3 Questions Of Risk And Communication In A Time Of Coronavirus

By Louis Garguilo, Chief Editor, Outsourced Pharma

We’ll get to the 3 key questions momentarily. Let’s begin with a look at some supply-chain data and analysis, and an update from a prior editorial. This will put our questions in their starkest focus.

Arguably, of the supply-chain data and analysis Outsourced Pharma has gathered, most exemplary of where we stand today are within these types of concern:

• Along with the well-publicized fact the U.S. suffers from a ~90% reliance on starting materials and generics from China, it’s estimated only about 15-20% of generics companies actually know every aspect of their supply chain – particularly the sources of their starting materials.
• While exposure of the U.S. generics market to China is relatively small for finished-dosage forms (FDF) at 8%, and for active pharmaceutical ingredients (APIs) at 14%, FDF manufacturers generally have limited visibility into where key starting materials for their products come from within China.

This analysis originates from an industry investor with expertise in pharmaceutical supply chains, during a recent investor call held by MEDACorp, a healthcare-focused network of some 35,000 professionals.

Next, drawing our attention further outward, to the practiced public sanguine of bio/pharma executives, I selected three examples included in a mid-March CPhIonline coronavirus update (from a service provider, Big Pharma, and generics company):

• Catalent says it has not identified any significant risk that threatens delivery of products or clinical trial supplies. It has adopted specific procedures to minimize and manage any future disruption our ongoing operations, including expanded safety stocks of raw materials and personal protective equipment, as well as ongoing monitoring of suppliers’ stock levels to assure future deliveries.

• Sanofi says its global network of manufacturing plants is operational and the diversity of its global sourcing is helping ensure business continuity across all product lines. “At this time, Sanofi does not anticipate shortages for patients resulting from the COVID-19 situation.”

• Armas Pharmaceuticals says it does not expect any COVID-19-related product disruptions. The generics firm says it is closely monitoring stock levels at its logistics provider and is in contact with supply chain partners, group purchasing organizations, wholesalers and distributors to oversee where it can assist in ensuring supply of its products.

These are public statements. Conversely, they were preceded by the to-date relatively quiet FDA Commissioner Stephen M. Hahn in a press release:

“… the FDA has been closely monitoring the supply chain with the expectation that the COVID-19 outbreak would likely impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S.

A manufacturer has alerted us to a shortage of a human drug that was recently added to the drug shortages list. The manufacturer just notified us that this shortage is related to a site affected by coronavirus. The shortage is due to an issue with manufacturing of an active pharmaceutical ingredient used in the drug …”

So which is it?

Here’s what’s been coming in to me via the Outsourced Pharma network – that means readers like you.

More Transportation News

On March 4^th I published an editorial (COVID-19 No-Fly Zone: A Year And Counting For Biopharma Supply Chains) pointing out that drug substance and product often flies on commercial airlines.

An executive at a biotech, which among other things develops antibody-drug conjugates, informs me that editorial is more timely than perhaps we’d realized:

“We had our first air transportation problem today. We are not able to move QC samples into Italy, because there are so few commercial aircraft going there. We employed a professional company that moves pharmaceuticals around the world, thinking they’d find a way. They are having issues as well. This is not a showstopper in any way for us, but I’m thinking it’s just the start …”

A second supply-chain veteran, also currently at a U.S.-based biotech, is having similar experiences:

“Last night my international freight forwarder/customs broker sent me a note indicating air capacity in Europe is scarce. All passenger airlines are grounding huge portions of their fleets.

“Since 9/11, I have always maintained healthy inventories in the US, and now I am happy that I do. U.S. ground freight and the parcel carriers seem to be operating normally.”

Questions Of Consequence

Both these readers have supply-chain contingency plans. Hopefully, they also have effective communication strategies.

Here are three fundamental questions all Outsourced Pharma readers should ask to help think through both.

1. Did we adequately plan out our supply-chain risk assessments?

   1. If so, is it time to enact them, or are they already undertaken and how are they performing?
   2. If not, how can we develop plans now?

2. Are there CDMOs in the U.S. we can turn to?
3. How do we honestly but strategically communicate our situation?

   1. How do we communicate internally with our employees?
   2. What are our patient/consumer-facing communication strategies?
   3. What are our investor/stakeholder strategies?
   4. What are our CDMO/service provider communication strategies?

As we see, there are varying communication stances – particularly public versus private messaging concerns.

Is that an honest way to operate?

Here’s how one reader described the current situation to me:

“We are making a lot of public statements about our supply chain that have to be vetted carefully by our lawyers. I can tell you every day investors and customers are asking about our ability to supply. I hear of the same constant pressures from my peers at other companies.”

In my opinion, this points to a most important coefficient, particularly to the less experienced biotech:

Consistency in constituent communication.

If there are developing supply-chain concerns or challenges, but not material (in a supply-chain and legal/business sense) consequences of yet: Drug companies must carefully reassure patients/consumers – the carefully crafted public announcements above — while in the background the endeavors to ensure the concerns and challenges are addressed.

Communication to employees, and then stockholders, private investors and other stakeholders, are placed on a different communication plan.

And then your outsourcing operations: CDMOs, sources of raw materials, fill-and-finish partners, and logistics companies all need to know precisely where the supply chain stands, where any bottlenecks exist or are anticipated.

They need to know so they can assist you.

Open communication with your service providers may turn out most important in getting through the immediate coronavirus challenges. Give your full attention to answering question 3.d above.

Outsourcing the supply chain may have gotten you into this situation; now it may be the only thing that can get you out.