Chain reaction: how the biopharmaceutical supply chain survived the pandemic

The pressure on the biopharmaceutical industry caused by Covid-19 is unprecedented, especially in the supply of materials. Government-enforced priorities and record demand have led to lengthening lead times, and the impact has been felt throughout the supply chain. In this period of adversity, the industry has responded with a colossal effort to produce and distribute hundreds of millions of vaccine doses worldwide. To continue to do this however, some significant issues remain unresolved.

Supply chain issues

A major challenge for industry is that there is so much change in requirements that no one yet knows what the ‘new normal’ looks like. Many frontline production personnel are still the only staff onsite, with almost everyone else operating from home. Companies are working hard to perform normal day-to-day activities, while expanding capacity and supporting the projects relating to vaccines, treatments or therapies. Ensuring that the manufacturing space has the right material supply at the right time is a widespread concern.


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“A critical area for us is in the single-use space, particularly around manufacturing sub-assemblies,” said Joe Reilly, Senior Director for Global Strategic Sourcing at Alexion. “Due to the number of materials and components used, an issue with one item means the whole assembly is delayed. By micromanaging some items with suppliers for the last year or so we haven’t had a direct manufacturing impact, but it’s still a concern for us.”

Suzanne Daniels, Director of Global Procurement, Biotech at Pfizer, said that her company had some problems with the movement of goods between countries when borders closed during the initial stages of the pandemic. “We then faced sustained issues in supply, with many suppliers reporting they’d received surge demand for materials and didn’t have enough capacity to keep pace.

“We’ve also had issues with the supply of single-use items,” Daniels added. “The pandemic has driven biomanufacturers towards single-use because it’s intended to be fast, flexible and quick to get operational for certain therapies and treatments. However, demand is high for single-use items.”

However, it is important to understand that Covid-19 and industry’s supply chain response can also have far-reaching effects and impact many non-vaccine products. “For example, we manufacture cell culture media for in vitro fertilization (IVF) procedures, that is used to assist parents during their IVF treatments, in an effort to have a baby,” said Marlin Frechette, Chief Quality & Compliance Officer (CQO) at FUJIFILM Irvine Scientific. “However starting in March 2020, many IVF clinics around the world closed due to the pandemic, which meant families were unable to start or continue with their treatments, which as we can imagine impacted patients worldwide. The clinics have reopened slowly and with many controls in place, still all suppliers of cell culture media are now prioritizing Covid-19 projects.”

This situation may be similar for those waiting for treatments for life-threatening illnesses, such as cancer.


Surety of supply

One of the significant issues being felt throughout industry is around the surety of supply to support patient need, particularly how supply vs demand is impacting safety stocks.

“As a biomanufacturer, having enough material for production plus a small buffer of safety stock would be our first line of defense,” explained Daniels. “But since March 2020, we’ve seen many lead-time increases from suppliers and maintaining any safety stock has become a real challenge.

“From certain suppliers, we get a ‘just in time’ delivery so our buyers are in a constant expedite mode,” added Daniels. “We often receive requests from our suppliers to prioritize orders, share information about minimum quantities we need to maintain our operations or, in some cases, to prioritize between our plants.”

Reilly said that Alexion has been able to build safety stocks for some materials and components, but receiving materials from supplies could be problematic. “We have a reasonably healthy inventory position in 90% of cases, so we’ve been trying to hold our production plans firm and not put extra strain on our supply chain by changing our volumes or forecasts. This has been pretty successful and so we have many of the materials and components we need.

“A greater concern is that if we have planned on, say, a 25-week lead time for a material, then being suddenly notified that this has pushed out to 54 weeks gives us a major problem for new orders. We’re trying to deal with this as well as trying to build inventory. We’re certainly not running lean, but I would suspect that very few companies in the industry are because it’s just so unpredictable.”

Companies are working hard to balance the extra workload, the materials required, the minimum quantities needed and where these are used. They are building extended lead times into their production planning and working closely with suppliers to mitigate potential problems.

“But some of our suppliers can’t confirm deliveries beyond the next six weeks,” said Daniels. “Replenishment lead times are very long for any new orders. On the material supply side, we’ve had to make full use of our proactive risk mitigation and second-source qualification program.”

However, Reilly said that it is not just materials where there is pressure on lead times. “We’ve also seen issues around our external quality testing capacity. We have several suppliers, either directly sub-contracted or through contract manufacturing organizations, where lead times are extending on testing. It seems to be an increasingly acute problem that I don’t think is going to disappear any time soon.”

