The Global Pharmaceutical Supply Chain Disruption during Covid 19

1.   All the Pharmaceutical Companies devised its unique new strategies in order to overcome decline in their revenues during Covid-19.

2.   Covid-19 disrupted China’s Supply Chain, in putting economies around the world under stress including India and pharmaceutical industry was one as front runner.

3.   India was among 15 economies affected by slow down induced by Covid-19 as per UNCTAD as prolonged lockdown were imposed.

4.   Indian pharmaceutical companies had stock of APIs & raw material till June 2020. Keeping the same in mind, Government of India announced restrictions on the export of 26 active pharmaceutical ingredients (APIs) and formulations to reduce its dependence on China.

5.   It is fact that till that Indian Drug Makers sourced 70 % of their APIs requirements from Chinese companies. So, Indian pharmaceutical Industry Supply Chain encountered huge disruption but some how managed to avoid a panic.

6.   A drug manufacturing campus in Baddi, India responsible for about 35% to 40% of the nations pharmaceutical output was back online at a fast pace after undergoing lockdown. The biggest generics and API providers such as Sun Pharma, Abbot Laboratories and Dr. Reddy’s have factories at Baddi though they were shutdown but resumed production quickly.

7.   India & China dominates in supply and that has been at the centre of US Concern as a pivot towards American domestic production which could build up drug production capacity to counter shortages in times of supply chain disruptions caused due to unforeseen eventualities.

8.   It could be easily concluded that China dominates the world’s supply of APIs and their chemical raw materials.

9.   So, efforts have been energized in US & Europe to bread balance the pharmaceutical chemical supply chain to ensure domestic production of drugs.

10. The US & Europe supporting the repatriation of Pharmaceutical chemical production from China back to Europe & US. It is an exercise to safeguard the world’s supply chain of medicines from the vulnerabilities inherent in relying on only one region for a significant proportion of essential raw materials and APIs.

11. The Corona Virus accelerated it and it shall have destined long term effects on how the Supply Chain Management will be run in times ahead. Though, there is no doubt that China shall still dominate pharmaceutical supply chain for some more time posing a formidable risk in present environment?

12. The Us is home to the most API manufacturing plants worldwide, with the EU close at 2nd place but each accounts for joint one a quarter of the worlds FDA registered facilities. China & India accounts for 31%. Post Covid 19 India is going to strengthen its share on the cost of china which faces a Trust Deficit as never before. India supplies 40% of generics to the world market. The US is keen to have internal capabilities for ensuring public medical supply.

13. The US calls for a cessation of purchases of API’s and finished drugs from China by 2022 or even before and in that direction work has commenced and certain steps have been initiated by strengthening America’s Supply Chain and National Security Act and Corona virus Aid, Relief and Economic Security Act.

14. The Industry acknowledge the irony that the very companies that spent the past 20 years outsourcing the supply of chemicals and APIs to China are now asking for support and putting all out efforts to bring it back.

15. The Chinese Industry Experts have a firm opinion that Western efforts to cut China out of supply chain as na?ve, though everyone has a good supply chain in place.

16. India depends on China for about 70% of the ingredients and APIs that turns into Generic Pharmaceutical Products. Now Government of India Committed $1.3 billion to promote the manufacturing of drugs ingredients domestically. This calls for establishing 03 drug making industrial parks, capacity expansion and new manufacturing sites, and investments incentives to boost output of APIs and key starting materials.

17. The take is in that in a globally integrated world, a drive towards efficiency has caused an increasing consolidation of production in lower cost geographies primary in China, Taiwan, Vietnam or other lover cost economies. Due to Covid-19, the countries were affected due to disruption in Supply chain globally. So, the need for distributing risk has become more vital than ever.   

18. Manufacturing today is a complex process as its supply chain is spread across continents as raw materials come from different countries. It has been made more with enormous challenges by the spread of pandemic.

19. India imports its large share of APIs from China but now as GOI imposed restrictions on its imports may slow down exports of generic drugs as India is biggest supplier worldwide. It may result in to global shortage though India sustained it. So, it is a big opportunity for Indian Pharmaceutical Industry to meet such challenges by adding up capacities of sourcing organizations and evolving befitting supply chain.

Conclusion:

1.   The corona virus wreaked economic growth around the world and modern supply chain encounter unprecedented stress but provided huge opportunity for confines those were depending on China. The existing supply chain is an outcome of an optimized ecosystem with identification of minimum lead times so to get finished products at lowest possible price. But now this system is disrupted badly, hence, cost of drugs shall go up and finally end up with bearing the burden. 

2.   The large-scale Cyber-attacks have forced companies to institute penetration tests to scrutinize their Cyber-Security Framework as it has been essential as Ransomeware  Attack on Mearsk, the shipping company in 2017 disrupted Global Supply Chain at 17 International Ports and it took about 02 week time to restore it at a huge cost of $300 million.

3.   In a post covid-19 world, the Supply Chain Stress Test will become new norms. The distributed global business model, optimized for a minimum cost for finished products shall look for new priorities to design a new model. As value become more variable, supply chains must become more adaptive, especially if, as forecasts suggest, large suppliers and Logistics operations in the supply chain industry must prepare for major catastrophic events such as weather events (fires, flood, tsunami) lethal pandemic outbreaks, strikes, social event and associated disruptions.

4.   The technology driven disruption in Supply Chain needs dashboards that refresh every half an hour in real time overview of the entire system. AI driven predictive data analysis could be of great value to simulate outcomes so that necessary interventions become timely and cost productive.

5.   Covid-19 has revealed the weaknesses of a globalized manufacturing system and in order to respond we need to fundamentally rethink supply chains. Our goals in the medium term should be making them more regional, modifying the supply chain as a key business driver and putting back the human asset as the most important factor for an agile business to succeed. Looking at these new inputs towards designing a befitting supply chain India emerges a trusted partner for global aspirations. The US-India and India-EU partnerships shall bring a balance in global pharmaceutical supply chain in times ahead.