Co-author: Lokamba Raja
Supply chains in life sciences and healthcare will have an undoubted impact post the COVID-19 crisis. A significant restructuring of global supply chains is imminent in the post-COVID-19 world. In this article, we will discuss the short-term and long-term risks being posed to the different stages of supply chains, and the possible actions to be taken to minimize and mitigate them.
Impact on Manufacturing and Supply Chains: Focus on Localization
Approximately 72 percent of active pharmaceutical ingredients (APIs) of US domestic medicine demand are sourced from foreign nations which makes the supply chain highly vulnerable in times of a global crisis like the current situation. China alone manufactures about 13 percent of US medical products which faced disruptions when China was struggling to control the pandemic through measures that involved the closure of various manufacturing and production facilities. To fight the spread of the pandemic, India had also imposed restrictions on the export of around 26 pharmaceutical ingredients, which is around 10 percent of its total pharmaceutical exports.
In the coming years, the US, along with the rest of the world, will see a great deal of localization in their supply chains. The industry will see a shift from linear supply chains to open dynamic and interconnected digital supply networks (DSNs) that uses technologies like sensors, robotic process automation (RPA), blockchain, and advanced analytics to enable greater product visibility, process optimization, data security, tractability, and inventory control.
The recent spike in demand will lead countries and organizations to re-evaluate pricing policies, demand will rise to increase safety stock to handle demand spikes during unprecedented events as most of the pharma companies would see a gradual shift from a “just in time” model.
Impact on R&D: Industry Best Practices for Risk Mitigation
Amidst the global supply chain crisis, the race for developing a new vaccine for COVID-19 has been the priority for many pharma companies across the globe. The biggest challenge in this area is the long drug development life cycle, where the existing process of regulatory compliance, phases of trials, and data collection/submission extends the timeline up to 10 to 15 years. However, given the speed of spread of the virus and current healthcare scenario even in most of the developed nations, such a high drug development timeline would have little impact on minimizing casualty and overall disruption of socio-economic conditions. To reduce the timeline, regulatory processes are being tweaked, and companies need to have the adequate infrastructure to adapt to the changing regulatory compliance standards.
In recent years, we have seen significant increase in venture capitalist (VC) funding for early-stage biotech companies. Tremendous number of INDs (investigational new drug applications) have been filed in the last few years. Big pharma companies have the potential to use this as an opportunity to adopt the “buy-to-build” model instead of heavily relying on in-house research. Companies like Celgene have led the way with 40 publicly announced R&D partnerships and a distributed R&D model. As part of “being agile”, companies must ensure robust data security to protect confidentiality, while working in an interconnected network of stakeholders.
We are still expanding our understanding on emerging diseases, some of them may have a vaccine, some may require a different approach of lifestyle management. For pandemics like COVID-19, optimizing resource utilization would require identification of critical community size and immunizing them to create herd immunity.
A rapidly changing healthcare landscape and fierce competition from generics puts pressure on growth and profit margins. Collaboration with external partners would be essential in allowing pharma companies to access specific expertise and minimize the build-up of infrastructure, particularly where the portfolio is spread across multiple modalities. Companies also need to plan for diversification and allocation of resources to new winning assets along with existing revenue streams.
The growing trend in utilizing the massive pool of genome data generated by lifestyle/fitness companies and population healthcare models should enable pharma companies to develop superior capability in forecasting these disease trends or demand for certain types of medicine. Teams must be empowered with holistic design and operational processes to support efficient and effective study execution.
Impact on Clinical Development: Focus on Process Optimization and Emerging Therapies
More than 100 non-COVID-19 trials have already been put on official hold, and only 14 percent of sites are open for enrollment in the US according to a report from WCG. Product approvals and projected product launch timelines will be delayed due to the delays in the clinical trials.
Organizational agility plays a crucial role with changing trial procedures. Delays in trial recruitment and the overall trial progress due to disruptions as part of the pandemic are normal. Therefore, companies need to re-plan timelines for regulatory submissions, then approvals, and finally, product launches. Reassessing the competitive landscape of both in-line and pipeline products may be required as accuracy of the competitive forecasts may no longer be valid.
Biopharma companies are investing in AI to optimize trial design and recruit patients. Availability of rich data can be helpful in developing personalized therapies without the need for large scale trials. Companies like Exscientia have shown significant advancement in using machine learning to generate molecular candidates in a quarter of time taken by traditional methods.
Impact on Launch and After-market Support- Empowering the Workforce through Business Continuity
To reopen the economy across all sectors, organizations are evaluating options to ensure employee health and safety in the new “normal”. Changing workplace structure and basic social behavior of people for the betterment of employee health and safety would require a greater degree of agility in the organization. HR administration and business leaders are collaborating with health experts round the clock to find out innovative approaches to balance employee safety and production in a sustainable way. This poses varying challenges for manufacturing and services Industries.
IT Services companies have drastically moved from 5 percent to 90 percent remote working within a matter of two months without showing much impact on productivity. Healthcare practitioners (HCP) are already using video calling extensively for remote consulting of patients. Manufacturers can use AI for effective aftermarket engagement with HCPs by stratifying them based on their habits, preferences and receptivity to marketing messages.
With higher work from home contracts and the increasing need of remote collaboration, seamless connectivity becomes a necessity. With a drastic change in human behavior at all levels, short-term benefit vs long-term productivity and psychological impact are under the radar.
High degree of cloud maturity would be essential for organizations to implement robust remote collaboration, process optimization, data security, and consequently, to get back to normal business activity. These considerations would transform every industry in the coming years; with Agile organizations taking the lead.
Traditionally, big pharma companies have relied on a network of hundreds of suppliers to manufacture, package, and deliver different products to market. As a strategy, this is complicated and expensive. The pandemic shock would accelerate the existing trend of supply chain consolidation across the industry. There would be an increasing urge to collaborate and share information across global supply chain partners to reduce overheads, accelerate innovation, deploy tighter quality control, and ensure higher availability.
Going forward, we would face a massive surge in demand across the world for the COVID-19 vaccine, if any of the candidates currently under testing prove to be effective through clinical trials. Supply capacity and resource constraints remaining same, this will utilize a significant chunk of resources causing risk to other medicine supplies, if organizations do not plan for business continuity ahead of time. Among other things, organizations would need to have dedicated response teams trained to perform extensive planning to work with critical supply chain partners, forecast risk, and develop mitigation plan ahead of time.