COVID-19 is driving more supplier redundancy

Contract development and manufacturing organisations (CDMOs) are busier than ever, and their work will increase as the pandemic prompts pharma companies to increase redundancy in the supply chain, says GlobalData.

Peter Shapiro, PharmSource Senior Director of Drugs and Business Fundamentals at GlobalData, comments, “Pharma companies may try to reduce their supply chain risks by deliberately building redundancies – such as through using multiple suppliers and stockpiling. In the future, large pharma companies will want to know more about their contractors, both their CDMOs and their CDMOs’ suppliers.

“The race for vaccines and treatments for COVID-19 has increased the pharma industry’s demand for service providers. COVID-19 has changed the top focus of contract manufacturing agreements in 2020 from the perennial leading therapy area, oncology, to infectious disease.”

The COVID-19 halo effect is driving extra funding to many small pharma companies, especially those in the infectious disease space. These startups do not have the expertise or funds to run their own manufacturing facilities, driving them to outsource production.

Shapiro concludes, “The pandemic has accelerated the number of partnerships between governments and pharma companies for vaccines and therapies. Governmental incentives in the US and other countries that aim to increase their domestic manufacturing are likely to continue, as is the uptick in public-private pharma partnerships.”