Distribution of a COVID-19 vaccine will be the prime objective for many in the pharmaceutical supply chain in 2021, but based on a new survey, concerns about the state of the supply chain could slow effective and timely distribution. And it goes beyond the expected issues with the temperature-controlled nature of the vaccine.
“Be mindful that the storage and transportation requirements for at least two of the vaccine candidates requires that they be kept at minus 75 degrees – something that the current supply chain is not equipped to handle at scale,” explained Simon Ellis, program vice president at IDC. “Some U.S. states are already saying that this will be a problem.”
Roddy Martin, chief digital strategist at TraceLink, noted that distribution of the vaccine could be impacted by available supply of the materials needed to package it.
“Disruptions in availability of packaging materials, glass vials, actual active ingredients, injectables and PPEs could cause vaccine shortages or even not allow vaccines to be administered timely at a point in the system,” Martin said.
Delays in transit could also impact the quality of the vaccines, Martin added, and overall disruptions could impact timely delivery of COVID testing supplies.
FreightWaves has covered the logistics of distributing a COVID vaccine, including the extremely cold temperatures Pfizer’s vaccine will need to be transported at – minus 80 degrees Celsius.
“In the initial phases it’s quite plausible we’ll see many shipments that are direct to the point of inoculation,” Larry St. Onge, president of life sciences and health care for DHL Customer Solutions, said in a virtual presentation during the FreightWaves Cold Chain Summit on Oct. 23. “Over time that will transition. We’ll see more consolidated shipments, more breakbulk opportunities where shipments are moved in larger quantities and then broken down through cross-dock mechanisms.”
Concerns grow among supply chain participants
A survey released Wednesday morning – Supply Chain Agility in the Pharmaceutical Industry – authored by Ellis for IDC and sponsored by TraceLink, a life sciences supply chain visibility provider, found that agility, visibility and a lack of preparedness could be hurting the supply chain.
IDC surveyed 532 global supply chain leaders across organizational levels and functions in pharmaceutical companies, wholesale distributors, hospitals and pharmacies. Ellis joined Tracelink for this special on-demand webinar.
According to the survey, 75% of respondents said their supply chains were in “reactive mode and constantly expediting to meet demand.” Further, 14% are concerned about end-to-end visibility as a focus area in the supply chain.
“Expediting almost always means extra cost, though that is usually borne by the pharma companies or their partners,” Martin told FreightWaves. “Delivery delays and shortages are more problematic, particularly when the absence of the right drug can have an adverse effect on patient health.”
Ellis said this reactive planning approach prevents pharmaceutical companies from developing a strategic plan.
“Suboptimal planning leads to an imbalance in supply and demand, causing additional unexpected and unbudgeted costs, unplanned shortages, poorly executed capacity planning and overall end-to-end optimization problems,” he said.
The result is hoarding of supplies and opens the door for counterfeiters or inventory imbalances.
Expediting impacts fulfillment
“When expediting and chasing product becomes habitual, there is no guarantee that services and capacity will be available at the last minute, which compromises order fulfillment time,” Ellis said. “Extended time and the resulting delays could cause shortages and stock-outs, critically impacting patients. A lack of visibility and insights not able to systematically administer vaccines could lead to chaos and disorder amongst patients waiting for vaccines.”
The IDC report stated that 43% of responding companies report they lack the necessary agility and redundancy to survive major business disruptions, with the historical approach to rely on inventory as the hedge against risk. Today, though, 65% say they can no longer accurately plan supply and 63% have lost faith in their demand forecasts.
Martin said pharmaceutical businesses, until COVID, did not have a “burning reason” to pursue change in the pharma supply chain.
“The urgency has been hidden by high margins and protected patents, meaning that there were no competitors allowed to produce a product even if they had the capacity to do so,” he said. “These factors like high margins, low cost of goods sold and protected patents were the insurance policy that allowed these businesses to operate in this hugely inefficient way.”
Survey respondents said that drug shortages during the pandemic remain their top concern, with 46% saying they have been unable to get drugs in a timely manner.
A clear majority of those surveyed – 70% – believe their supply chains are very vulnerable to suffering additional problems as the pandemic drags on.
Supply chain stresses
“Keep in mind that COVID has ‘exposed’ a number of cracks in the pharma supply chain that, while manageable before though certainly not optimal, have become significant problems when the supply chain gets stressed as it has in 2020 and will again in 2021,” Ellis said. “What will be critical is the degree to which supply chains take their deficiencies to heart and do something to fix them. Otherwise, the next major disruption will present precisely the same kinds of problems.”
Shabbir Dahod, president and CEO of TraceLink, said the COVID-10 pandemic has demonstrated that the current supply chain setup is not efficient and needs to change.
“Traditional information-sharing and business processes need to be broken down in order to improve agility, provide actionable visibility and increase end-to-end supply chain resilience,” Dahod said. “Next-generation technologies like digital network platforms and supply chain work-management software applications that are designed to work across multiple enterprises can improve supply chain performance and ensure the timely delivery of medicines to patients all over the world.”
Ellis said there is an opportunity to focus on some areas of the pharma supply chain to improve efficiency and visibility, including transportation and storage resiliency.
“The tools and the integration of systems and skills to do this are available but will need to be mustered en masse and focused on those companies strategically prioritized to deliver vaccines,” Martin said. “This calls for a ‘USA Manhattan project’ of enormous scope and proportions together with incredibly strong government and global leadership in economics, politics, science, operations and infrastructure.”
Click for more FreightWaves articles by Brian Straight.
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