Monday, April 20, 2020

COVID-19 and supply chains

...Separate from medical supplies specific to COVID-19, a longer-term disruption of China’s pharmaceutical and medical exports could increase the cost of everyday drugs and routine medical procedures in the United States. This could happen as it becomes harder to import APIs for common drugs and components for medical devices. 
According to FDA officials, in 2018, China ranked second among countries that export drugs and biologics to the United States by import line (accounting for 13.4% of U.S. imports of those products). However, FDA states it is not able to determine the volume of APIs that China is manufacturing given the complexity of the supply chain and gaps in what pharmaceutical companies are required to disclose about their inputs. 
China is also a leading supplier of APIs in global supply chains for painkillers, diabetes
medicines, and antibiotics, meaning a slowdown in API exports from China could increase cost pressures faced by U.S. drug manufacturers. For example, China accounts for 52% of U.S. imports of penicillin, 90% of tetracycline, and 93% of chloramphenicol. 
On February 27, FDA Commissioner Stephen Hahn announced that a manufacturer of an unspecified human drug informed FDA of a shortage the drug’s supply related to a Chinese API manufacturer affected by COVID-19. Because information disclosed to FDA regarding drug shortages is considered proprietary, FDA did not disclose the name of the drug in question, but did note that alternatives exist for patient use. 
China’s role as the primary supplier of APIs to global manufacturers of generic pharmaceuticals, particularly in India, is likely to increase overall costs of generic pharmaceuticals for consumers in the United States in the short-to-medium term. The outbreak of COVID-19 in India could also affect the availability of generic pharmaceuticals in the United States. India, which supplies approximately 40% of generic pharmaceuticals used in the United States, imports nearly 70% of its APIs from China. In March 2020, India imposed export restrictions on several drugs whose
supply chains rely on China, leading to fears of potential global shortages of generic drugs that have since escalated after India announced a nationwide 21-day lockdown.
It will be fascinating to see if pharma changes its supply chains in response to all of these events. 

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