Skip to main content

The COVID-19 pandemic created significant supply chain challenges as manufacturers and distribution channels shut down, pivoted, or significantly scaled back to fight the spread of the virus. For both new vaccines and therapeutics and existing, life-saving drugs, supply chain issues did not discriminate. Access to active ingredients and the materials needed to deliver those ingredients to patients would be critical, and yet the same supply chain issues faced by other industries would impact Pharma (Pharmaceutical) as well. The impacts were felt throughout the entire system, from the production of raw materials through to distribution of finished products. The response to the pandemic exposed how fragile the supply chain is in terms of providing a reliable supply of vaccines and therapeutics to patients. While we all want to move on from the worst of the pandemic, it provides an opportunity for learnings around what’s needed to create a more adaptable and agile system that’s better able to respond to future disruptions

We talked with Anders Vinther, Vice President of Quality at Kronos Bio and co-leader of One-Voice-of-Quality for Post Approval Changes, and Chris Horan, Chief Technical Operations Officer at Artiva Biotherapeutics, to get their perspectives on how Pharma companies responded to the crisis created by the pandemic and lessons that can be carried forward. Both Anders and Chris have life-long careers in the Pharma industry, holding senior roles in both Big Pharma and smaller biotech companies.

From your perspective, what are the biggest challenges facing the Pharma supply chain right now?

Anders Vinther: The first challenge is unpredictable logistics. With COVID-19, millions of people suddenly had to get vaccinated. That’s a lot of needles, vials, etc., creating an immediate shortage of materials that can’t be produced overnight. This leads to competition between companies for the same materials.

Second, for some products, particularly generic products, there are very few suppliers in the world. If there is a problem with a product from just one or two suppliers, then the entire world supply is in jeopardy.

Finally, the global trade wars influence the supply chain. Right now, there is a push not to use suppliers from China. In some cases, China is the only source. Of all drugs being sold in Europe and the US, 70% or more of the active ingredients are actually produced elsewhere. The active substance is more likely produced in India or China, and that can lead to challenges with supply and production. 

Chris Horan: Across the Pharma industry, there has been a steady pursuit of efficiency and cost savings, which can pose risks for supply resilience. Patients can be seriously impacted when essential drugs are out of stock.

The supply issues started out as a real pandemic-driven emergency and now, two and a half years later, despite some improvements, shortages still exist. COVID-19 should no longer be an excuse for that, and we need to get more granular about what specifically needs to be fixed.

What are some things that companies in the industry are doing to address these issues?

Anders: There are some opportunities that can be done without hurting competition between companies. For example, collaborating when it comes to inventory of packaging materials, process aids, etc.

One of the things in short supply right now is capsules. We cannot produce product fast enough because of the lack of available capsules. We have been in conversation with other companies that have similar products, and we have agreed to buy capsules from another company who didn’t have an urgent need for that inventory. We reached an agreement to take the inventory, as it has become a matter of where the need is highest. Many companies help each other in this regard.

Chris: We’re seeing lots of investment in building more capacity and bringing things back domestically.

It’s not always the most complicated things that trip you up. Tubing, pipettes, disposables – things that were considered commodities – weren’t treated as critical materials and were somewhat taken for granted. But, when they aren’t available, you can’t produce. It’s not just about the critical raw materials, it’s everything. The recent experience with COVID-19 expanded our appreciation of what a resilient supply chain requires. We used to pay so much attention to starting materials, but not to gloves, gowns, tubes, etc. That’s the obvious learning – the supply chain is only as strong as the weakest link. We focused on the bill of materials for each product, but there are many other things that aren’t on that list, and that’s what tripped up a lot of companies. We are now expanding the scope of what we need to include in a supply chain resiliency program.

What were some changes in how the industry operates that you’ve observed throughout the pandemic?

Anders: When a company gets a new product approved worldwide, as soon as you make a change (e.g., need to get raw materials from elsewhere because a supplier went out of business, process improvement, technology advancement, etc.), all these things are post-approval changes. Every country has its own requirements for what needs to be reported, what documentation to include, and timelines requirements. Every change usually takes between three and five years. You will have a change approved in some countries and not others, so you end up with a patchwork of requirements and inventories which leads to drug shortages because of approval delays. 

