It took some time for the WHO (World Health Organization) to recognize the novel Coronavirus (COVID-19) as a pandemic, but its impact on global markets (and health industries in particular) was hard to miss. 2019 closed with the first case traced to Wuhan, China. The city and many nearby are on lockdown, the largest quarantine in human history. As of March 2020, the virus has spread to every inhabited continent, with 118,000+ cases documented, and 4,000+ deaths reported.
Needless to say, the impact on investors, financials, and consumer behavior has been felt around the world. The extreme fluctuations of the stock market have been felt around the world. As financial institutions scramble to reassure investors and the public the effects are likely far from over.
For manufacturers of medical devices, pharmaceuticals, and lab equipment such a medical crisis is a double-edged sword. On the one hand, the demand for many medical products rises. Higher demand means more business in a battle to help save lives.
On the other hand, a crisis on such a large scale has a significant impact on the supply chain for manufacturers across industries. The growing dependence on equipment, raw materials and even packaging manufactured in Asia is driven by the low prices offered there. For many industries China has become a critical player in the process of manufacturing. The pharma industry is no different and COVID-19 serves as a perfect reminder of the risks of relying on a single overseas point of failure in the manufacturing supply chain.
Mounting prices for masks and protective gear in Asia and beyond highlight how these repercussions are being felt around the world, and the FDA has announced upcoming shortages in drugs and products as a result of supply chain caused by the crisis. In addition to protective gear such as masks and surgical gloves, pharmaceuticals and other ingredients that are part of the production process for human drugs are in short supply. Such shortages only serve to compound the problem, as well as the panic.
How is the pharma industry handling the crisis?
Manufacturers are hard at work trying to keep up with regular orders while still supplying the new high demand. These efforts are made all the more difficult because the industry is plagued by supply chain disruptions from the East where the virus impacts businesses the most. Even as the stock market periodically dives more than a few companies are seeing their profits and stock prices rise as the Coronavirus causes an infectious stock hype.
Preparing for the next crisis
COVID-19 is not the first, nor will it be the last virus to cause widespread panic and challenge the global health care market. As this crisis unfolds it is important to observe its short-term effects and long-term ramifications upon the market. Although at this time there is no certainty as to when this outbreak will subside, it is safe to say that the industry will need to adapt and change to deal with this, and future, crises.
The pharma manufacturing industry stands to learn much from the situation today. What insights can we gain already?
1. Plan ahead
Preparing for the unexpected is fairly impossible, but reviewing the way the crisis impacts your business now will help you create a contingency plan for the future. No plan can ever be perfectly accurate, but having a conceptual idea of the steps to take will come in handy in the event of an emergency.
Outline the way your business will operate if employees are quarantined. Will they work from home, or must you halt all operations? Considering these questions ahead of time will enable you to brainstorm and develop possible solutions. If your business is factory- or customer-based, maintaining regular operations may be an impossibility. In such a case your contingency plan is even more critical.
Safeguard your physical premises. If your business has a storefront or laboratory, it is vulnerable during a shutdown on any scale. Ensure that your doors are secured and consider installing cameras and other safety measures. Protecting your livelihood from the elements, robbery, and vandalism are important aspects of any emergency preparedness plan.
Be flexible, stay compassionate. Your employees are people, too. They have families and children who may have to stay home from school. While it’s best to establish policies to handle such events, it’s also vital to remain flexible to adapt to changing situations and sudden developments.
2. Network of support
Manufacturers dependent on Chinese providers of components and raw materials have been hit the hardest by the COVID-19 crisis. This dependence can do real damage to a business, rendering it unable to deliver on orders or maintain day-to-day operations.
Researching and flagging alternatives and other options for mission-critical suppliers, as well as service providers, is a smart strategy across all your business operations. Maintaining a well-stocked supply of all essentials is also encouraged to avoid a shortage. By keeping the potential of a supply shortage in mind, businesses can better withstand short-term crises with minimized impact.
3. Go local
Local production may sometimes be more costly, but having the option to avoid international trade in your manufacturing process can prove to be valuable at times of global crisis. As entire countries are quarantined and international shipping becomes more and more difficult, obtaining supplies from the usual sources may be a challenge, if not impossible.
Determining a list of local suppliers who can meet your needs in a pinch may be the difference between taking a hit, and shutting down operations completely. It is worth including a list of alternative suppliers to consider in your emergency plan before the next crisis, whenever that may be.
4. Leverage AI, automation and robotics
Innovative technological solutions can contribute to a more efficient business. With AI-powered BI and QMS systems, you can better understand and facilitate your company’s growth. Automation can help speed up workflows and offload tasks from people in the organization. Investing in such technology at these early stages can protect your business in the future, particularly in the event of another viral epidemic.
Already a worldwide leader in manufacturing and the fastest growing market, China is also leading the way in adoption of new technology including robots and automation. With the current lack of personnel available for on-site work in China in the wake of COVID-19, this early deployment of robotics and other manufacturing technology is relatively fortunate. Implementation of additional robots and automation of production lines are urgently underway.
Some examples of this new technology include working remotely and video conferencing, as well as “thermometer guns,” used to detect people’s temperatures. Such measures have become commonplace in China in the recent months since the outbreak, along with other, more advanced, approaches. Artificial Intelligence is assisting heavily in detecting symptoms, tracking the spread, and developing possible treatments.
As all this technology is new, the Coronavirus can be seen as a sort of trial-by-fire test for future success and sustainability. The coming weeks will be instrumental in determining how such tools and resources are developed and used in the next decades.
5. Ready, set, SCALE!
The agility to scale operations up and down according to market demands can make or break a business, in any regard. Being able to deliver high quality, compliant medical products at a time of crisis is not only a business advantage but an opportunity to help save lives.
A scaling plan as part of a contingency plan for such crises can let you respond faster to radical changes in the market. For example, consider what tools and processes you would need to prepare to have the ability to quickly train employees to increase production, or to allow personnel to work from home in the event of a quarantine. Looking into potential equipment rentals and emergency outsourcing of different stages of manufacturing may make the difference between maintaining production and shutting down in the future.
By learning from the past and present, we can improve the future for the pharma manufacturing industry. The Coronavirus has reminded us all that, as manufacturers of health care products, we have a responsibility not only to our investors, but also to patients, doctors, nurses, and the public as a whole.
As the COVID-19 crisis develops and unfolds we must face the challenges of growing demand and scarce resources plaguing the pharma industry. At the same time, we have to analyze the situation and our response to it in an aim to be better prepared for the next crisis.