Life Sciences Supply Chain Disruptions Likely to Persist through 2022

Apr 19, 2022

Supply chain disruption will be with biopharmaceutical companies for the foreseeable future, according to the recent CFO survey, Supply Chain Resilience, by BDO. A separate report by CatalentAllogeneic and Autologous Cell Therapies Report 2022, agrees, saying, “Bottlenecks are one of the most common hurdles facing cell and gene therapy developers.”

Drilling down to identify specific concerns, BDO found that global life science companies are most concerned about rising materials cost (51%), supplier risks or delays (46%), supply shortages (41%) and trade compliance violations (41%). For U.S.-only companies, the top issues were slightly different. Those respondents were most concerned about rising material costs (37%), demand unpredictability (37%), lack of supply chain technology (33%) and trade compliance violations (24%). Supply shortages (21%) and supplier risks or delays (19%) were lesser concerns.

BDO’s respondents said their perception of risk was driven by a mixture of geopolitical concerns, data protection regulations, geographic concentration of raw materials and ongoing COVID-19 outbreaks. (Lesser concerns included tariffs, regulations, transfer pricing and international R&D tax incentives.)

For example, Tony Quiñones, CEO of Bright Path Laboratories, Inc., told BioSpace that many key starting materials come from areas – like China – that still are experiencing lockdowns. A recent article in the South China Morning Post notes that although the port of Shanghai is operating round-the-clock, many warehouses are closed and truck drivers are reluctant to enter the area because of the risk of being quarantined. Any delay there trickles down to India, which needs those materials to make the intermediary products and then to those making the finished product.

To cope this year, life sciences companies are undertaking a supply chain risk assessment, conducting make-or-buy assessments, investing in supply chain technology and identifying backup suppliers.

There’s another option, too. The approach advocated by Bright Path Laboratories involves reducing the number of steps and ingredients needed to make the drug of interest. “Often, there may be 20 different vendors or ingredients needed to develop one drug. Our process eliminates a number of those ingredients,” Quiñones said, using rapid synthetic development and highly automated, controlled use of scaled cGMP commercial manufacturing.

“Our process doesn’t require as many solvents and precursors to break down a chemistry to make them react together,” he explained. “In one case, we reduced 10 vendors to four.”

Quiñones predicted supply chain stress for many companies in the rare and orphan disease spaces, as well as mRNA therapeutics. The current, limited number of suppliers in that area will be stretched, which will trickle over and exert greater stress on essential medicines.

Bright Path also is working with a Ukrainian supplier to help it fill gaps for its customers as a result of Russia’s invasion.

“Drug developers are looking for sustainability in their supplies, and the supply is unstable right now. There were problems prior to the pandemic, and now developers are seeing their six-month supplies dwindling, so they need reliable domestic partners,” Quiñones said.

Supply chain issues, global uncertainties, and “buy American” mandates from the federal government are contributing to the return of some manufacturing back to the U.S.  The Buy American initiative signed by President Biden in 2021 and finalized this March raises the required domestic content for federal purchasers from 55% now, to 60% in October, to 65% in January 2024 and 75% in January 2029.

Bright Path is bringing its capabilities online in North Carolina and New Mexico and is already serving customers. Quiñones is quick to point out this was done without receiving any money from Operation Warp Speed, while some who did receive funding to make products domestically are scheduled to break ground later this summer.

Cell therapy developers feel the constraints, too, although they are focused more on manufacturing. Respondents to the Catalent report noted challenges in cell therapy manufacturing – notably, “getting into the queue having plasmids and vectors produced” and “working with an outside party to schedule and facilitate improvements to our manufacturing process” – as reasons for developing manufacturing in-house. Some 57% (approximately the same percentage that manufactures in-house) cited the need for better supply chain control as the overwhelming reason for that decision. Of the 43% who manufacture their cell therapy products with a partner, 53% said the primary reason was their lack of in-house capacity. Only 29% mentioned access to their partner’s expertise as a reason to out-source.

In 2022, with COVID-19 restrictions and war affecting some of the key geographic regions that produce pharmaceutical ingredients, any delay trickles down to affect shipping and manufacturing. To minimize disruptions, biotech companies would be wise to make their supply chains as resilient as possible (building in redundancies, such as identifying alternate suppliers) and find on-shore or near-shore supply and manufacturing options.

Quiñones advised suppliers to forecast needs 6 to 12 months out and to ensure they each can have adequate supplies on hand.