The Next Supply Chain Capacity Expansion Will Be…

In the current environment, the big push for production and the biggest shortfalls in capacity is for test kits.  Recent reports identify that the level of testing is far below what they need to be, and despite their best efforts, test kit manufacturers and laboratories are not able to keep up, due to shortages of reagents, equipment, and other issues.

The next big push, of course, is going to be in vaccines.  A recent article noted that the U.S. has invested as much as $2.1 billion to Covid-19 vaccine partners Sanofi and GlaxoSmithKline Plc, the biggest U.S. investment yet in fast-tracking shots and snapping up supplies.

In addition, Britain has also become one of the biggest buyers of potential vaccines against Covid-19, following an agreement to purchase a fourth vaccine that takes the UK stockpile to 250m doses so far.  In a worldwide scramble, which has been criticized by campaigners who warn vaccine nationalism will cause billions of people in poorer countries to lose out, the UK, the US and EU are in effect securing their own supplies. Wealthy countries are able to take a gamble, signing deals for vaccines that may not work.

This chain of events will of course eventually result in a domino effect, because most of the big manufacturers like Glaxo and Sanofi do not manufacture their own products.  They rely on large “contract manufacturers” like ThermoFisher and Catalent, among others, to produce and ship products for them.  These contract manufacturers must then begin to plan for how they are going to allocate their capacity, and where to place their bets.

Rather than just placing massive bets on every type of vaccine that is out there, the idea of supply chain immunity is one that I have been promoting in the past, and which I believe should stand out as the guiding concept for development of a vaccine.  There needs to be some strategic planning around how to standardize requirements, as well as wargaming and scenario planning to be able to pool production requirements across contract manufacturers, distributors, vial manufacturers, and distribution providers.  We have the planning capabilities to do this on a global scale, but it will require greater collaboration and leadership on the part of all major parties in the supply chain.  Somehow, I don’t see this happening at the moment..

The fact remains that our healthcare supply chain is not good at planning for unexpected events.  Vaccine development is by no means a predictable process, and there need to be more agile approaches to planning ahead.  For example, providers could begin to look at the materials used in vaccine development, and understand where the bottlenecks are likely to be in supply.  Strategic investments with critical suppliers, to build flexible capacity or at least be prepared with plans to expand should be occurring.  This will require some careful, collaborative contracting approaches, that are not predicated on the lowest bid.  In addition, systems for sharing forecasts and identifying protocol for demand planning should be established between partners to prepare for potential onslaught of demand orders that may be forthcoming..this is what we mean by development of supply chain immunity.   Preparing for an unknown event that is imminent…