Pharmaceutical industry building emergency readiness
For years, the pharmaceutical industry has carried out proactive risk assessment and management on their global supply chains to ensure that medicines remain available at competitive prices.
The spreading of the coronavirus has thrown into relief the importance of contingency planning in case of widespread health emergencies. The industrial demand and supply chains are integrated and specialised in our globalised economy. The pharmaceutical industry is one of the most genuinely global industries, with a market value exceeding an astronomical 1.200 billion euros. Competition in drug development and the production of generic medicines is truly global. European countries have decided to respond to the cost pressures in healthcare by creating national systems in which the prices of generic products are brought as low as possible. This strategy has been successful, perhaps even too successful. Today, a three-month treatment of medicines for certain conditions costs less than a cup of coffee in a coffee shop.
Globalisation is one of the watersheds in world history, and it has revolutionised the way we are able to generate wealth. However, globalisation does not do away with the need for readiness and contingency planning for situations where production capacities are compromised and goods are not moving. As a result of the cost pressures created for the pharmaceutical industry, China has risen as a major producer of many starting materials and intermediates required for chemical processes in the pharmaceutical industry. In reality, many of these materials can no longer be sourced from anywhere outside China. Finland’s security of supply in the medical sector is also dependent on the global supply chain. With respect to security of supply, production capacity is not so much of a problem, as Finland hosts, for example, six of Orion’s production facilities. Many medicines and their active ingredients can be manufactured, at least in theory, if the necessary starting materials and other components are available.
For years, the pharmaceutical industry has carried out proactive risk assessment and management on their global supply chains to ensure that medicines remain available at competitive prices. Prompted by the first tentative news about a new coronavirus, Orion took immediate action to activate alternative supply chains known to procure materials outside China and to locate new suppliers. Some products and ingredients have alternative suppliers, some don’t. Many of the new suppliers are located in Northern Italy, a major European concentration of pharmaceutical companies and plants. Unfortunately, Italian suppliers are now also ridden with uncertainties. Because of the long supply chains typical of the pharmaceutical industry, the impact of disruptions usually shows with a couple of months’ delay but affects the production for a long time as capacity slowly recovers.
The pharmaceutical industry is a highly regulated industry. The efficacy and reproducibility plication of different components must be tested and proven through a series of methods. Furthermore, changes often require official approval by the authorities. For this reason, Orion maintains an ongoing dialogue with the relevant authorities in different countries to ensure that the latter have all the necessary data about stock levels and production capacity as well as any changes that may be needed in the production.
13 March 2020