As countries and companies alike continue to grapple with the unprecedented challenges thrown up by the novel coronavirus (COVID-19), a specific area of concern has been the uncertainty surrounding the impact of the COVID-19 pandemic on the global as well as pharma industry supply chains. The concerns have been aggravated by the fact that COVID-19 struck first, and worst, in China, which is the world’s leading producer and exporter of active pharmaceutical ingredients. A significant number of pharma companies in Pakistan and around the world import a bulk of their raw materials from China, which witnessed a lockdown of over two months from January 2020 to March 2020, while it battled COVID-19.
During this emergency situation in Pakistan due to Covid 19, the supply chain of Pharma industry was also significantly affected.
Supply chain department is the backbone of any manufacturing or service organization in which inventory is one of the most important elements. Similarly, at all pharmaceutical companies’ inventory performs a major role in company’s performance, operational efficiency and customer satisfaction. When organization won’t be able to have enough inventory levels its operational efficiency will decrease, and this will lead to loss of customer satisfaction as organization won’t be able to meet customer orders. Since all active raw materials of Pharma industry are imported therefore, supply of raw material components were badly affected in current Covid 19 situation. Mostly pharmaceuticals are dependent on cargo system for the delivery of imported raw material which was not operational. The only cargo flight that was operational is through chartered cargo plane which is extremely expensive.
As of Jan 2020 all the raw material was available except the one active component that is imported from China. China was the 1st country that faced this pandemic therefore production was stopped in China since December 2019. Due to this, Chinese suppliers were unable to deliver raw material to Pakistan. Therefore, even with availability of all raw material, goods, infrastructure, machinery, man power, sound planning, strategic objectives and well planned production and delivery schedules, all the departments still couldn’t perform their operations.
In order to compensate the production that was badly affected due to lockdown of 2 weeks, companies had to increase overtime shifts that increased expenses of the company as they had to pay more to workers for over time shift. Workers who are above age of 50 and were not well enough to work had to give paid leave in order to avoid health risk and transfer to other workers while working together. This led to another added expense due to hiring of part time workers in order to avoid production and order delays.
Problems that companies faced due to above mentioned integration and dependency have been multiplied in the current situation of this pandemic. In current situation efficiency of organizations has been decreased due to delay or unavailability of raw material, reduction in manpower, social distancing, and precautionary measures as imposed by WHO. Since all goods and departments are dependent on each other companies has to suffer significant decline in productivity.
Talking about the distribution system, it was also affected due to the closure of wholesale market and unavailability of local transportation. The company’s distributors were unable to supply to local retailers, pharmacies and shops. Institutional distributors who further supply to private hospitals, nursing homes and direct practicing doctors were also unable to distribute products timely.
The lessons from COVID-19 are with a hope to change the global footprint of Pakistan pharmaceutical companies and more importantly, reduce dependence of the domestic pharma companies on a single supplier like China.