Covid-19 severely disrupted pharmaceutical supply chains, issuing a loud warning to the industry: Far-flung manufacturing sites carry a perilous risk. But the pandemic wasn’t the first alarm. While the transfer of pharma sourcing and manufacturing to Asia has lowered costs, it has also directly affected supply chain reliability. Data from the US Food and Drug Administration (FDA) shows an increase in prepandemic drug shortages resulting from several factors, including quality issues and disruptive events, such as the 2017 fire at a Chinese plant that led to a global shortage of piperacillin/tazobactam.
The winner-take-all generic pharmaceutical bidding process in Germany also has produced drug shortages by reducing the number of producers or bidders over time. In some cases, for example, the winners were sales offices dependent on foreign third-party manufacturers incapable of delivering high drug volumes.
Of the 114 FDA-reported drug shortages in April 2021, 56 were related to an increase in demand, 13 to active pharmaceutical ingredient (API) shortages, and 7 to manufacturing or shipping delays. The past year has underscored the growing risk of drug shortages and overreliance on API imports, triggering public concern. As a result, leading pharma companies are taking key steps to increase supply chain resilience, to ensure manufacturing continuity and patient safety, and to protect the business in times of uncertainty.
A Strategy to Make Pharma Supply Chains More Resilient
Flexible contracts, modular manufacturing and improved network visibility help reduce risk.