Again, the typical cycle is three to five years or longer. But with COVID-19, some things have been done almost overnight.  If there is a crisis, such as a threat to life-saving supply, people work together. All of a sudden, those who don’t usually work with each other will get together and get things done. When there is a risk of supply shortage, they find ways of getting it out to the market when there is a shortage out to the patient level.

Agencies got together and relied on each other to avoid drug shortages. As far as I know, there hasn’t been any additional risk forced by expediting these changes. We really should learn from the pandemic in terms of how we work together.

Chris: Technology got a boost from the pandemic. There was an acceleration in the willingness to try new things. There hadn’t been a drive to adopt new technology (e.g., blockchain, cloud-based systems, etc.) before. The pandemic has forced people to be more open to take risks on the technology side. We now have the learnings with technology that should enable us to manage the end-to-end supply chain more effectively in the future

It seems that the criticality of the situation caused a shift in how key players are behaving. Are they experiencing enough benefit that these new ways of working are likely to be sustained?

Anders: Once the crisis abates, people go back to their old behaviors. The same technical assessment is done by each country’s agency. Each looks at it as though they were the only country assessing the change. There is no incentive for agencies to speak to each other when things are working well. It is important that industry and patient groups push for more collaboration and reliance between health authorities in different countries. Having said that, the problem has been acknowledged and a few first steps have been taken, but a real shift has not happened. 

Chris: The pendulum tends to swing between financial focus on cost savings and efficiency and a focus on capacity for meeting immediate peaks in demand. The opportunity for the industry is to operate at a more consistent level of resiliency rather than swinging back and forth between efficiency and ensuring supply. This involves having sufficient capacity, safety stock and locating enough inventory in each node of the supply chain.

Where do you see opportunities to make sustainable changes?

Anders: Heads of quality from across the industry have come together and are speaking with one voice. They have proposed solutions that can help reduce drug shortages and facilitate more innovation and continual improvements. They are working with regulators around the world to implement the solutions. 

This problem of global post-approval change regulatory complexity was acknowledged 20 years ago. Guidelines came out, but no improvement has been seen. Agencies are now starting to do something about this in various international working groups.  

There is a lot of focus on getting things on the market and not that much talk about keeping it on the market. We’re trying to talk about that now to ensure there is ongoing supply.  Nobody seems to think about supply after it’s brought to market. There’s an assumption that available supply will just continue, but that is not the case. 

If patients demanded more collaboration and harmonization of regulatory procedures, there would be more pressure on politicians, who are the ones that can make changes to the legal framework. But, generally speaking, they are not aware of it.  

Chris: What’s needed is collaboration. Large Pharma companies have “first mover” advantage and use it to buy up all available supply, which leaves smaller companies more vulnerable. It’s not helpful for patients (or the industry) for one company to hoard material and leave other companies in “stock out” as a result. Suppliers today are more willing to push back on their large customers and listen to the smaller customers. They’ll ask the big company if it can take a little less in order to provide adequate supply to another company. The more those relationships can be based on trust and transparency the better it is for the supply chain.

Companies and societies have short-term memory.  The burning platform works in-the-moment. The real danger is that we forget about it too quickly. Events like the pandemic unfold quickly. Building resilience in the supply chain is a longer-term endeavor. It’s the role of the supply chain leader to be the conscience that remembers and provides stability to resist the tendency for short-term thinking. The challenge is to have the fortitude to stick with it. The industry has to admit that the cost of “stocking out” is so much greater than the cost of doing the right thing all the time. Having safety stock is analogous to having insurance and cutting corners on this comes at high risk.
Reading Anders’ and Chris’ responses may make it seem like there are overwhelming challenges for the Pharma industry to tackle. However, the adaptability demonstrated throughout the pandemic is a prime example of when our Survive response works well. Pharma companies and regulators were able to spot critical challenges and problem-solve quickly together to ensure life-saving drugs got to patients. However, as we learn to live with COVID-19, we have an opportunity to be proactive and shift our organizations and the entire system into a state of Thrive. This will require taking the learnings from this time of crisis to build more agility into the supply chain system and to more intentionally break down silos (between functions and companies) to better leverage a network of relationships. Though we can’t predict what it will be, we are certain there will be more disruptions in the future. It’s inevitable in the complex and uncertain world we’re operating in. Building agility now will ensure we’re prepared to overcome these disruptions when they arise.