Ensuring Business Continuity in Uncertain Times: Understanding Five Risk Categories that Can Lead to Better Mitigation Strategies
In a time where businesses are being forced to come up with contingency plans for pandemics, one industry that is particularly vulnerable is the pharmaceuticals sector. The supply chains that keep healthcare systems running are extremely complex and rely on a steady flow of components from all over the world. Disruptions to any part of the supply chain can have a ripple effect that causes shortages and price hikes.
There’s no doubt that pharmaceutical companies face significant challenges—especially with therapeutics and vaccines requiring refrigeration at precise temperature ranges in transit and storage. Although some errors can be tolerated for a general global supply chain, the same can’t be said for the pharma cold chain. There is no margin for error when you are working with materials that are highly sensitive and in high demand. For many drugs, temperature variation of even 1–2 degrees beyond acceptable ranges during transit, or exposure to moisture, can make a shipment unusable, leading to lost revenues, reptation and ultimately, patient lives.1 In fact, the IQVIA Institute for Human Data Science estimates that the biopharma industry loses approximately $34 billion annually due to supply-chain temperature-control failures.1
While it’s evident that there were challenges in the pharmaceutical supply chain even before COVID-19, the current pandemic has made these even more acute.2 As a result, it is critical for companies to evaluate their supply chain and determine how they can best mitigate risks that may be encountered along the way—now and in the future.
Classifying Challenges Offsets Potential Threats
Business continuity is something that every company needs to think about. Whether it’s a natural disaster or a data breach, there’s always the potential for something to go wrong. That’s why it’s so important to have a plan in place for how you’ll keep your business running in the event of an incident.
As you begin to plan, we recommend classifying challenges into categories or “buckets,” so you can take concrete actions to offset potential threats.
At Asymchem, we have spent time characterizing the following risk buckets and developing operational and business systems to armor against their impact:
- Security (physical and supply chain)
While some of these have slight overlaps, it is often better to be overly comprehensive than to narrowly construct these buckets, which may then lead to gaps that no risk-mitigation measure addresses.
When a business is planning for continuity, there are a number of financial considerations to take into account:
- Cost of replacing essential equipment and supplies
- Cost of lost productivity, which can occur when employees are unable to work due to an interruption in service
- Cost of temporary relocations
- Cost of additional staffing needs
When you have a business continuity program, it’s important to analyze your organization’s financial position. This includes liquidity and revenue forecasts, investments in equipment or labor force, as well as availability of financing—to quantify minimum cash requirements which could sustain operations for a defined period. 3
Clear strategies and procedures must be put in place for controlling costs, reporting information, budgeting as well as tracking expenditures so that the organization can come out on top.3
To ensure that our financial stability remains intact, Asymchem is committed to maintaining a healthy balance between preserving financial integrity and protecting the company from potential harm. As a publicly held company, our financial health is interrogated throughout public disclosure and audited financial reports. By being conservative in the M&A space and forming strategic partnerships and joint ventures, a company can further ensure their financial status remains stable. Our by-design debt levels are lower than the industry average, which helps us guard against financial exposure or consequences of forced rapid deleveraging.
Operations continuity planning is one of the most important aspects of continuity management. Yet, many businesses do not take the necessary steps to ensure that their operations will be able to continue in the event of a disruption. Disasters, both natural and man-made, can strike at any time, often without warning.
There are a number of threats to the continuity of business operations, including:
- Natural disasters
- Cyber security attacks
- System failures (e.g., power outages, computer crashes)
- Human error
- Theft and vandalism
- Employee strikes or protests
- Economic recession
- Reputational issues
While no amount of planning can completely eliminate the risks associated with these events, a good continuity plan can help to minimize the impact on your business.
The first thing companies should do is to consider potential disruptions that could affect your operations. Once you have identified the risks, you can then develop strategies to mitigate them. This might involve things such as storing critical data offsite, maintaining backup power generators, or establishing alternate supplier relationships. By taking the time to develop a comprehensive continuity plan, you can help ensure that your business will be able to weather any storm, literally.
At Asymchem, our operational system is based on a site hub model where multiple sites are centered in a specific geographic locale. Each hub is geographically isolated form the other, so a force majeure event in one region will not present an insurmountable challenge to continuing operations. In addition, sites in different hubs have overlapping capabilities, so there is no site whose capabilities are completely unique—everything we do can be done at a different site in one or more hubs. This ensures that operations can continue smoothly in the case of a disruption.
What’s more, we maintain exacting sites standards in terms of site engineering and site build quality. We serve as our own general contractor with a dedicated corporate function overseeing all site builds and modification, which allows us to know and understand each site and how best to address any disruptions that may arise.
There are also a number of technological considerations that need to be taken into account as you put together your business continuity plan:
- A robust backup and recovery system: It’s essential to have a robust backup system in place. Backups should be stored off-site, in a secure location that is not vulnerable to the same threats as the primary system. They should also be tested regularly to ensure that they can be restored quickly and efficiently in the event of an emergency.
- Power outages and network failures: Always have backup power sources on hand, such as generators or UPS systems. This way, you can keep your lights on and your computers running even when the grid is down. Second, have a plan for communicating with your employees and customers during an outage. This could include setting up a hotline or using social media to send updates.
- Employee training: In the event of an unexpected shutdown, employees need to know how to keep the business running. That means having a plan in place for how to handle customer service, IT support, marketing, and other essential functions. The best way to ensure that employees are prepared is to provide them with regular training on the business continuity plan. That way, they will be familiar with the procedures and will be able to act quickly and efficiently in the event of an emergency.
