Aesop's grape-hungry fox has a lesson for DHL's dealmakers
From 1.0 to 2.0
© John6863373
Drug maker Pfizer sounded the alarm on 11 June that it would be running out of a drug to treat bacterial infections in children by the end of the month, owing to a need to prioritise versions of the drug for adults. In a letter to the US health regulator Pfizer wrote that it expected supply of the pediatric drug to be exhausted by the end of the quarter.
Another penicillin product, used to treat respiratory infections, may run out of supply in the third quarter, Pfizer reported. The company’s penicillin products have reportedly faced issues with shortages since April.
Drug shortages, notably lack of supplies of pain and fever relief for children that left drug store shelves empty and saw anxious parents rush to hospitals’ emergency wards, have sparked lawmakers into action. A report from the US Senate’s homeland security committee released in late March concluded that drug shortages pose a national security risk as well as a danger to public health.
The report’s authors counted 295 drug shortages last year, a five-year high. More than 15 critical products have been in short supply for over a decade.
There have been sporadic flare-ups of drug shortages going back well before the outbreak of Covid, reported Lorant Kovacs, regional head of vertical market healthcare of Schenker Americas. For the most part, these have been attributed to insufficient supply of drugs or ingredients. But bottlenecks in logistics have not been a significant factor, he added.
Currently airfreight bellyhold capacity out of China, the biggest source of pharmaceuticals and ingredients, is limited, but the industry usually can resort to charters if needs be, he noted. At the height of the shortage of children’s fever medication, Edmonton International airport handled a string of charters to replenish supplies at the Canadian city’s university hospital and depleted pharmacy shelves.
“It all comes down to priorities,” Mr Kovacs said, pointing to the movement of vaccines and PPE shipments during the Covid pandemic, when governments, pharma producers and logistics firms pulled out all the stops to ensure rapid dissemination of shipments.
Supply chain visibility is a major issue, the US Senate report noted. Pharma supply chains are rather fragmented. Schenker works with pharma producers as well as with their suppliers, but these streams are not linked. Suppliers control the flow of their output to the pharma manufacturers, whose own logistics infrastructure is predominantly geared to the dissemination of their output, Mr Kovacs noted.
Unlike the automotive industry, the pharma sector is not very integrated along its supply chains, which has been the biggest stumbling block for efforts to improve visibility.
Not only is the industry hamstrung by a variety of different systems impeding data flow between pharma producers and their suppliers, even manufacturers themselves typically use multiple systems and platforms. This makes efforts to integrate systems and data flows laborious and very time-consuming, Mr Kovacs said.
For legislators, the geographic spread of pharma supply chains is another headache. The US Senate report pointed out that large numbers of drug and ingredient producers are located in China and India, whereas the US has limited manufacturing capability on both fronts.
By some estimates, China produces over 70% of all antibiotics.
French president Macron unveiled plans earlier this month to ramp up domestic production of key medicines. The government has drawn up a “core list” of 50 drugs, and aims to ramp up domestic production of at least half of these.
“The long-term solution to avoid shortages in our pharmacies is to bring back our factories. That is what we are going to do for many drugs,” the president declared.
Likewise, the US government is looking to step up domestic drug production, which it intends to stimulate in part through public-private partnerships.
Mr Kovacs reported that many pharma companies are planning to break ground on new production facilities in the US and increase output. At this stage of the game, discussions with logistics providers would be a bit premature, he said, adding that these developments seem unlikely to bring significant challenges for supply chains and logistics firms. These companies already have a US presence, temperature-controlled warehousing capacity is no longer extremely tight, and the biggest impact should be a rise in temperature-controlled trucking activity, he pointed out.
His own company is ready for an increase in US production, he said.
“We’ve continued to invest in extending our network, and we’ve added a lot of people and subject matter capability. We’re opening healthcare facilities around the world, and we keep rolling out GDP certification, which covers more than 100 stations at this time,” he said.
Comment on this article