An impact of industry’s supply chain issues is that countries have been looking for ways to be less reliant on supplies from other countries. For example, the US’s Biomedical Advanced Research and Development Authority (BARDA) launched a congress-funded, strategic partnership to foster and expand pharmaceutical manufacturing by increasing US-based capacity.


Operation Warp Speed

Another US government initiative is the Defense Priorities and Allocation System (DPAS), otherwise known as Operation Warp Speed. It is mandating that all biopharmaceutical suppliers should prioritize orders from companies producing a Covid-19 vaccine. This can significantly impact operations, especially for non-Covid-19 supplies; the trick is to find the balance to ensure all other patient needs are met.

“If we were expecting a shipment, but the supplier receives a priority order from a Covid-19 vaccine manufacturer, then our order moves down the supplier’s list and the supplier may be unable to commit to a delivery timeframe for us,” explained Reilly. “Some suppliers are uncertain about when they can commit to shipping our order and can only let us know late in the schedule, maybe only 7-10 days before we’re expecting it in case our order is deprioritized. As vaccines are approved, there’s likely to be increased strain as governments put manufacturers under pressure to get vaccines to market.”

This prioritization happens even if orders were placed long before the DPAS initiative started and may be delayed by two or three months, if not longer. Frechette suggested that “customers understand that Covid-19 takes priority, but it creates pressure and delays to other programs that need to continue their clinical studies or manufacture other critical drugs”. Unfortunately, the collateral impact on patients because of potential delays to their non-Covid-19 drug treatments is not yet fully understood.

“Demand for raw materials has increased tremendously because projects supporting Covid-19 require a lot of raw materials such as amino acids, vitamins and minerals, and other items such as packaging materials,” Frechette added. “The worldwide demand is so high that we are depleting the inventories of common suppliers. We have been qualifying new suppliers and raw materials as turnaround times from existing suppliers are so unpredictable.”

The impact on commodities and services

Many companies are looking at outsourcing some steps in their process, such as packing, or increasing capacity through extra shifts and expanding their physical layouts. But this too may have its issues. “If we bring in a modular cleanroom, for example, and use outsourced personnel for extra shifts, they have to be trained and qualified correctly,” said Frechette. “Covid-19 means it’s difficult to secure the right personnel as demand is so high. It’s like starting another company really quickly.”

Investment needs to happen deep into the supply chain because delays are not always just caused when finished goods are created, it is where tubing and plastic film is manufactured. This should ensure industry can produce items of equivalent quality in different regions of the world and not be impacted by political decisions that prevent the free movement of products outside of national boundaries.

Investing in new facilities is one way for biomanufacturers to increase capacity, but this can be tough because of the impact of Covid-19.

“We began work on a new facility in the Netherlands just before the Covid-19 outbreak and then decided to increase engineering work to accelerate its commissioning,” Frechette added. “Unfortunately, equipment was delayed because supplier plants were closed down, which slowed commissioning deadlines. So we allocated extra internal personnel to get our validations completed quickly to offset the equipment delays. Thankfully, customers have been keen to qualify the facility quickly because it supports their increased demand.”

This is an example where initiatives such as the Rx-360 Joint Audit Program® can help. BioPhorum collaborated with Rx-360 recently to raise awareness of the value of using the Rx-360 Joint Audit Program® to help alleviate the audit burden in the in-bound supply chain.

Some companies are also putting extra focus on their contract manufacturing organizations across their commercial and clinical programs. “We’re trying to understand where they see pressure on the supply of materials or components they need,” said Reilly. “It’s also a little uncertain how some of them might be treating clinical programs over commercial ones and the capacity that they’re allocating to Covid-19 vaccine manufacturing.”

As national health authorities approve vaccines, manufacturers are likely to be ramping up their production and booking capacity with the global contract manufacturing organization network. How this will affect the network’s overall capacity is unknown but is something on many companies’ watchlist.


People, processes and technology planning

Some members have said that the planning needed under Covid-19 has caused many of them to go ‘off system’ and revert to using spreadsheets because their enterprise resource planning systems cannot always cope with the many changes brought to bear on suppliers and manufacturers at short notice. Investment in these systems and processes should facilitate open conversations up and down the supply chain. This openness would also help with visibility and information shared by government organizations down to biomanufacturers and then into suppliers.

