and overreliance on other countries once and for all. Bringing manufacturing back to the US isn’t just a must, but a national priority.
For more information…
- Read our blog: Are Local CDMOs Going To Save Pharma?
- View our executive search solutions to see how we can help you gain a competitive edge through talent.
* Fraser Dove International is a specialist executive search firm operating exclusively in the Life Science industry. Passionate about people, we take pride in helping exceptional life science organisations source the talent they need to design, manufacture and distribute life-changing drugs, treatments and devices which transform and save patient lives.