TMCnet Feature
June 04, 2020

Impacts of COVID on the Pharmaceutical Industry - Barinder Sandhu's Assessment

In the recent months, the onset of the novel coronavirus has significantly impacted nearly every industry on a global scale. According to Barinder Sandhu, the Founder and CEO of Evergreen Pharma Solutions, the pharmaceutical industry proves no exception. While the concrete details regarding industry changes are yet to be determined, one thing remains certain: the industry will weather drastic shifts due to COVID-19’s implications.

Over the last two decades Barinder Sandhu has helped some of the largest global companies increase productivity whilst delivering significant cost savings. Her industry knowledge and 20-years of experience have earned her the reputation as a trusted visionary in the pharmaceutical world.

In the following article, Barinder Sandhu explores COVID-19’s potential impacts on global pharmaceutical marketing dynamics, with special attention on supply chain management. In an attempt to provide guidance on impending shifts, she outlines the short-term, mid-term, and long-term impacts of COVID-19 as they will likely occur in the pharmaceutical industry.

Short-term Impacts

Drug Shortages

Perhaps the most immediate short-term impact caused by COVID is the widespread creation of drug shortages. As demand for some drugs have increased, manufacturers have struggled to meet needs.

These shortages are further exacerbated due to the extensive adoption of premature information, which has induced a trending towards medication stockpiling. For example, the premature advisement that acetaminophen be used to treat COVID-19 symptoms such as fevers has created an immediate shortage of the drug. However, the notion itself has since been formally retracted. Similarly, shortages are further aggravated due to the need for Rx medications. As a result, many pharmacies have implemented restricted dispensing to a 30-day cycle.

Relaxed FDA Standards 

Considerable shortages of certain key medications (e.g. Hydroxychloroquine) have created an increased demand. As a result, facilities that were previously deemed non-compliant by the FDA have received "exceptions" for imports in an effort to boost overall production and minimize shortages.

During a normal year, the US Food and Drug Administration performs 500 inspections a year of Chinese pharmaceutical and medical device plants. However, COVID-related travel restrictions have postponed these measures, meaning 2020 could see significantly less surveillance in regards to product qualities and production practices.

In the short term, relaxed FDA standards may help to minimize drug shortages, but Barinder Sandhu highlights that there is uncertainty regarding how the FDA will rationalize their decision to support such allowances and exceptions of non-compliant facilities to commence manufacturing after initial shortages are solved. Likely, once the virus is addressed, inspections will resume, and bans will be reinstated in an effort to improve the national economy by supporting domestic manufacturing.

API Shortages Lead to Price Increases

Currently, only 28% of the active pharmaceutical ingredients (API) used by major US pharmaceutical companies are manufactured domestically within the US. Most commonly, they are imported largely from India (18%), the European Union (26%), and China (13%). Thus, as COVID progresses, the pharmaceutical industry can expect significant supply chain disruption to continue. These disruptions have inevitably created increased costs. Shutdowns and port restrictions are also adversely impacting production, which will continue to result in increased API and R&D costs throughout the coming months.

To combat the impact of these shortages, Barinder Sandhu suggests local manufacturers embrace the opportunity to evaluate the drug shortage list and work to reprioritize their production schedules. For many, the most profitable move will be to ramp up the manufacturing of in-demand medicines to minimize drug shortages and capitalize on current needs.

Mid-term Impacts

Further Supply Chain Challenges

As the COVID pandemic progresses, Barinder Sandhu believes supply chain disruption will continue past the short term, ultimately warranting an in-depth evaluation of local needs vs. global needs. Trade threats (such as those posed between the US and India regarding Hydroxychloroquine supply and those posed between the US and Canada regarding 3M (News - Alert) masks) will continue to raise concerns regarding national interests.

As COVID’s longer standing impacts become more apparent, Barinder Sandhu believes the federal government will seek to improve the national economy amidst COVID’s initial fallout by minimizing the country’s reliance on foreign imports. Likely, they will instead enlist domestic pharmaceutical manufacturers to fill the country’s domestic needs.

In response to mid-term impacts, Barinder Sandhu encourages shifting the collective focus from reactionary measures (i.e. researching vaccines and medications) to more proactive methodology. For example, investing in quick laboratory diagnostic therapies will likely prove promising in helping mitigate the spread of disease. An increased focus on medical devices may also prove advantageous.

Long-term Impacts

Decrease in Research and Development

As overall costs rise and resources are reduced, the pharmaceutical industry can expect significant long-term profit reductions. In turn, these shifts will likely launch a decline in research and development investments, prompting a halt in industry advancement.

In an attempt to ease some of these negative impacts, some national governments are making efforts to offset current expenses and funding interruptions. The EU’s Innovative Medicines Initiative (IMI), for example, has offered the equivalent of around $50 million in research and development funding for promising coronavirus research. Similarly, a consortium led by the Bill &  Melinda Gates Foundation has pledged $125 million in funding to expedite drug access during the coronavirus pandemic.

Failed Vaccines Create a Push for Innovation

As many pharmaceutical companies rush to develop COVID-19 therapies, the virus will continue mutating. Barinder Sandhu highlights that it will take considerable time to produce safe, effective vaccines. There are currently ~108 vaccines in the development process globally, the majority of which will likely fail. Given that travel bans have halted patient travel, clinical trials will also prove difficult.

In this way, Barinder Sandhu believes an effective vaccine is a moving target. Even if a successful vaccine is developed, it is doubtful that manufacturers will have the capabilities to effectively mass produce it. It is her hope that the use of AI will lead to the development of new therapies which will help to speed up drug discovery and provide an expedited solution to the coronavirus pandemic. Likely, it is a proactive approach (investing in quick laboratory diagnostic therapies, for example) that will prove most effective in alleviating the COVID-19 pandemic.

About the Author

Barinder Sandhu is the Founder and CEO of Evergreen Pharma Solutions; a best in class consulting service to global pharmaceutical and pharmaceutical/cannabis companies. Ms. Sandhu’s unique skill set allows her to offer creative solutions into business strategy & organizational design coupled with a core knowledge in regulatory affairs, quality assurance and business process re-engineering. This allows her to effectively work with both C-suite leaders and line management at a strategic and operational level. Her clients appreciate her proven track record with both start-up companies as well as more mature organizations, where she has led business transformation projects applying key principles of lean sigma to increase productivity whilst delivering significant cost savings.

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