“Many of the changes we have made to our planning have been driven by requests from the supply base and when supply is disrupted in any area or replenishment lead times or quantity changes at short notice, you can fewer automated processes,” Daniels explained. “Suppliers have asked, ‘What’s the minimum quantity you need?’ or ‘What’s the very latest you could accept a delivery to prevent your production operations shutting down?’ This means more manual interventions and a prioritization exercise for our planning teams.”

Daniels added that responses from suppliers show how tough it is for them to fulfill orders. “Some suppliers have even asked, ‘Do you have an alternative source qualified? If so, could you please order from them’. I’m not sure I can ever remember a time where a supplier asked me to actively source material elsewhere.”

Reilly explained that Alexion has invested in building strong supplier relationships and holding face-to-face meetings at their sites, regardless of location. “We’ve reaped the benefits of this approach over the last year and successfully resolved issues by knowing the decision-makers in suppliers. Being honest transparent about our short-term, often critical, needs means that suppliers have usually been able to support us.

“These relationships have also helped us gain an insight into their supply challenges in a very proactive way to understand the potential issues coming down the line. So several suppliers have told us, ‘Watch out for Material X over the next eight or nine months because it is also in the makeup of a particular vaccine’. This insight lets us take proactive action and mitigate risks that may be ahead.

When biomanufacturers and their suppliers discuss future demand for materials, a robust forecast is crucial to provide a structure for transparent and open conversations. This and the need for more regular forecasting are covered in BioPhorum’s Forecast template and Forecast and demand planning communication package, which are bringing great benefit to users.

“How to forecast better is something we regularly hear about from BioPhorum,” Reilly added. “Pre-Covid-19, we might have updated our forecasts twice a year for a 48-month horizon. Now we refresh our forecasts once a quarter for the same period. I can see us doing this for at least the next 18 months.”

Changing predicted demand from customers can also create uncertainty for biomanufacturers. “We have a certain level of numbers forecasted by our customers, but sometimes it feels like we receive almost daily changes for greater demand,” said Frechette. “So even once we make a plan, changing customer demand can have a huge impact. For one of our products, we received two- or three-years’ worth of orders from customers that they wanted in a few months.”

Risk management

One of the common themes throughout industry is improved risk management and having a business continuity plan that is appropriate for a post-Covid-19 world. “We now have a pandemic plan,” Frechette explained. “We already have a business continuity plan that includes a pandemic response, but our specific pandemic plan is more detailed because we’ve learned so many things. For example, what is critical to a supply agreement, supply issues on components with single sources, etc.”

BioPhorum’s Best practice guide to risk management in the biologics industry supply chain encourages industry to review its risk management approach and build resilience in its frameworks. One of the crucial aspects of this approach is accepting the greater need for secondary sources of critical materials and supplies.

“Covid-19 has driven us to develop alternate sourcing programs for some materials and components,” said Reilly. “I think we have probably done more alternate sourcing in the last nine months than we did in the previous three or four years, which is certainly going to help as a risk mitigation strategy.”

There is a greater acceptance of the need to qualify alternates, which is a significant commitment for a biomanufacturing company in terms of technical, quality and procurement teams needing to manage that change. At the same time, when a supplier increases its capacity – whether that’s adding cleanroom space, making changes to their manufacturing plants or creating new ones – then there are increased change control requests. “This means a lot more activity around managing change and therefore work required to evaluate it and ensure there’s no impact on our finished product,” suggested Daniels. 

Industry response

As well as delivering across a rapidly changing landscape, companies have been planning to be better prepared for any future pandemic situations. This can be seen in the focus on risk management and actions to de-risk parts of their processes, such as having secondary sources for materials.

However, the whole supply chain needs to further invest in its capacity to support new demand levels and ensure redundancy is built-in for future growth. Planning and forecasting need improvement at all levels to allow better communication of numbers and ensure that people, processes and technology are in place.

With eight or nine major companies involved in vaccine manufacturing, and many more with candidate products, they are all pulling on people and raw material resources at the same time.

Responding to the increased, volatile demand continues to be a Herculean task to which the whole supply chain is responding. Imagine how other industries and their supply chains might react to a similar challenge: what would the computer and aerospace companies do if they were asked to massively ramp up production with just a few months’ notice? And ensure their products have been tested and are safe for users?

Yes, there continue to be supply chain problems and there are likely to be bumps in the road ahead, but what the biopharmaceutical industry working together has achieved to date is not far short of miraculous.

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