How COVID Supply Chain Interruptions Affect the Medical & Pharmaceutical Industry in 2022

Over-dependence on foreign suppliers

Pharmaceutical raw materials are one of those commodities. There has been an increased demand for these products in Australia, Europe, and the United States.

Still, there have also been restrictions on exporting these commodities in many countries.

When such restrictions are in place, it becomes challenging to obtain supplies from abroad or pass them through channels with export restrictions.

With increased demand worldwide and export restrictions for these commodities in many countries, it is becoming harder and harder to be independent of foreign suppliers.

Lacking a diversified portfolio may lead to a higher likelihood of disruption in production or transportation if one of your key suppliers has an accident, cannot transport raw materials from overseas, or cannot supply adequate quantities due to shortages. 

In addition, not having a diverse portfolio of products and services means you have limited options for avoiding disruptions.

Surges in demand during the pandemic caused stock-outs and decreased capacity in hospitals.

Because of the pandemic, oncology and cardiology were no longer the priority. The number of people on the waiting list grew, and the demand for these drugs increased.

A surge in demand following a pandemic meant a greater risk of stock-outs in the wake of normal operations returning to normal. Even two years after the pandemic began, traditional pharmaceutical supply chains struggled to cope with these conditions.

Transportation disruptions continue due to ongoing restrictions.

Even after over a year since its containment, some regulations imposed during the containment of COVID remain in place, making transportation slow. For example, there are still restrictions on transporting vehicles across long distances, requiring approval from local governments.

Shipment setbacks can last days or weeks before proceeding to their destination. As a result, companies have to scramble to adjust their schedules accordingly. Freight disruptions affect all industries, especially those with strict deadlines like healthcare providers who rely on regular deliveries of suppliers to keep patients alive and healthy.

In addition, quarantines or other special restrictions on travel within a state or region can also create transportation disruptions that affect medical or pharma supplies. For example, local authorities may require people entering a community to be examined by health care workers before entry. Barriers to entry can disrupt distribution channels if goods have to be shipped directly from manufacturing facilities instead of through intermediaries such as wholesalers or distributors.

Logistics Failure

Medical supplies follow a tight production schedule. With a limited amount of time to produce them, factories require total operating capacity, resulting in high demand for transportation resources to move products from manufacturing facilities to distribution centers and stores.

A disruption in logistics will stall production lines because workers won't be able to get their materials on time. Even minor upsets can cause days of wasted work. 

The effects ripple throughout an entire network of suppliers and manufacturers that depend on one another to deliver products.

So, even if your company isn't directly affected by a pandemic or natural disaster, you could see delays or losses as companies further down your supply chain struggle to keep up with demand. In fact, in most cases, it's not just one link in the chain that breaks – it tends to be many.

Solutions to Supply Chain Problems

Intense consumer demand for medicine has led to many hospitals, clinics, and individuals rationing their supplies. Hospitals, particularly, have suffered because of limited shipments of drugs essential to maintaining a healthy patient population.

To ensure the delivery of medicines to those who need them most, many health organizations are employing alternative methods:

I. Setting up one or more backup suppliers

To minimize the disruption of drug delivery, many hospitals have set up alternative suppliers if a primary supplier cannot deliver. These secondary sources are usually small, local companies that have been able to fill orders with raw materials from other countries where production has not been interrupted by COVID.

II. Purchasing drugs from other countries

In addition to setting up backup suppliers, many hospitals have also purchased supplemental drugs from countries where production has been least affected by COVID.

However, many countries have placed restrictions on drug exports due to shortages in their own country; many wish to avoid the perception of dumping medicine on foreign markets.

These hurdles have caused import prices to skyrocket, making these channels cost-prohibitive for hospitals already operating at a loss.

Many hospitals have had to set up emergency stockpiles of essential medicines in case deliveries from primary suppliers are delayed or disrupted. These stockpiles can be expensive to set up and maintain. But they allow health organizations to continue providing care throughout severe freight disruption.

The Bottom Line

When it comes to health and well-being, delays are not acceptable. Whether you need a few doses of insulin or a vaccine against a deadly flu virus, being unable to access it in time can lead to severe consequences – up to death. Healthcare companies must prepare for any disruption in their supply chains, whether it is an employee strike, a cyberattack, or an epidemic outbreak.

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