Global Pharma Supply Chains: What’s Next in 2022

In 2022, both the EU and the US will continue policy moves to evaluate vulnerabilities in bio/pharma supply chains and recommend solutions to address those vulnerabilities.

In 2022, both the EU and the US will continue policy moves to evaluate vulnerabilities in bio/pharma supply chains and recommend solutions to address those vulnerabilities.

The EU and API supply
The European Commission is moving forward with a process for amending pharmaceutical legislation in the European Union (EU) as part of its Pharmaceutical Strategy for Europe, which was adopted in November 2020. It concluded a public consultation late last month (December 2021) to gather the views from both the general public and stakeholders to support the evaluation and impact assessment for the revision of the EU’s pharmaceutical legislation. The new public consultation follows an earlier one conducted for the preparation of the European Commission’s Pharmaceutical Strategy itself.

Since the adoption of the Pharmaceutical Strategy in November 2020, the European Commission has been working on a number of actions in cooperation with EU member state authorities, the European Medicines Agency, and stakeholder organizations. A major flagship action is the revision of the general pharmaceutical legislation, expected for the end 2022.

The last comprehensive review of the general pharmaceutical legislation was tabled almost 20 years ago. The EU’s Pharmaceutical Strategy adopted in November 2020 includes an ambitious agenda of legislative and non-legislative actions to be launched over the coming years, with four main objectives: (1) ensuring access to affordable medicines for patients and addressing unmet medical needs (e.g. in the areas of antimicrobial resistance, cancer, and rare diseases); (2) supporting competitiveness, innovation, and sustainability of the EU’s pharmaceutical industry and the development of high-quality, safe, effective, and greener medicines; (3) enhancing crisis preparedness and response mechanisms and addressing security of supply; and (4) ensuring a strong EU voice in the world by promoting a high level of quality, efficacy, and safety standards.

As part of the development of its Pharmaceutical Strategy as it relates to medicine supply and evaluation of supply chains and vulnerabilities, the European Commission created a mechanism for a structured dialogue with relevant public and private actors of the pharmaceutical supply chain. The structured dialogue first focused on identifying the causes and drivers of potential vulnerabilities, including dependencies in global and complex supply chains of critical medicines, their raw materials, active pharmaceutical ingredients (APIs), and intermediates.

After closing knowledge gaps and gaining a better understanding of the current situation, the European Commission will consider possible solutions to address issues identified. As part of that process, it opened up a public consultation to comment on the Pharmaceutical Strategy for Europe, which includes measures for manufacturing and supply. That public consultation ended last month (December 2021).

The US and pharma supply chains
A key milestone in the US government’s consideration of pharma supply chains is coming in 2022, with an anticipated release of findings from a one-year review of industry supply chains, including pharmaceuticals. The long-term review was by directed by President Joe Biden through an executive order issued in February 2021 for six sectors. These sectoral reviews direct federal agencies and departments to review a variety of risks to supply chains and industrial bases within one year of the executive order issue date of (February 24, 2021), by which the specified heads of agencies in these six sectors, which includes pharmaceuticals, are required to submit reports to the President.

These reviews must identify critical goods and materials within supply chains, the manufacturing, or other capabilities needed to produce those materials, as well as a variety of vulnerabilities created by failure to develop domestic capabilities. Federal agencies and departments are also directed to identify locations of key manufacturing and production assets, the availability of substitutes or alternative sources for critical goods, the state of workforce skills and identified gaps for all sectors, and the role of transportation systems in supporting supply chains and industrial bases. Additional details required in this assessment of US manufacturing supply chains are outlined below.

  • US manufacturing capacity. The manufacturing or other needed capacities of the US, including the ability to modernize to meet future needs;
  • Gaps in US capabilities. Gaps in domestic manufacturing capabilities, including nonexistent, extinct, threatened, or single-point-of-failure capabilities;
  • Limited resiliency in supply chains. Supply chains with a single point of failure, single or dual suppliers, or limited resilience, especially for subcontractors;
  • Location of manufacturing assets. The location of key manufacturing and production assets, with any significant risks posed by the assets’ physical location;
  • Other countries involved in the supply chain. Exclusive or dominant supply of critical goods and materials and other essential goods and materials by or through nations that are, or are likely to become, unfriendly or unstable;
  • Alternative sources. The availability of substitutes or alternative sources for critical goods and materials and other essential goods and materials;
  • Current US workforce and gaps. Current domestic education and manufacturing workforce skills for the relevant sector and identified gaps, opportunities, and potential best practices in meeting the future workforce needs for the relevant sector;
  • R&D capacity. The need for R&D capacity to sustain leadership in the development of critical goods and materials and other essential goods and materials;
  • Transportation systems. The role of transportation systems in supporting existing supply chains and risks associated with those transportation systems; and
  • Climate-change risk. The risks posed by climate change to the availability, production, or transportation of critical goods and materials and other essential goods and materials.

In addition, the supply-chain assessments are to include whether there are possible avenues for international engagement with US allies and partners for the critical goods and materials and other essential goods and materials identified in the review of the given sector’s supply chain. The assessment should also identify the primary causes of risks for any aspect of the relevant industrial base and supply chains assessed as vulnerable. The assessment should include a prioritization of the critical goods and materials and other essential goods and materials, including digital products for the purpose of identifying options and policy recommendations. The prioritization is to be based on statutory or regulatory requirements, importance to national security, emergency preparedness, and US policy.

Agencies are directed to make specific policy recommendations to address risks as well as proposals for new research and development (R&D) activities. The executive order specifies that the policy recommendations for ensuring a resilient supply chain for a given sector should evaluate the following:

  • Reshoring. Sustainably reshoring supply chains and developing domestic supplies;
  • Alternative supply chains. Cooperating with allies and partners to identify alternative supply chains;
  • Redundancy. Building redundancy into domestic supply chains;
  • Stockpiles. Ensuring and enlarging stockpiles;
  • Workforce. Developing workforce capabilities;
  • Financing. Enhancing access to financing;
  • R&D capacity. Expanding R&D to broaden supply chains;
  • Digital-products risks. Addressing risks due to vulnerabilities in digital products relied on by supply chains;
  • Climate-change risks. Addressing risks posed by climate change, and any other recommendations;
  • US government support and policy. Any executive, legislative, regulatory, policy changes and any other actions needed to strengthen capabilities; and
  • Other US government efforts. Proposals for improving the US government-wide effort to strengthen supply chains.

Going forward, after this initial one-year review of supply chains, the executive order specifies that the US government also plans to conduct regular, ongoing reviews of supply-chain resilience, including a quadrennial review process.

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