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Government needs to subsidise UK-based pharmaceutical supply chains, academic tells parliamentary committee

Dr Sam Roscoe giving evidence remotely to the parliamentary International Trade Committee

Supply chain expert Dr Sam Roscoe has called on the Government to subsidise a parallel, UK-based, pharmaceutical supply chain capable of coping with the huge and abrupt increases in demand seen during the current pandemic and that will be seen again during future crises.

Dr Roscoe told the International Trade Committee on Thursday that a UK-based parallel supply chain for critical drugs including those that treat the symptoms of coronvirus was essential to ride out the disruption to international supply centred on China and India.

The Supply Chain and Operations Management expert from the University of Sussex Business School told the committee’s inquiry into the Covid-19 pandemic and pharmaceutical supply chains that companies have prioritized cost and efficiency over resilience and flexibility in their supply chain and that needed to change in the future.

Global drug production has already faced two major disruptions; in January and February thanks to China’s extensive manufacturing lockdown and currently because of a lockdown in India.

He told the committee that the pandemic was likely to lead to much shorter, localised supply chains in the future in pharmaceuticals, clothing, automotive and aerospace sectors.

Dr Roscoe said: “In the longer term, a major structural change in supply chains needs to happen. This crisis has really brought that to the fore.
“There is a lack of resilience in global supply chains that bring products from overseas to the UK.
“What we should be thinking about is a parallel supply chain where we are able to develop manufacturing capacity to make critical drugs in the UK, alongside existing supply chains in China and India.
"Government has a big role to play in setting up this parallel supply chain."

Dr Roscoe said that buffer stocks in pharmaceutical supply chains meant that the UK could ride out disruption for between three to six months but there was question marks if disruption from lockdowns around the world extended beyond then.

He said: “We don’t have that facility at the moment so the set-up cost will be very high.
“For the majority of generics, there’s not a lot of profit so there will need to be government support.
“It would be a supply chain that is established within the UK.
"It doesn’t have to make 100% of the product, it could make 30% to 40% but when there’s a crisis, such as a second wave of the coronavirus, it is able to ramp up production capacity so that the UK population has the drugs that it needs.
"If it takes 3-4 months to ramp up production, then we need to have 3-4 months of buffer stock sitting in the UK to cover the ramp-up period."

Dr Roscoe added that the coronavirus pandemic could lead to a significant overhaul of supply chains by many companies in different sectors.

He said: “In the future, I think companies will begin to prioritise the need to be flexible and resilient over cost and efficiency.
"It needs to be localised with supply chains closer to the market.
"And this is not just for pharmaceuticals but also in apparel, automotive and aerospace."

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By: Neil Vowles
Last updated: Friday, 15 May 2020

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