active pharmaceutical ingredients, Bain & Company, CCP Virus, China, coronavirus, COVID 19, Cytiva, FDA, Food and Drug Administration, health security, Im-Politic, offshoring, pharmaceuticals, supply chain, Wuhan virus
Here’s a post full of data that should be of more than a little interest to folks who aren’t data geeks. That’s because it presents information shedding light on the likelihood of America getting caught dangerously short of key medical supplies – in this case, pharmaceuticals – when the next pandemic hits. As usual with CCP Virus-related info nowadays, it contains some good news and some findings that aren’t so encouraging.
First, some background. The surveys cited here underscore just how much offshoring of drugs and their chemical building blocks has taken place in the years – and possibly decades – before the pandemic. A poll of pharmaceutical executives the world over conducted by the U.S. life sciences company Cytiva found that 51 percent of the former “say that drug shortages increased in their domestic market during the pandemic, although 33% say that the issue had been increasing over the past five years.”
In other words, a series of “underlying issues around supply chain resilience…have been exacerbated — but not caused — by the pandemic.”
In this vein, Cytiva also found that fluctuating demand is only part of the shortage problem: “About half of the executives and policymakers surveyed (47%) say their country is moderately or highly dependent on the import of drugs,” and nowhere is this problem more worrisome than with those drug building blocks, since “China and India in particular have become the epicentres of production for the generics and active pharmaceutical ingredients (APIs) that form so much of the industry’s output.”
Moreover, according to a study last fall by the American consulting firm Bain & Company, the API production picture is increasingly dominated by China. All by itself, the People’s Republic accounted for 39 percent of global output last year, up from 17 percent ten years ago. Meanwhile, the North American share has fallen from 23 percent to 19 percent.
Bain also draws a direct link between the shift of drug industry output to the developing world and the frequency of U.S. shortages:
“The transfer of pharma sourcing and manufacturing to Asia has directly affected supply chain reliability. FDA [U.S. Food and Drug Administration] data shows an increase in drug shortages [shown in the chart above] resulting from several factors, including quality issues and disruptive events, such as the 2017 fire at a Chinese API producer that led to a global shortage of piperacillin/tazobactam.”
And indirectly responsible for these shortages have been industry features like “The winner-take-all generic pharmaceutical bidding process in Germany….” This system 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.”
This finding, in turn, adds to the evidence that the pharmaceutical supply chain security issue predates the current pandemic, and that the industry has been slow to respond. In fact, Bain specifies that the CCP Virus outbreak and its effects weren’t “the first warning. Tsunamis wrecked pharma manufacturing facilities in Asia in 2011 and 2012, and in 2017, Hurricane Maria knocked out Puerto Rico’s electricity supply, disabling many of the nearly 50 pharmaceutical plants on the island for months.”
Moreover, RealityChek readers might remember the post reporting that in 2011, a U.S. Commerce Department study discovered not only that troubling pharmaceutical supply chain vulnerabilities had developed, but that the companies themselves were pretty blasé about the problem.
Like I said at the outset, however, the pharmaceutical supply chain news is by no means all discouraging. The Cytiva survey found that 59 percent of the executives “say that the era of offshoring drug manufacturing to low-cost countries is over, and 67% say that the manufacturing of biopharma staples such as biologics would dramatically increase in their own countries over the next three years.” And given the U.S. industry’s global prominence, it seems safe to assume that many of these executives work at American-owned firms.
In addition, the Biden administration has designated improving health security as a high priority – although as I’ve reported, the President’s plans so far seek to treat as reliable suppliers many countries that have curbed or outright banned exports of medical supplies during the height of the pandemic. And these nationalistic impulses clearly are alive today in the pandemic era’s current “vaccine phase”
Finally, a big shout out to the Cytiva folks for including a URL for the aformentioned FDA shortage database – which I’ve been trying to find for months. It’s not only searchable, but it’s updated daily.