By taking all of these factors into consideration, you can ensure that your business is prepared for anything.
Asymchem’s manufacturing facilities are equipped with backup generators to ensure that even if power fails, operations can continue seamlessly. In addition, we upgraded our internet network in 2020 to increase bandwidth and strength, which helps to protect our backup and recovery systems so that they can be restored quickly and efficiently in the event of an emergency.
One important aspect of business continuity is security. While a broad term, security can refer to physical security as well as the more complex issue of supply chain security. The latter is seldom contemplated, yet represents the greater and more insidious of these two risk buckets.
It’s critical to have strong security measures in place to protect your business from potential threats. There are many different components to a strong security system, and it’s important to make sure that all of them are working together effectively. The following factors should be considered:
Physical security is often considered the fences and gates surrounding a facility. Companies need to consider:
- Installing security cameras, alarms, and access control measures.
- Protecting data and systems, which may involve backing up data offsite and implementing security measures such as firewalls and encryption.
- Potential security breaches, which should include procedures for reporting and responding to incidents.
Asymchem owns security obligations to the point where subcontracting does not exist and no non-Asymchem person interacts with client material or IP. Security and regional logistics (i.e., drivers) are all employed by Asymchem and accountable under the terms of security and nondisclosure agreements they sign. Asymchem makes extensive use of video monitoring in critical areas as well.
This helps ensure our facilities are secure. But even more importantly, this allows us to have a deep understanding of the inner workings of our facilities. If something were to go wrong, our team is armed with full knowledge of what to do and when.
Supply chain security
A company needs to takes responsibility not only for the assets their clients have asked them to produce but also for any additional assets they may need in order to do this. Having systems in place to guard against other additional assets being delayed or not produced in sufficient volume, inadequate quality, or too slowly to support project timelines, is a critical step that many companies often don’t consider.
When it comes to business continuity, supply chain security is a key consideration. In the event of an interruption in the supply chain, businesses need to be able to maintain operations and fulfill customer demand. To do this, they need to have a plan in place for securing alternative supplies. This may include:
- Stockpiling key components
- Establishing relationships with multiple suppliers
- Diversifying the sources of their supplies
At Asymchem, we maintain excess network capacity to handle sudden fluctuations in asset demand. To provide an even more comprehensive risk-mitigation measure, a company should maintain dedicated, state-of-the-art non-GMP sites that could be rapidly engaged to produce any materials they may need. For example, if a much-needed product fails to be delivered for whatever reason, we can intercede and produce the material to keep the project within its timelines.
As you plan for business continuity, it’s important to give careful thought to your personnel. After all, they’re the ones who will be keeping your business running if an emergency arises. There are a few things you’ll need to take into account:
- Adequate Staffing: Do you have enough employees to cover all essential functions? You don’t want to be understaffed in an emergency situation. Make sure you have a plan for how you’ll maintain adequate staffing levels, even if some of your employees are unavailable.
- Training: Are your employees properly trained to handle an emergency situation? It is important that they’re familiar with your business continuity plan and understand roles and responsibilities.
- Staying Informed: Things change, and your business continuity plan should change with them. Make sure your personnel are aware of any changes or updates to the plan so they can be prepared in the event of an emergency.
Asymchem takes safety seriously. In the event of a pandemic, we have plans in place to keep employees safe, providing transportation to and from work, and even in extreme cases, housing to accommodate minimal outside exposure to viruses.
Training is also very important to us. Our employees are trained regularly on how to follow protocols in case an emergency arises, and we’ve developed a plan that ensures manufacturing continues even with only skeleton crews. We have also established a “closed loop” communication system, in which one person relays information to another, who then confirms that they received and understood the message. This back-and-forth ensures that everyone is on the same page, prevents misunderstandings, and allows quick course correction if necessary.
Pharmaceutical companies are always at risk for disruptions in their supply chain. In order to mitigate these risks, it is important for companies to understand potential challenges and have a contingency plan in place, which includes financial, operational, technological, personnel and security considerations. Pandemics are just one example of a disruption that could occur; however, by understanding the different risks and separating them into discrete “buckets,” companies can better understand the risks and ultimately, develop specific plans to address them.
Since its inception in 1999, Asymchem has been positioned and structured to act as a true partner for pharmaceutical and biotech companies by offering integrated solutions across all stages of drug development and into commercialization.
Today, Asymchem is a leading contract manufacturer comprising eight manufacturing facilities in China and a fully staffed U.S. operations center in Research Triangle Park, North Carolina. Our staff of 7,000 employees include more than 2,600 scientists engaged in innovative research and process development from preclinical research to commercialization for both non-cGMP or cGMP products.
Asymchem’s breadth of capabilities spans conventional batch manufacturing, and we are a world leader in green chemistry. Our scientists excel in the creation and manufacture of enzymes for use in bio-catalysis, and the development of practical continuous flow technologies for commercialization. In addition to strong supply chain relationships, Asymchem maintains a dedicated facility for the in-house production of raw materials and regulatory starting materials to better control quality, costs and lead times.
Asymchem has partnered with more than 400 clients across the globe, and is currently involved in more than 600 ongoing clinical projects and 30 commercial projects. We have a consistently demonstrated ability to meet project deadlines and achieve commercialization success while exemplifying the long-term financial stability critical to project continuity and achievement. Our work has frequently won us “most valuable partner” and “strategic partner” recognition from major pharma and leading biotech companies.
Asymchem maintains an impeccable quality record and positive regulatory and environmental compliance history, with 30 successful USFDA, NMPA, TGA, MFDS inspections. Projects are handled at high standards of safety and environmental responsibility.