How Pharma Business Can Absorb Russia-Ukraine War’s Impact
- Many drugmakers have suspended operations and deferred investments in Russia
- Pharma companies must prepare for a possible rise in supply chain bottlenecks and increase in input costs
- They can mitigate the risk of further supply disruptions by transitioning to a digital supply chain
May 16, 2022 | Pharma and Life Sciences
There has been a mixed response from the global pharma industry about the continuation of business with Russia after it invaded Ukraine in February.
AbbVie, an American biopharma company, suspended its aesthetic products operations and paused new clinical trials in Russia. Pfizer, Bayer, Sanofi and some others have deferred new investments or development in the country.
Drugmakers such as Abbott Laboratories and Johnson & Johnson have, however, continued operations in Russia and provided access to medicines and medical equipment in keeping with the international humanitarian law. Abbott donated $2 million to humanitarian efforts and condemned the war and violence in Ukraine. Pfizer, based in New York, supplied $1 million in humanitarian grants.
The business disruption
Although sanctions imposed on Russia by the U.S., U.K., Europe and Canada did not cover medicines and medical equipment, they have cut off seven Russian banks from the SWIFT international payment system. This impacted the export of medical devices from the EU to Russia.
Trade with India, one of the biggest exporters of generic medicines to Russia, has also been disrupted due to the ongoing war. Drug manufacturers in several Indian states claimed they had not received their dues for medicines exported to Russia.
Shipments to Russia, Ukraine and the Commonwealth of Independent States are stuck at Indian ports. Payment delays have disrupted production cycles, leaving manufacturers with little money for day-to-day operations.
Additional Read: Russia-Ukraine War Puts Drug Development Pipeline at Risk
Adding pressure to the already tight supply has been the increasing price of aluminum foil, commonly used in the packaging of drugs. Ukraine is a prominent exporter of foil.
Although companies continue to make efforts to provide medicines and treat patients, the situation can deteriorate if the war escalates.
Pharma companies therefore must anticipate, and prepare for, a possible rise in supply chain disruptions and price hikes.
Gaining full visibility into the supply chain
One definite way for pharma companies to mitigate the risk of further supply chain disruptions is to transition to a digital supply chain, given their poor data visibility and disconnected processes, as reported by pharma supply chain executives in a survey by the Supply Chain Resource Cooperative and North Carolina State University.
Traditional ERP systems lack real-time data visibility and robust reporting needed for an optimally operating global pharmaceutical supply chain that has to deal with new supply bottlenecks, changing regulations and compliance needs.
These factors hinder smooth information sharing and collaboration that are critical to counter the impact of the war and other disruptions on pharma supply chains.
Here are two ways they can prepare:
Effective risk mitigation and building resiliency
This can be achieved by gaining access to key production and supply chain data in a timely and precise fashion and overall and detailed visibility across supply relationships and across the production life cycle from order/forecast to final product delivery.
Cost management
For pharmaceutical companies and contract manufacturing organizations, costs and price fluctuations of APIs and raw materials remain significant challenges, exacerbated now by the Ukraine war. With a unified supply chain platform, pharma organizations can mitigate some of the impacts of API and raw material costs as well as price and availability through demand sensing capabilities, live market indices and forecasts to spot and leverage prices and cost-reduction opportunities.
Links
https://www.healthleadersmedia.com/pharma/ukraine-russia-war-pushes-big-pharma-mixed-response
Russia-Ukraine war may spell trouble for India's pharma sector — Quartz India (qz.com)
https://www.healthleadersmedia.com/pharma/ukraine-russia-war-pushes-big-pharma-mixed-response
https://www.chicagobusiness.com/health-care/abbott-big-pharma-companies-arent-exiting-russia
